All Forum Posts by: Account Closed

Hi BP Community:

It seems to be a trend in Philly: Good looking property, decent numbers, weird zoning/ land use. 

I recently viewed a duplex in south Philly for a house hack, but am still waiting on the seller to produce a variance for the property since public records show it as a "1 unit" RSA5 SFR with O50 land use. I am doubtful that the seller has been approved for the variance for a 2-unit, and am wondering if I should move forward to submit an offer without it.

The mortgage company should be able to finance the loan, but my question and where all the risk lies is on the exit. 

Is it too risky to purchase a duplex that potentially needs a variance without the confidence that it will be actually be approved? I am not familiar with the zoning boards, but have heard they can be very political despite an investors best intentions for the property and neighborhood.

Illegal duplexes exist all over the city, and I’ve heard that continuing to use it as such is less of a risk due to the lack of enforcement by the city. Rental licenses appear to be more of a “money grab” than anything else. 

Jesse

As a final update, the sellers refused to offer more than a $1500 credit for the work. They had their own electrician scope out the work, and he felt that the K&T was fine and did not need to be replaced. Because we did not feel comfortable with his assessment, and they couldn't produce any report of their findings, we held firm and countered at $28k for a full remediation. This prompted the sellers to terminate the deal.

I hope this was the right decision, but am still not sure due to the intricacies of K&T wiring. But if the majority of insurance companies no longer cover this type of wiring, it must be for a good reason. I would prefer to feel safe sleeping in my own house, and confident that when I move out my tenants are safe as well. 

As another update, we received a $30,000 estimate for full remediation. We asked the sellers to credit us this amount so that we could do the work. They had their own electrician give them an estimate and countered at $1500, stating that their electrician claims the K&T is fine as is and does not need to be updated. They would rather continue to rent and put back on the market. 

So, is it absolutely necessary to update K&T? I guess not because there are policies out there that will cover it. But what is our risk as a landlord should there be a fire? At this point, is it better to negotiate the price of the property and some other smaller items that came up in the inspection? 

Thanks for the recommendations. As an update, I have All Star Electrical Services giving me an estimate for full remediation today. They charge $75, but will deduct $100 for any work done over $800 so it works out if you use them.

Interesting point about Allstate @Mike McCarthy, because I wonder how the current owner has the house insured. But what if there is a fire that destroys the entire house, and they diagnose it back to the K&T? Would you still be paid the insurance money to rebuild?

Also, any experience or tips for a good way to negotiate with the seller for the cost to remediate K&T? 

Hi BP Community,

I got my inspection report back for a duplex in Manayunk. Both sides have knob and tube electricals. 

Can anyone refer a good electrician that has experience with knob and tube, and would be able to provide a (hopefully free) estimate for the work? I’ve been told by numerous insurance companies that we won’t be covered without repair. Thank you!

Jesse

Thank you everyone for the helpful information! 

As an update, I received a copy of the rental license from the seller which in addition to historical zoning approval, confirms that the zoning is correct for its intended use as a duplex. Now after the inspection on Monday, we will be able to move forward with the Rental Suitability License if there aren't too many issues that come out of it. We will probably wait until 5/1, when we are set to have the tenants in place sign our lease to apply since it's only valid for 60 days. Also, it looks like the fee has been waived for this license according to the L&I website: https://secure.phila.gov/CRS-Onlinev2/

Thanks for the warm welcome and recommendation, @Joseph Scorese. I plan on attending the Greater Philadelphia Real Estate Investors Alliance meet up next Thursday that you're hosting. Looking forward to it!

Hi BP Community:

While researching to get started with my first investment property, I came across this very useful guide for landlords in Philly written by Justin Turner, CFO at and Co-Founder of Brownstone Real Estate Partners. 

Use the following link for the guide: <http://brownstonere.com/blog/landlord_guide>>.

I'm closing on my first duplex in Philly at the end of April, and am wondering when I should apply for the rental license. The property is zoned RSA-3 single family with a variance for use as a duplex. The seller never bothered to get a CAL (Commercial Activity License) or rental license, but has applied for one to verify the property is correctly zoned. 

I recently applied and was approved for a CAL for this property, but no results populated for the address when applying for the rental license. I'm wondering if this is because of the variance on the property, or because we haven't closed on the house yet. 

Hoping for any insight into this situation if you are familiar with it. Thanks!

Thanks for the info, Yuriy. You make a good point to run the numbers in both scenarios, incase the variance is denied. This property is set up like a duplex, and would need to be thoroughly renovated to work as a SFR. Something to also consider.