All Forum Posts by: Account Closed

Hello All,

As @Jay Walsh has mentioned I have visited him at his office. 

I would like to prefix my take away from the meeting with this:

I believe everyone should do their own due diligence and come to their own conclusion whenever investing their own money. Investing is a personal endeavor and one persons' goals, interest, strategy and belief on what is a good investment does not always line up with those of other people. 

Having said that, my meeting with Jay has changed my opinion towards ABC Capital Investments. My original issue was that ABC Capital Investments was attempting to make false claims on their website in terms of the market value of their properties and the potential rent they can generate. Simply put: that was a misunderstanding. 

Currently, a large portion of ABC's investors are people from out of the country. Theses investors primarily do not live in Countries or areas where investing in Real Estate is a realistic endeavor either due to political influences or the housing market of their country. Thus, theses people are looking for somewhere to put their money with a reliable return on investment. Often these out of country investors are not to concerned with the location of a property so much as the return on investment they will receive. I bring this up because after meeting with Jay my only issue with ABC Capital Investments that remains may be the area of some of their properties. From my understanding a lot of their properties are located in Southwest Philadelphia, West Philadelphia and some in North Philadelphia. West Philadelphia and North Philadelphia are not great areas however I do not have to much of an issue with these areas as I can see them becoming much better areas in the future. When it comes to Southwest Philadelphia, Jay 100% has more experience than I in the area and although it may not be an area I would be interested in investing in, others may feel differently. For me, the biggest thing to make investing in Southwest Philadelphia worth while would have to be proper management. I can honestly say that Jay knows what he is doing and if I were to invest hands off, I would feel comfortable knowing Jay is managing my property. So if you're a person who only cares about low cost to buy and solid monthly cash flow these properties may be idea for you as, from my opinion, Jay is highly capable of managing the properties.

The two biggest things I took from my meeting with Jay are 1) He graduated Drexel University, majoring in accounting, at the top of his class. I also attended Drexel therefore, this is very impressive to me considering Drexel's terms are only 10 weeks long so being on top of your game is required in order to sustain a high GPA. Also, he has his CPA and being an accountant, in my opinion, is very valuable in this business as keeping track/managing costs and what have you is the difference between being profitable or in the negative. 2) He has been doing this for a long time, simply put: he knows how to renovate a property and then manage the property.

Side Note:

For those of you out there who are looking for properties in nicer areas I do know that Jay is planning to expand into these areas of Philadelphia. Areas of interest to me would have to be Manayunk/Roxborough, Mt. Airy, Germantown, Olney, Oak Lane, Logan, Mayfair, Tacony and others. In some of these areas you will need to buy a little higher than you would otherwise like however they provide very solid potential for appreciation while still providing positive cash flow. 

@Jay Walsh 

I do not wish to start a debate however:

First: I am a realtor working throughout the Greater Philadelphia Area. I have lived within 25 minutes of Center City Philadelphia my entire life. I also attended college at Drexel University in Philadelphia (BS in Finance). Based on your profile (Philadelphia native and fellow Drexel Graduate), it seems as though we have similar first hand knowledge of the area. 

Second: I am a realtor I understand the appraising process, using a 0.5 miles rather than 0.3 miles is a safety net. I order the comparable properties based upon distance from subject property using the closest properties first and the farther away properties (if needed) as further "feel good" supporting evidence. 

Third: Is it 2642 Lehigh (St, Ave, Ln, Ct, Blvd, etc...) ? I could only find a 2642 W Lehigh Ave and a 2642 E Lehigh Ave. Base upon the picture on your website and the properties at these two locations it appears the subject property's address is 2642 W Lehigh Ave. 

Forth: Most of your response, I believe, came from a misunderstanding of my analysis. Simply put: Based upon research I have conducted using the Multiple Listing Service, the data does not support your claims. 

