All Forum Posts by: Alan Asriants

You need to run the comps and see what kind of properties hold their value best in your market. If single family homes have better resale values than duplexes then its likely better to improve that single and add an ADU.

However, adding an ADU is not 1:1 usually. Meaning have 3 ADU's that cost you 300k to build might not increase your value by 300k.

Single family to duplex conversion is incredibly expensive. If you are not fully gutting it, then you are cutting corners. Needs to be redone properly - otherwise I wouldn't consider it. 

If your single family is completely deteriorated and is in need of a full gut anyway, then go for it, but if it is well maintained, has updated cap ex (plumbing, electrical, etc), then I would not bother for conversion. Garages at that point are easier to convert - less demo, and open frame.

Also look into the option of renting out the garage spaces. Maybe the capital to convert is not worth it if garage demand is high. 

I am a licensed realtor in PA and Nj and I serve the greater Philadelphia area. For the most part, the market near me is a huge Seller's market. Especially in the suburbs of Philadelphia and Northern NJ. Those markets are just nuts. Every home has an immense level of competition and very likely due to: major zoning restriction, not enough homes for sale, no major developments of new construction (most homes are built before 1990 and way before - in NJ this is more like 1940 and before), MULTI FAMILY market is just ridiculous with month over month appreciation (no major construction of 2-4 units since the mid 80s) and still large population density.

I have been seeing trends across the US (and especailly FL) of a major shift in the market to a Buyer's market besides the NE region. How is your local market? Historically, the NE markets have been more stable and likely due to the factors listed above. 

Would love to hear many diverse responses!

Hey Alexander, the answer to your question is it all depends. In your situation it is usually hard to gauge who's responsibility it is since you inherited the property and the tenant. Maybe it was there before they moved in maybe it happened after. You can ask the previous owner if they pictures of the unit when they listed it for rent or if they know about the damage there.

If it was there before then it is what it is. If the owner shows you pictures before they occupied the unit and there is no damage then you have a clear case to deduct it from the SD. Get more info from previous owner. 

Do you have duct work in the property? If so, just add a condensor/compressor to the existing hot air furnace for central air. 

I think there might be a shift in the Philadelphia market. The suburbs of Philly are basically out of control with month over month appreciation. Similar to Nj market. Tough regulations of building and tough to even find land to build on. 

In downtown areas like Fishtown, northern liberties, and olde kensington I think there might be a reshift of the market. The reason I believe this might happen( and hopefully it does not), is because developers were allowed to build a tremendous amount of units in these areas and timiing with COVID caused a lot of people to leave, creating less demand. So as these units sit vacant - there are hundreds of them, developers are forced to rent out to section 8. If a majority of these buildings are occupied by section 8, the neighborhood dynamic might start to change as a new population takes over and the old population moves out. So those "up and coming" neighborhoods might see incredible decline, and once booming Fishtown, northern lib, etc might see a decline. Hopefully the rentals are absorbed by higher quality tenants.  

Hey Kevin, I always focus on the three main rules of RE:

1. Location

2. Location

3. Location

If you hear that Philly is Block by block, I would shy away from that that advice. That means that they are buying in risky areas hoping for major change in gentrification and appreciation. 

The following neighborhoods are best for appreciation and long term holds although cash flow might be tight:

Far NE Phila

Roxborough

Manyunk

East Falls

W Mount Airy

Parts of E Mount Airy

Chestnut Hill

Farimount

Grad hosptial

Fitler Sq

Old City

There are some more here and there but these stand out to me most. best of luck! 

Same kind of market here. The NE I hear is especially bad. NJ market near New York is nuts. And the kinds of houses flying off the shelves is bonkers to me.

Anything that hits the market as flipper that is even an ounce worthy for a project is just scooped up at a price that makes 0 sense. 

With the interest rates dipping a bit I am afraid this might only get worse. What I don't understand is how people are affording some of these payments. Seems like people max out their CC debt sometimes. 

Unfortunately you gotta get buyers that are willing to waive contingencies and go higher if the home has multiple offers, or start looking at homes that are already sitting on the market.

I set the expectation up front that the market is like this, this way buyers are not shocked - its normalized. For weaker buyers see what homes are nice but perhaps might've been overpriced when listed - could be opportunity for your buyer to get in with some negotiation and keeping their contingencies. 

