All Forum Posts by: Dan Powers

@Malik Ahmad Obviously it depends on the specifics of the deal, but the further north and west in LoMo the better. South Philly is a better flipping market right now due to the high entry price, the only times I've seen rentals work out is when you can convert a SFH to a duplex. Hope this helps.

@Christian Roberts Fishtown is not an area you typically have to go through an eviction in. I agree with @Eric Greenberg I wouldn't worry too much about it unless the problem is at your doorstep. Yes, they are a pain like @Paul S. says, but if a deal is coming with a squatter, it's pretty much the only time you'll see a deal in this market sell under 70%. 

@Christian Roberts I have a few contractors that have done work for me on fishtown projects. I'll PM.

@Andrew Fehrle Northwest Philly as a whole is a very hot neighborhood, the borders between the suburbs and the city blur while still maintaining the low city taxes that everyone loves. That pocket of Mt. Airy/Germantown has blown up the past year and inventory is extremely hard to come by so if you do find a deal there, jump on it.

https://www.timesherald.com/lo...

The huge development plan on the corner of Dekalb and Main st. just received a huge endorsement from Norristown officials further solidifying the legitimacy of this project. It has been in the works for many years now and shows the effort by the town and the state to really push to make Norristown the younger artsy district that Phoenixville has become. The development will include commercial space on the 1st floor with the remaining 6 floors a mixture of studio,1-bed, 2-bed units, and parking spots.

This development combined with the completion of the highway extension is going to accelerate Norristown's appreciation. Would love to know everyone's thoughts and if this changes your perception of Norristown to the point that you would invest in the area.

@Babu Ramadoss 19131 is a very good spot for investments, I am very curious why you are limiting yourself to such a small area, given the huge amount of opportunity in the surrounding areas. In agreeance with @Sheryl Sitman Philly as a whole is extremely block by block and your ARV values can change dramatically within a block radius. In terms of the numbers for the pocket, you will see most purchase be in the range of 100-120k, closer to 100k for shells/full guts, and 120k+ for cleaner closer to rent ready properties. ARV's will range from 180-200k for most, with a handfull of properties getting as high as 240k. Rents in this pocket for 3 beds are solidly 1250-1300, with 4 beds hitting 1400+. This area is primed to pop off next as a result of the huge explosion of appreciation seen in Cobbs Creek over the last year.

Investment Info:

Small multi-family (2-4 units) buy & hold investment in Folsom.

Purchase price: $205,000
Cash invested: $25,000

My investor just closed on this great duplex opportunity in Ridley School District. With a 2 bedroom unit located on the first floor and a 4 bedroom unit on the second and third floors. This property was in great shape and only needed minor cosmetic updates to bring in great market rent and make this a cash cow.

What made you interested in investing in this type of deal?

What made my investor interested in this deal was the location, condition, and the good rent as is. Located in Folsom this property falls into the Ridley School District which will make it appealing for renters. As you can see by the interior photo, the house is in great condition, with the rest of the property in identical shape. On top of all that, the property was bringing in $2500 as it sat, already above the 1% rule.

How did you find this deal and how did you negotiate it?

This deal was sourced through New Western Acquisitions and was sold on a first come first serve basis. My investor has lost out on a few similar properties to this before so when the opportunity came about she jumped on it immediately, and we were in contract within an hr of the property being released.

How did you finance this deal?

This property was purchased using our in-house hard money lender Sherman Bridge. My investor qualified for 90% purchase/ 100% rehab, and only had to bring 45k to close this deal.

How did you add value to the deal?

My investor is going to add value to this deal by redoing all of the cosmetic items in the 4 bed unit, due to that unit being the most under market rent with her plan on getting a new tenant in place. She is planning on keeping the 2 bed unit with the current tenant as is.

What was the outcome?

The outcome was a seasoned investor branching of the retail space and into the off-market world. She is very happy with her purchase and has already started on rehabbing the 4 bed unit.

Lessons learned? Challenges?

The only challenge we endured while being in contract was a delay in obtaining tenant contact info until the day after closing.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Dan Powers - New Western Acquisitions

@Jonathan Chan Welcome to the Philly market, the land of cheesesteaks and cheap taxes. There is a ton of potential in the C class neighborhoods with some pockets experiencing 20%+ appreciation year over year. West + Southwest philly have been experiencing that rapid appreciation and are some of the hottest markets in Philly. That being said there are plenty of other areas such as East/West Oak Lane, Olney, Ogontz, Germantown.

In terms of areas to avoid, its pretty easy to point out what areas to avoid, Strawberry Mansion, Kensington, Nicetown.

Feel free to reach out if you have any more questions.

@Jason Forman Congrats on getting in the market it's a fun world to get into. Right now the MLS is averaging 80-85% of ARV, while most off-market inventory is hovering around 72-78%. 70% is a great benchmark to shoot for but in this market finding plentiful inventory at that margin is an unrealistic expectation. Philly is a very block-by-block city so sticking to 0.1 miles for comps is a good rule to stick to, but it's not unreasonable to use 0.15 as well. For repairs, it's very dependant on the neighborhood as well as if you're using the property as a flip or a rental. A full gut in Port Richmond or West Philly is not going to cost the same as a full gut in South Philly even with an identical sqft. house, and a rental rehab will cost significantly less than a flip rehab.

Every rental investor always stresses about wanting the maximize cashflow, and the clear answer to that is Section 8. While on the surface of examining the rents in the most popular zip codes (19143, 19139, 19142) might show Section 8 rents identical to market, that being said the conditions needed to reach that rent are drastically different. To reach market rent in West Philly you'll most likely need central AC, stainless steel apps, and near flip finishes throughout. In comparison, for Section 8, you really only have to finish the home to pass inspection, or play the fun game of going to Home Depot and buying the cheapest finishes you can. This is really where you make your money in Section 8.

There are still parts of the city where Section 8 rent is higher than market (19121, 19132, 19133, and 19140), but it’s extremely block by block to say the least. That being said, your margins are significantly better because the entry price is drastically lower than West Philly, with most properties selling around 50-80k while rent is $1200.

I would love to hear why people are reluctant to rent Section 8 especially if you get a solid property manager to handle everything.