Lastly: I would like to speak with the owners of these properties. If you could please send me their names and contact information so that I can follow up with these people it would be greatly appreciated.

If these people are the owners and support your claims (on your website and in this forum), I will be glad to delete my previous post and post again in this forum supporting your turnkey company.  

It is not my intention to speak poorly upon anyone/any company, especially one that I have never worked with. 

My aim with this post is to shed light upon a claim that ABC Investments is making on their website. 

www.abccapitalinvestments.com

TAB- Investing with us SUBTAB- Financing

Case Study) 2642 Lehigh St.

There is actually no such address in Philadelphia.

I did some research on the MLS to try to make sense of the numbers they are claiming to provide. From what I can put together its as if they are taking the cost of a renovated home in Southwest Philadelphia and claiming rental potential for properties located around Temple University's Campus.

I came to this conclusion by giving them the benefit of the doubt that they meant Ave. not St.. There is a 2642 Lehigh Ave., this address is located near Temple University. According to the MLS service the typical renovated home within .5 miles of 2642 Lehigh Ave. cost anywhere from $200,000 to $250,000+ and the typical home within the same area will rent for roughly $1,200 to $1.800 based on factors such as # of bedrooms and # of bathrooms. Since a majority of their properties (advertised on their site) are located in Kingsessing/Southwest Philadelphia I then took the property 2904 S. Felton St. (an advertised renovation project on their website) and did the same search as above. What I found was that the typical renovated property in the area will sell for no higher than $100,000 and the typical property in this area, dependent on # of bedrooms and # of bathrooms, ranges from $300 to $800. So the conclusion I made was that they took the higher rent potential from the Temple University area property and matched it with the cost of a renovated property in the far less renting attractive area of Southwest Philadelphia.

Again I did not intend to speak negatively of ABC Investments however the case study they present on their website is 100% misleading.

Great Norristown Investment Opportunity

Original List Price = $97,500

Current List Price = $92,500

Target Price = $85,000   Live with $90,000

Rental Income (Based on comparables) = Low $1,150  High $1,300

Current Property Tax = $2,891

Rental Referral Fee = 1 months rent $1,150

Landlord insurance = $400  (90,000 / 1000= 90 x 4= $360 round up to $400)

Vacancy Ratio = 10% or $1,380

Maintenance = 10% or $1,380

Management Fees = 10% or $1,380

Landscaping/Snow Removal = 5% or $690

25% down Rate at 3.5% 30 year = $300 monthly payment

All numbers are conservative 

CASH FLOW = $350/month

Replay via post or call me for more information and other investment opportunities.

Thank You,

Geno Angeloni

Keller Williams

215-882-0947

[email protected]

@Jason Bott thank you for your honest straight forward advise. 

@Jason Bott Thank you for your feedback it is greatly appreciated.

Is there a general % to property price I could use to estimate insurance costs?

For Example: On a $100,000 property the insure is typically $600 or 0.6%...

@David T. Thank You

Hey BP,

Feel free to scroll down to the Important Part.

I am a realtor in the Greater Philadelphia area. My goal/aim is to work with investors for two reasons. First, I am a finance guy, recent Drexel University graduate, and would rather work with people who appreciate the value of a property than those who struggle see past cosmetic problems. Second, I plan to invest myself, therefore through working with investors I can stand to gain an invaluable amount of knowledge and information through them and their experiences. 

With that said, I want to be a true investor's agent, I want to truly provide value to an investor and become someone who when I present an investor with an investment opportunity they can feel confident my numbers are accurate. 

For Flippers: I don't just want to say hey here is a beat up property, a comparable "renovated" property can sell for $X can you make it work...by the way, can I get the commission when you buy and then later sell the property? 

For Buy&Hold: I don't want to say hey this property is nice, you can rent it out for $X/month do your due diligence and get back to me...by the way can I get the commission when you buy the property?

