All Forum Posts by: Dan Powers

With every week a new house sells and set a record in its respective area, with this trend having gone on for months the big question on everyone's mind right now is, is there going to be a big correction in the market soon. I believe any correction of sorts will not happen for a while, but feel free to point out something I'm not seeing.

 The Fed will continue to hold interests rates at the current level till at least 2023, (https://www.cnbc.com/2021/06/1...) meaning money is going to continue to be cheap, for flippers and landlords alike.

On top of cheap money, there is no big influx of inventory coming to market anytime soon. Yes, I've heard people talk about the tax auctions coming back which would in theory bring a large amount of cheap inventory to the market. My response to that is, if people are currently paying on average 82% of ARV on the MLS, once this cheap inventory becomes available why would it not get bid up crazy amounts to the levels people are used to paying right now.

Would love to hear what people think!!

Welcome to the Philly market @Joseph Scaglione, the land of cheap taxes and great cheesesteaks. The areas you want to focus on all depend on your strategy, budget, are you looking for more appreciation or cash flow, the amount of cash flow, etc. Both Philly and Delco offer a variety of submarkets for flip, buy/hold SFH, and multis (not so much in Philly though).

Obviously, the nicer areas in Philly (Fishtown, Fairmount, Northern Liberties) are exclusively flip markets. Most of South Philly is a flipping market, with the rare exception if you can convert a SFH to a multi. West + Southwest Philly are right now the hottest areas I move properties in, as they are great for both flipping and buy/hold and have been experiencing large amounts of appreciation over the last year.

Delco has more expensive taxes, but generally, the title is cleaner as opposed to Philly properties. There is a much higher inventory of multi properties, compared to Philly, and they are more times than not significantly cleaner as well. On top of that, you see a range of SFH flips from 100k-300k on the purchase.

Hope this helps, would love to connect!

@Mark Trani I have sold many deals in both Norristown and Pottstown, both having their own pros and cons. Norristown is a fantastic area for rentals with specific pockets having good flip potential. With a cheap barrier of entry and rents hovering around 1100-1200 for a 2 bed, and 4-5 beds getting upwards of 1700-2000. Also, there is a ton of appreciation coming to Norristown with a large amount of development with a new highway exit being added. Along with big redevelopment plans along the river front to add bars, restaurants, duck boat tours, with the goal to turn Norristown into the younger artsy district Phoenixville has become.

Now I will say Norristown is a very block-by-block town (arguably more drastic than Philly), the closer to the courthouse the better, but honestly, it's a very deal-by-deal basis. Hope this helps.

@Russell Brazil Thank god they're finally on the decline. I pulled this from Nasdaq, and it's shocking to see such a decline in a month's period. Nonetheless, very happy to see to as my investors have been getting killed recently on their rehab budgets. Hopefully, this will influence people to start bigger rehabs again. 

@Buyan Thyagarajan 19143 + 19139 are some of the hottest areas in Philly right now, and the appreciation in this pocket has exploded in the last year. Over the last 5 years, West Philly in general has seen the average home price rise from 90k-190k. Now that is a broad statistic and values vary drastically from block to block.

In 19139 a huge divider is obviously Market St., in Haddington you will see a purchase range of 85-110k with your ARV values 190-220k, you see a similar purchase and ARV range south of Baltimore Ave in Angora + Kingsessing areas. Now a year ago, a purchase in these pockets ranged from 55-85k while your ARV values were only 150-190k.

Cobbs Creek has seen a huge amount of appreciation in the last year, with pre-covid prices hovering around 85-110k with ARV values around 190-220k, in today's market you can't find a house in true Cobbs for less than 110k unless its simply 4 walls and some joists. Most houses are trading between 110k for a full gut, up to 135k for a cleaner rental-ready home, with ARV values rising by the week but consistently ranging between 220-250k with some properties even pushing north of 250k.

Typically my contractors have been pricing full guts between 60-80k depending on what lumber is priced at for the week (thank god it's finally on the decline).

Hope this helps!

