All Forum Posts by: Chris Pelc

Just running the numbers without the full details... Hopefully it helps!

Purchase Price: $140,000
Est. Title Closing Costs: ~$5,000 
Loan Closing Costs: $4,153 Points + $2-3K Fees/Appraisal

Renovation: $25,000
HML Holdings Costs: $3,600 (3 Months @ 12%)
All in before refi: ~$180,000


If it appraises for $220,000 assuming a 70% LTV, your loan principal at 7% will be: $1,025/mo

Without full understanding of the house, lets assume around $2,500/yr in taxes. And about $1,200/yr insurance prem. 

Estimated Rent: $1,780 * 80% = ~ $1,450/mo

Est. Expenses:
Loan: $1,025
Taxes: ~$208/mo
Insurance: ~$100/mo
Vacancy (3%): $45/mo
Maint.(5%): $72/mo
Mgmt.: ????

With these numbers, you're breaking even every month. And that does not include any management fees if you don't plan to self manage. These figures are not going to be 100% accurate of course because i don't have the complete details. But to be honest, it doesn't seem to be that great of a deal. 

Hey Anthony, 

If you're looking for some leads for lenders, give me a call. I've worked with ton's of lenders, and i can give you my opinion on who could give you the best experience/terms. 

Also, quick question out of curiosity... I noticed that you say this is a single family home that you purchased looking to convert it into multi family... What is the zoning on the property? If it zoned RM1 and the lot size meets the requirement, you should be fine. If not, are you aware that you would need to get a variance and permits to do so? 

Hey Robert, 

It sounds like you already have a solid foundation and could jump in as soon as you're comfortable. The Philadelphia market could be a decent option for you, as with your liquidity, you could potentially get into a couple of cheap rentals to start building equity and get a little bit of additional income. However, if you're considering house hacking because you have a timeline of when you would like to be out of your current living situation, you might be challenged with a competitive market for mulifamily properties. Most of the house hacking candidates that are available would need extensive rehab. If that is something you're okay with, that's great. Just know you will be limited on your financing options going that route. 

There's no shame in utilizing the resources your given. Look at it as an opportunity to get ahead. If you pick up a few properties now, it will be MUCH easier to buy more sooner than later down the road. Especially if you're buying correctly. I would suggest doing some digging into BRRRR strategy, and see if you'd be open to buying something that needs renovating.

The answer to that is subjective. It depends on so many factors. But to give you an idea: 

Take for instance a turnkey 3-Story in Fitler Square (A Class Neighborhood) averages around $550k-$600k+. Whereas the same house over in Manayunk (A class Neighborhood) could be in the $400k-$500k range.

When you say that you have enough for 5% down on a property... What purchase price would that 5% be covering up to? Paying PMI will certainly eat into your cash flow.. But what might offset this is finding a property with low property tax. What areas have you been targeting? If you are looking at the suburbs around Philly, the taxes are generally a lot higher than the city. Honestly, i'm not the biggest lover of being in the city.. I'm a suburbs guy. But if you guys are open to living in the city, you might have a better scope of options - cash flow wise.

Negative cash flow will significantly stunt your ability to scale. Especially when just starting out in REI. Unless you make a great wage, and have deep pockets... acquiring the next property is going to be difficult.

I know someone who installs security systems. However, i don't think they do any sort of buzzer systems. I can't imagine the installation being too much different. All of the labor is running all of the lines throughout the building. 

Message me if you want me to get in touch with them. 

Hey Mike, i service this area. Lets connect!

Hey Kyle. Welcome to PA! It's also pretty awesome to hear that you are looking to start investing in property over here too. 

Have you defined any of the nuances to your strategy of a long term rental? For example, are you looking for something that you can add some sweat equity, and break even at the refinance? Or are you simply looking to get into something turnkey, and just stick a tenant in there with good cash flow?

If you're open to it, i would be happy to talk if you're interested in pinning down some ideas. 

It's really best off to have an agent with access to the MLS to pull accurate data related to comps when underwriting a deal.

When it comes to areas, think about what surrounds the area in addition to the class of neighborhood. A class neighborhoods will be tough to cash flow, because of the expensive entry point in price. But these properties will likely appreciate nicely. Whereas, C class neighborhoods will likely cash flow nicely because of the cost entry point is a lot lower. But then you might deal with higher tenant turnover, less appreciation, and headaches all around. 

You might be best fit finding those in between deals. 

I'd be happy to talk a bit further if you'd like. 

Simply put, get a real estate license. 

The challenge for a lot of wholesalers, is once they obtain the licensing, what brokerage is going to sponsor them in wholesale transactions?