IMPORTANT PART

I want to provide value to investors. I have identified a few ways in which I can do so, and would like feedback on how to better their quality from an investors standpoint. Also, suggestions on other ways to be of value to investors is greatly appreciated!

A) Well Organized and Reliable Pro Forma Investment Spreadsheet to accurately identify a properties investment potential.

For Buy and Hold (SFR)

I am a realtor so I understand all of the cost at closing from both the buyer's and seller's perspective so I will skip that part.

 Cash In-Flow:

1) Expected rental income

As a realtor, I have access to the MLS service and can search both active and historical rent based on area to identify a reasonably expect-able rental rate. Focusing on # of beedrooms, # of bathrooms and the over all quality of the home.

Cash Out-Flow:

1) Mortgage Rate/Payment (For those using financing to purchase property)

I have built and understand how to use an amortization schedule/chart.

2) Property Tax

Philadelphia has recently changed their assessment process and I am in the process of understanding they assess properties. More information here > http://www.phila.gov/OPA/Assessments/Pages/Assessm...

Also, by typing in the address or BRT Number into the following website I can determine the property tax as according to the City of Philadelphia > http://www.phila.gov/revenue/realestatetax/

3) Management Fee

My understanding is the typical management company charges roughly 10% of rental income to manage the property.

Way to add value: Build relationships with property management companies throughout the Greater Philadelphia area, making sure to screen the various companies responsiveness, professionalism, tenant screening process, tenant satisfaction (other key aspects to focus on is appreciated)

4) Rental Referral Fee

My understanding is a rental referral agent receives 1 months rent as commission.

Is this true even with a property management company in place?

5) Property Insurance (For Rental Property)

My understanding is that there are three types of coverage's  Dp-1 (lowest), DP-2 and Dp-3 (highest).

Does anyone know a reliable source/% of home value to use to estimate this cost? Also, what type of coverage do investors typically use?

6) Vacancy Ratio

Reading through other forums I have found that many investors use 10% of rental income as gauge for this cost. Is this a reasonable value to use?

7) Maintenance 

Reading through other forums I have found that many investors use 10% of rental income as gauge for this cost. Is this a reasonable value to use? Also, what about the potential for major maintenance costs (roof repair) ? 

8) Water Bill

My experience as a tenant was that one of us, the tenants, had to register with PWD (Philadelphia Water Department) and pay the water bill on top of our rent. Is this a typical practice?

9) Gas

My experience as a tenant was that one of us, the tenants, had to register with PGW (Philadelphia Gas Works) and pay the gas bill on top of our rent. Is this a typical practice?

10) Electric

My experience as a tenant was that one of us, the tenants, had to register with Peco (Philadelphia Electric Company) and pay the electric bill on top of our rent. Is this a typical practice?

11) Landscaping

Typical homes in Philadelphia do not have much, if any, grass. I would assume for those that do one could reasonably expect $40 a month max. Do anyone have more experience here?

12) Snow Removal

This is a season to season variable cost, does anyone know what a reasonable costs for snow removal may be?

13) Business Tax (Not actually included in Cash Out-Flow, factored in later)

How is a real estate investor viewed from a business standpoint. I assume/expect an investor to be taxed under the Net Profit "umbrella" which according to the City of Philadelphia is taxed at 3.924% (Resident) and 3.495% (Non-Resident) see link > http://www.phila.gov/Revenue/businesses/taxes/Page...

Philadelphia Investors is this correct?

WHAT ARE OTHER COST THAT I AM OVER LOOKING??

Cash In-Flow - Cash Out-Flow = Net Operating Income or Debt Coverage Raito

Net Operating Income x (1-Business Tax) = After Tax Income 

Net Operating Income / Property Value = Cap Rate

Net Operating Income / Initial Investment = Derived Cap Rate

Is a Duplex or Triplex not evaluated similarly?

B) Generating a list of Reliable Contractors

Carpenters, Electricians, Plumber, Roofers, Window guy etc..