 Great points overall. I like the fact that you mentioned turnover. With well priced units that are functionally better than the market, your tenants are certainly more likely to stay longer. Why go back out into the market, pay for moving and deal with the hassle to find something less functional and not much cheaper. 

Unless financial they can or they can't, they will likely stay longer with a favorable layout. 

The squeezing of bedrooms in Section 8 rentals is too real. Investors believe that more bedrooms will get higher rent payouts by Section 8, which can be true, but then you create the exact issue you mention. A space that is functionally obsolete. And the less obsolete your layout is, the harder it will be to rent to higher qualified candidates. You will be left with those who don't have many options. Likely a bad outcome for the landlord.

Investing is all about mitigating risk and increasing opportunity. Squeezing bedrooms is not a means to that. 

Working with a lot of investors, I often get asked whether adding an extra bedroom is worth it. On paper, it makes mathematical sense: more bedrooms often translate to a higher sales price or increased rental value. But before you go putting up framing for a new bedroom, there’s something important you need to consider—livable space.

Yes, a three-bedroom unit will generally rent for more than a two-bedroom. But you have to look beyond just the bedroom count. Square footage, layout, and functionality matter just as much—if not more. A three-bedroom unit squeezed into 1,000 square feet with one bathroom and three tiny bedrooms may not perform better than a spacious two-bedroom, two-bath unit with generous closets and well-sized rooms. The latter often attracts a more affluent or stable tenant pool because the space feels better and lives better.

When you walk into a property, it's not just about having a higher bedroom count—the space needs to make sense. If there’s no room for a sofa, the living room feels cramped, and one of the bedrooms barely fits a twin bed, are you really adding value? In fact, that can make the unit harder to rent. I speak on this from experience.

My first project was a major rehab where I had to fully reframe three units. I was proud of the improved functionality, but on the second and third floors, I tried to squeeze two bedrooms into small spaces. The result? A tiny "efficiency" two-bedroom with no real living or dining space. It was difficult to market because, while it had the bedroom count, it didn’t feel like a true two-bedroom. Couples or small families would walk in expecting more and leave disappointed.

Eventually, I decided to re-market the unit as a one-bedroom with a large living area—and everything changed. Interest spiked. The tenants who came could actually envision living there. They could see a proper living room, a comfortable setup, and the potential of the space. I didn’t reframe anything, but that shift in perception made all the difference.

And here’s the kicker—I didn’t make less money renting it as a one-bedroom. Because of the improved functionality and feel, I was able to command near market rates for a two-bedroom anyway. Why? Because tenants value layout and comfort just as much as the number of bedrooms. A well-designed one-bedroom can outperform a cramped two-bedroom any day of the week.

So when you’re considering adding a bedroom or reframing a unit, think about the overall livability. Is there enough closet space? Can someone comfortably put a sofa and watch TV? Is there room for a dining table? A crammed layout packed with bedrooms won’t attract quality tenants or buyers.

Bottom line: Functionality often beats bedroom count. Design with the end user in mind—not just the listing description.

it all depends on your end user and buyer. Typically these kinds of major improvements work best and very affluent neighborhoods. The reason is because the ceiling no pun intended, is a lot higher than other lower class neighborhoods. 

So if there are plenty of sales that are higher priced doing major improvements is OK because the market can absorb it. Where are you? Don't wanna do this is by trying to push. You were record-breaking sales number in a neighborhood. 

For example:

Neighborhood A: AVG price is 1M. Your homes current value: $500k - With Addition EST: $850k
Neighborhood B: AVG price is 450k. Your homes current value: $400k - With Addition EST: $650k

This example is obviously a little bit more straightforward, but paints the general picture. 

Also, the notion of simply adding bedrooms to a property is incredibly silly. A five bedroom house in 1000 ft.² is going to feel incredibly tight compared to a nice two bedroom two bathroom layout in the same space. In fact many Philly flippers found out about this the hard way and tried to force 4 bedrooms in a 2 bedroom home. Those who did best, maximized the space. Believe it or not closet space is really important. :)

I made this mistake on my first major rehab. I forced 2 beds instead of one thinking I could pull off higher rents. Set and done in the spaces felt incredibly tight I realized that no one would consider my apartment a true two bedroom. After a month of marketing it in this way, I changed the listing to 1 bedroom and my results improved significantly. 

The crammed 2 bed now felt like a large 1 bedroom!