All Forum Posts by: Greg Hagenbuch

Thanks, Ryan! My property value is somewhere in the low/mid 200Ks. The purchase appraisal was $215K back in 2021; online estimates have it valued in the $240-270K range today (I know they can be inacurate). My current insurance is covering $225K for personal property plus 60K for "other structures" -- not sure exactly what that means. But yeah, I'd likely be paying closer to $200 a month for insurance. 

I definitely want to calculate costs conservatively given it would be my first time as a landlord. I would want to set aside plenty for rainy day maintenance /capital expenditures. Given all this, I think a more realistic expectation for me in the first couple of years may be net around 0, or just slightly negative cash flow. With rental appreciation, and the equity/home value appreciation I would gain over time, I still think it could be a good long-term investment. As long as the net cash flow would almost definitely be no more than -$100 per month for the first couple of years, I could afford it (with the expectation the cash flow reverses to positive with rental appreciation).

Hey, thanks for the responses! Yes, besides the potential for cashflow (or near net 0 if my numbers were not conservative enough) while paying down the mortgage, I think Manayunk has really great appreciation potential. All speculation, but it's hard for me to see it not appreciate at least 5% average per year.

I have not reached out to property managers yet - but yes I'd definitely do so in my next step. The rental estimate from dealcheck does align well with what I notice comperable properties going for in my neighborhood -- but yes, I'd definitely need to confirm.

Here's a breakdown of the estimates for operating expenses:

Property Taxes:$ 205

Insurance:$ 90

Property Management:$ 158 (looks like they estimate about 9% of rent - is that about right in Philadelphia)?

Maintenance:$ 176

Capital Expenditures:$ 88

The only thing that seems low is the insurance -- that is nearly half the cost of my insurance covering me while I reside here - though I do have comprehensive insurance. I am not sure if dealcheck takes into account rental insurance costs based upon specs/location. I'd have to look into that more (how?).

In regards to the upgrades I'd need to put in, yes, I think about $35K, and I am thinking (hoping) that is a high/conservative number, especially since the bathroom and kitchen renovation will be pretty basic and renter-friendly. But investing this money to make my house renter-ready is one of my bigger concerns. It is kinda scary to think I could put in this money and have a terrible tenant shred up new appliances, etc.  But I can afford this out-of-pocket and I'd still have a decent rainy day fund left. Would property managers be willing to look through my property and help me come up with a checklist of things that need to be updated before it rents out?

And lastly, no I won't need $ for a down payment, trip, etc. anytime soon. I am almost certainly moving in with family within these next couple of years, and will just pay a low rent price to them. This is another factor which makes this set up appealing.

Hey BP! I made a post about considering turning my first home in Philadelphia into a rental property about an hour ago, but it does not show up in the forum! Perhaps I need to start here first? Hello!

Hey all,

I bought my rowhome here in Philadelphia back in the real estate craze of 2021. I intended to live here for at least five years, but some life circumstances have changed, and I am likely moving in a year or two.

Upon purchase, my place was a fixer upper that needed a lot of (and still needs some) cosmetic updates. However, it did come with some pretty decent bones. Upon purchase, the foundation, roof, and plumbing are were all in good condition/recently updated, plus the basement is finished - all of which are a rarity in my neighborhood where most properties are over 100 years old. Comparable properties with ideal cosmetic updates were going for $60 - 90K more than my purchase price. Prices seem to have pretty much stabilized in my neighborhood.

I have already put about 30K into this place to install an HVAC system, restore the hardwood floors (formerly covered by old carpet), and install new windows. I’ve also done a few DIY cosmetic projects which cost me a few hundred bucks. The biggest updates the places needs from here are a kitchen and bathroom rehab, both of which are small, so I estimate it’d cost about $35K.

If I sell in a year or two, I think I’d almost definitely had been better off renting. However, I have been real estate investment-curious for awhile now, and I wonder if I can turn this situation around to make it work for me.

Here’s the monthly math I am looking at – am I missing anything (I used dealcheck.io to help guide me):

Avg rental of my specs (3 br, 1 ba, ~1K sq ft): $1,760/mo

Vacancy(10%): $176/mo

Operating expense estimate (taxes, insurance, maintenance, property management, etc) : $717/mo

Loan: $714/mo (I purchased at 2.875 interest rate)

Cash flow estimate: $153/mo

My neighborhood has a high demand from renters - Manayunk (19127 zip) for those who are familiar. Relative to the rest of the city, it is very safe, plus walkable to amenities, nightlife, and transit. From another post here on BP, the neighborhood is rated an “A:” “A: Only new construction and rehabs, with very very few shells and opportunity left, young trendy bars and coffee shops on every other corner.” I have read on here and elsewhere from landlords who experience consistent 0% vacancy – but I still budgeted for 10% to be conservative. It is filled with college kids, and young professionals / families, so the tenant base is pretty nice. 

I’d especially love to hear from anyone with investment experience, and especially those familiar with the Philadelphia market. Do you think this is a good opportunity? Are there details I’ve overlooked in my considerations? I feel like this could be a great entry point for me to get into real estate investment, but I would love other opinions.