All Forum Posts by: David Haynes

Hello BP community,

I’m in need of a good accountant around Delaware County PA who can help me navigate taxes related to my full time job, self-employed RE job, and real estate investments.

I'm particularly interested in learning more about laws related to my self employment income and how I can maximize my IRA contributions and minimize taxes while still building up capital for my real estate ventures.

Any recommendations for CPAs in the area?

@Lindsay Op de Coul

I’m more interested in zip codes that can typically meet or exceed the 1% rule where monthly rent is at least 1% of the home’s after repair value. Net cash flow each month should also be around $300 per unit after paying for all costs including mortgage. Which zip codes would offer the most opportunity for such returns?

I buy and sell a lot of rentals in the Philly, Delco, Montco areas of southeast PA. However, I'm pretty novice when it comes to New Jersey. If someone were to ask me what zip codes were best for Philadelphia rentals here, I'd be able to give a thorough list, so I know many of you exist in NJ too lol

Can some of you give me a list of rental zips in the NJ area, and if you have time, maybe some pros and cons? Thank you!

Investment Info:

Single-family residence wholesale investment in Philadelphia.

Purchase price: $110,000
Cash invested: $75,000
Sale price: $260,000

My client had a vision for this off-market South Philly house back in January that few could see. It didn't take him long to bring it back to the 21st century to demand top dollar. Buy low and sell high. What he bought at the rock bottom of the market is now selling at the top.

Even after dealing with a problem electrician and the city shutting him down for a couple weeks, he finished in great timing with minimal holding costs and is making a hefty profit. On to the next!

I never fully introduced myself, so here we go

While on break at Starbucks several years ago, I remember reading through Brandon Turner's book How to Invest in Real Estate and thinking to myself... "I screwed up!" I had just graduated from a Flordia college with a useless degree and was now serving Venti Unicorn Frappuccinos to crazed lines running out the door and around the corner.

Anyone else have humble beginnings?

I decided at that point that I needed a career change. So I packed my bags and flew over to Europe to teach English and work on my master's in finance. Ended up spending three years in the post-soviet country Georgia, or as they call it, "Sakartvelo" (the country in which they filmed the last Fast and Furious).

Eventually, I graduated with my master's! It was time for a career change! I couldn't wait for the job offers to fly in my inbox as I planned my flight out.

Then....COVID....hit.... haha

I had to call the US embassy several times just to find a flight out of the country. I still remember walking through the deserted Rome airport. Oh, and the 100+ jobs I applied for... yeah they weren't hiring anymore. Except for one. And honestly, it was a perfect accident that I stumbled upon them. I wanted a job in mergers and acquisitions, however, New Western Acquisitions is what I found, an investment real estate brokerage. 

I had forgotten about real estate while sipping cappuccinos in Europe. My mind starting remembering my grandiose plans of building my own rental portfolio. Needless to say, I took the job. Driving the streets of Philly, Delco, and Montco and connecting distressed properties with investors beats being cooped up in an office cubicle any day.

I still have a long way to go, but after a year, I've made a lot of progress. I just closed my 29th off-market deal in one year and have three more scheduled to close this month. Thank you Philly! Looking forward to connecting, revitalizing communities, and developing passive income together.

@Wayne Brooks Haha I'm poised to take advantage of that wave whether it's a tidal wave or ripple. We'll see.

I and my team have been through the process several times, so I'm aware of how painful it could be. Should be set to close within a month and a half. I'm most likely double closing on it.

I read an article about a year ago predicting Bucks County PA to be one of the top counties for future foreclosures, at least in Pennsylvania. I've been waiting patiently since then.

I finally found a good off-market short sale in Bristol Township. It has gotten me eager for more. I usually focus on flips in Bucks, but this one is priced so low that it makes a lot of sense as a rental as well.

Anyone else experiencing a rise in short sales/foreclosures in your market? Which markets are you seeing those in.

I'm based in Philadelphia, but am always curious about other markets.

@Christopher Bannister

I agree with what others have said. The 1% rule is a quick rule of thumb that can quickly remove properties out of your way. For instance, if the property is worth $120K after cosmetic updates, it should rent for at least 1% of that ($1200/month). 

But then that brings the questions "How do I know what it will be worth after updates?" and "How do I know what it will rent for?" 

The two questions above could still take you a lot of time to answer. Here's how you can shrink that time as well.

What will it be worth?

I have access to the MLS, but this can still be done on Zillow and similar websites. I pull comps within the area that meet the following criteria.

1) Within a quarter mile (in the suburbs, I may go out further)

2) Within 20% of the square footage

3) Similar or less desirable category (i.e. single-detached, semi-detached, rowhome..)

4) Closed within the past 6 months (maybe further back if there's a lack of comps)

5) Similar or worse condition to what the subject property will be in after renovation

I'm thinking from the perspective of a bank appraiser as I pull comps. Because ultimately the goal is to buy, renovated, rent, refinance around 75% LTV, and repeat.

If your goal is to refinance all your cash out, you want to be all in at 75%. So your purchase price and rehab should be 75% or less of the ARV. For example, $52,000 purchase + $3000 closing costs + $20,000 rehab = 75% of $100K ARV.

What will it rent for?

If you do not have rent-o-meter or MLS access, here's a very quick short cut. Section 8 housing publishes what they determine to be fair market rent within each zip code and for each bedroom count. Even if you aren't planning to accept section 8 tenants, it's still a good rule of thumb for knowing which zips rent for how much without having to pay for a subscription.

Click here to go to the website. This is what you can expect...

Again, this isn't perfect. But it does allow you to quickly determine which properties are worth pursuing.

Thought I would throw this gem out there. Bright MLS recently made the following statement, "Bright's On/Off MLS Study reveals the median sale price for homes promoted through the MLS was 16.98% higher than homes sold off-MLS."

I know it's a well-known fact that off-market properties are usually cheaper, but it's good to see just how much cheaper. Their study included the surrounding areas of Philadelphia, Baltimore, and D.C.

If you want to buy properties 17% cheaper, work on your off-market sources. The opposite is also true. If you want to sell your home 17% higher, it's apparently worth using a listing agent.

Thoughts? Insights? Success stories?

My experience in Philadelphia has taught me the utility company takes months and months to install a new water meter. My client went under contract in MARCH for two side-by-side triplexes which had no water meters. Since we couldn't close without a water reading, we had to wait for meters to be installed. We are STILL waiting, and it's nearly August.

Maybe the utility company in Chicago is more efficient.

However, I know submetering is possible as long as the plumbing is separated between the two units. I believe they can be bought for around $200 each and installed within a day. I'm sure there's a smart submeter option to allow a wifi connection.