All Forum Posts by: Jimmy O'Connor

@Buyan Thyagarajan At the time, he was on point for some of those pockets for ARV's specifically for buy and holds. Fast forward 2 years later to today, nearly all of those pockets appreciated. This city is very neighborhood by neighborhood and block by block within. If you are curious about the different pockets and which one may suit your needs, I always love talking shop. Always feel free to reach out.

@Mauricio Botero I would beg the question- what is your goal? If it is appreciation, this overlay greatly hindered that upside. If it is cashflow, and strictly cashflow, this may still be a viable play. I see this overlay actually devaluing the area since it is objectively no longer "up and coming." As a cashflow/section 8 play, you'll be able to get these properties cheaper and still be able to collect decent rents relative to your all in/debt service. I would imagine a lag in property price drops to the "new values" because it will take time for the perceived competitiveness (i.e seller's seeing new builds and hearing table saws on the block) to completely fizzle out. This probably won't happen until enough time goes by to see the effects that @Troy Sheets described above where the community will feel the lack of progress. 

Congrats!

@Geoff Haughwout, I would encourage you to not just add cash buyers to your email list. Try and focus on a getting plenty of personal relationships so when you actually do get a property, you'll have buyers that have expressed their criteria and that actually pick up the phone for the opportunity. 

@Joshua Hower if you want to travel up I-95 to Greater Philly let me know! The Delco, Chester, Montco, and Philly markets are where I specialize, I'd gladly point you in the right direction

@Account Closed tried to present both sides to the best of my, again, limited ability. What are the best resources do you know that have relevant data or literature so I can study up?

*I would encourage you to read the links below to be educated prior to reading/posting! Everyone is entitled to an opinion... but only the informed should share it!*

Link to the Legislation, PDF available to download

Against- Overlay Editorial

Pro- Overlay Article

Please feel free to correct anything I may state incorrectly, I do not write nor read legislation for a living. My limited qualification is that I analyze, buy, and sell several beat-up houses and land each month.

Objective, non-opinionated summary: 

Councilman Darrell Clarke and the Strawberry Mansion Community Development Corporation have pushed a zoning overlay that prevents higher unit density on land, building heights, roof decks, and other development characteristics non-homogenous to the current neighborhood aesthetic. 

Brace yourselves, I wrote a novel.

Strawberry Mansion, which was (and in some parts still remains) one of the more crime-ridden areas has experienced a major boom in property values over the last 5 years. This is largely in part from a lack of inventory in Fairmount which crossed over the border of 25th-33rd & Girard Ave to the now booming Brewerytown. Similar to how Point Breeze expanded past the tracks above 25th street to Grays Ferry, Brewerytown then pushed past Cecil B Moore and the magic triangle of Sedgley and Ridge to increase values in "The Mansion." Major players and funds that have 8-10 figures to play with such as GNR (aka Philadelphia Lotus) have poured countless dollars acquiring inventory, likely banking on the continued appreciation married with an impressive S8 portfolio. However, this overlay has effectively brought new construction to a halt and stripped incentives for long term multi-family investment. They have removed the density/height bonuses that incentivized green roofs, low/moderate-income housing, limited new build heights (intention of fewer 3 stories) and is forcing the hand of the developers to use more expensive building materials and processes.

 *Note that this overlay only applies to the boundaries of Oxford to Lehigh, 29th to 33rd that is north of Sedgley, not the entirety of what investors conventionally consider Strawberry Mansion*

One of the benefits of buying land in this area is that it still had plenty of large lots zoned for multi families (RM1) within shouting distance to the up-coming areas to warrant building now before the cost of land skyrocketed. The question is, does this benefit still remain? As roof decks and large 3 stories have become the industry standard for the gentrifying areas of Philadelphia, will builders stop buying these vacant lots if the upside has been stripped? Furthermore, how will the buy and hold investors that have been eagerly awaiting newbuilds to creep up north pivot now that their appreciation now has a cloudier future?

Do not get me wrong, there is a STRONG case to be made to preserve the culture and not push out neighborhood natives with increasing taxes that accompany gentrification as the land values rapidly go up. I am not personally a fan of the modern standard of "lego with a bump out." As it sits, Strawberry Mansion has some of the most beautiful buildings with behemoths of existing three stories. Just drive up 33rd ave and take a quick gander at the homes overlooking Fairmount Park. This bill requires buildings to be made of similar material and style to the existing structure, which is a nice refresh since most newbuilds look like vertical storage containers. 

Philadelphia Investors, especially those investing in those markets... what do you think?

Also- I had trouble interpreting this, so if anyone can clarify, I would be greatly appreciative:

"Building Height.
(.a) On lots with frontage on at least one street with a width greater than or equal
to 50 ft. and less than 75 ft., the height of any new structure shall not exceed
35 ft.
(.b) On lots with no frontage on streets with a width greater than or equal to 50
ft., the height of any new structure shall not exceed 25 ft."

Does this really only affect massively wide lots and larger developments? To make a quad you really only need 14x103 to a 16x 90 lot (1440sf).

@Troy Sheets @Mayer M. @Sheryl Sitman You guys have done "a rehab or two," mind weighing in?

Hey @Ryan S.! I've done several deals with my investors in those areas. Your post has a wide net with a whole variety of values that strongly intertwined with what block you are on. What is your specific strategy? What level of rehab can you handle? And what are you valuing more favorably, cashflow or appreciation?

@Matt I. have you considered pairing with a higher net worth individual that can trade your sweat equity for funding? Setting up your team to be a well-oiled machine AND finding deal flow is harder than finding money today. There are plenty of people who will throw money at a solid model that gives better returns and is nearly laissez-faire. 

@Rich O'Neill would be my go-to guy on this. Does everything by the book and comes from the background of being a RE Investor and professional first, project manager second (which means he gets it)

@Steve Babiak they are jumping ship to CO and Austin! I'm curious how Philly places on the list in previous years. I'd like to see if this influx of higher list prices and inventory moved had anything to deal with the buyer aggression that festered as a result of the entire REI shutdown when COVID started and was released from the flood gates once made essential.