Reaching out to contractors and evaluating them on factors such as:

1) Professionalism - They are insured and present themselves as a business not just a on the side guy.

2) Referrals - Follow up on referrals to insure work is completed with quality, insuring customer was satisfied with the overall experience of working with them and preferably finding contractors who work with investors and know the timeliness investors demand

3) Pricing - How do they price a job, should I focus on per sq. ft. or is their knowledge that investors are looking for low costs simply enough and competing quotes will determine lowest costs

WHAT ELSE?

C) Attorneys 

PA is a landlord friendly state but in case of tenant problems having attorneys that specialize in evictions would be good, no?

D) Knowing the Markets

I know the markets well and spend most my time studying and examining the various markets..

E) Property Management Firms

I had touched on this earlier: Build relationships with property management companies throughout the Greater Philadelphia area, making sure to screen the various companies responsiveness, professionalism, tenant screening process, tenant satisfaction (other key aspects to focus on is appreciated)

F) Being easily accessible to investors: promptly responding to phone and e-mail

How else can I be of service to an investor?

What are some other traits investors seek in a realtor?

I appreciate all feedback BP!

Thank You,

Geno

check out www.meetup.com make real estate investing your interest then check out the groups on there. DIG is a rather good meetup group there are others as well, all depends on what exactly your interest is in Real Estate (Wholesale, Flipping, Buy&Hold etc..)

Rose,

I am a realtor in the Greater Philadelphia area. One thing I tell people to keep in mind when renovating with the end goal to sell, pick one feature to be your character feature. If you begin to overly "customize" you begin to limit your pool of potential buyers. Non-investor home buyers typically don't understand or see how simply/cheaply they can fix an aspect of a property they do not like and end up not placing an offer on a house that with an extra $1,000 to $5,000 is their dream home. 

Having said that I suggest:

1) Red door - its the perfect curb appeal statement feature that any homeowner understand is a quick fix if they don't like it

2) Shutters - Without the shutters the facade seems to lack depth/looks odd 

Keep them blue, black, grayish (Neutral) 

3) Siding should match the brick

4) The trim is your call (Personally I would paint it the same as the shutters - Gray/Neutral)

Tim,

I understand your intention in posting this article was simply to help identify the "hot" areas of Philadelphia for those out there that may not be familiar with the Philadelphia market.

However:

I must disagree/add to Kevin Gillen's viewpoints as to why these areas are experiencing an increase in rent prices as in my opinion using the term gentrification is too vague. I recently graduated from Drexel University and lived in University City for the majority of the 5 years (5 year Co-Op Program) I attended Drexel University. Drexel is typically misunderstood from a national perspective since the majority of students attending Drexel are in the 5 year Co-Op program as opposed to the typical 4 year program most colleges offer. Therefore, the costs of attending Drexel is greatly underestimated as Forbes and other college ranking services do not take this extra year into account. Taking that into account both Drexel and UPenn are among the most expensive colleges in the nation. Students that attend these schools typically come from wealthy families that can afford to send their children to these schools. Being as these schools are located so closely to one another you have a large amount of students looking for housing all within the same area. According to bigfuture.collegeboard.org the number of undergrad students from out of state that attend UPenn and Drexel are 81% and 51% respectively. So given that there are roughly 9,000 undergrad students attending UPenn and 16,000 undergrads attending Drexel your looking at roughly 15,000 students with no option but to live either in student housing or in the surrounding area. I can go on on but my point is University City is filled with tons of students, with family money, looking for housing options. (Not to mention: for at least 6 months of the year Drexel students are working as interns, making money.)

In terms of the other areas mentioned in the article (Fishtown, Point Breeze and also Norther Liberties). What Kevin does not mention is that these areas have a good bar scene. Therefore, you are seeing a massive influx of recent college grads, that work in the city, moving to these areas for the cheaper rent option but more importantly to a lot of recent grads...a good night life.