@Matt Hummer Very thorough breakdown, I have a minute detail but in this business, every penny counts. Full transfer tax is 4.28% and split is 2.12%, from what I've seen in the off-market sector it's actually very common for the buyer to pay both sides of transfer tax (Full)

@Rich O'Neill @Nkuti Ndely I can confirm Rentwell does not manage in Chester. Any other areas is Delco they are my first call, great experience all around from @Sean Watson, I send all my investors to them. On top of that, I very much agree with @Mark Trani, you should definitely for an LLC, yes you will pay the 4.28% transfer tax, but it's well worth the cost considering what it can save you from.

Investment Info:

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

Purchase price: $150,000
Cash invested: $80,000

This big beautiful detached home in Prospect Park was an absolute dunk for any investor. The property needs a complete rehab, all interior cosmetics + mechanicals. Great days on market, great school district (Interboro) my investor loved this house. We are currently configured as a duplex (1-2/1 unit and 1-3/1 unit), with the potential market rent totaling $3600, it far beats the 1% rule by a mile.

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

What made my investor interested in this deal mostly was the area. We are located in Interboro school district which is one of the best in Delaware County. On top of that due to the condition of the house which was in poor condition made the entry price for this type of property a steal.

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

This deal was sold as a 24 hr Highest + Best, and was sourced through New Western Acqusitions.

How did you finance this deal?

This deal was purchased with cash

How did you add value to the deal?

The value being added to this deal was extensive, sold at 150k, with an ARV of 375k. This property is going to need a full gut rehab, with all cosmetic items (kitchens, baths, paint, carpet) and all mechanical work as well (plumbing, electric, and HVAC), to both units.

What was the outcome?

The outcome is going to be a fantastic duplex, bringing in great rent, in an area that will only continue to appreciate.

Lessons learned? Challenges?

The only challenge we experienced on this project was on the initial walkthrough, the work needed was very extensive, given that we had to agree on a bid my buyer wanted to submit that still made the deal work for him given the high rehab price.

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

Dan Powers - New Western Acquisitions

Investment Info:

Single-family residence fix & flip investment in Philadelphia.

Purchase price: $123,000
Cash invested: $60,000
Sale price: $250,000

This property was located in the booming North Philly neighborhood of Olney. It was a standard 3/1.5 with 1346 sqft. While this property needed nearly everything done to it, the neighborhood is what drove the real return in this property. With comps settling at 235k + 240k with DOM under 10, my investor is shooting to push the market with this rehab aiming to list at 250k when all said and done.

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

What made my investor interested in this deal was the neighborhood, Olney is one of the hottest markets to get into in Philly, with the continuing issue of inventory being extremeley hard to find my investor jumped on the opportunity.

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

This deal was sourced through New Western Acquisitions, it was one of the 40-50 properties we release every month. It was sold as a 24 hr highest + best offer. Having missed out on other H+B properties I instructed my buyer to place a bid 24k over the starting bid to secure he was the winner.

How did you finance this deal?

It was purchased with cash.

How did you add value to the deal?

Value is going to be added to this property by doing a full rehab while still keeping some of the character pieces in this home. A full bathroom will be added in the finished basement, as well as a new kitchen, upstairs bath, updated electric, and adding a condenser to the existing forced-air system. My investor plans on refinishing the existing floors, fireplace, and staircase to highlight the character of the home.

What was the outcome?

The outcome is going to be a great modern rehabbed home while keeping the character pieces that will really make this property sell.

Lessons learned? Challenges?

The only challenge encountered on this project was deciding on what bid to place, my investor had missed out previously on other H+B properties we have sold while still bidding 10-15k over ask. When this property was released, we had a discussion if he wants to win this property he needed to place a bid at his purchase price of 123k.

@Satima Flaherty

@Satima Flaherty Welcome to the fun world of off-market real estate. I have to agree with @Steve Uhlig on Norristown being a hidden gem. I have had great success moving multis in that area, with good cash flow as is, with great potential once you put market value tenants in. The area has a large range of unit sizes from 2-10, so there are opportunities for anyone to jump into the market. 

On top of the that, there are huge amounts of develpoment coming to the area. Attached are articles showing a new highway expansion to bring a more traffic into the area, as well as new commercial development including bars/restaurants, and duck boat tours along the riverfront.

https://whyy.org/articles/mont...

https://www.norristown.org/424...

https://www.norristown.org/Doc...

Hope this helps you in your search, always open to connecting so feel free to reach out!