All Forum Posts by: Lucas Pfaff

It's nice to see so many Philly investors helping each other out on the same post. I'm not trying to hijack the conversation (@Chris Rosenberg - really I'm not) but this seems like the best place to get a response to a question I've had trouble answering.

Does anyone use or recommend both a Philly based lawyer and accountant who are investors themselves? I've had trouble finding any that are RE investors themselves and I would prefer to only work with people who truly understand the needs of an investor.

If you have someone in mind, please shoot me a PM. Thanks

I agree wholeheartedly with @Rick C. and @Troy Sheets

I live in the heart of Fishtown in a SFH with several tenants. If I hadn't planned on living in this area it would have been much more difficult to find a location with a cap >6-7%.

I saw 150+ properties in the neighborhood prior to purchasing in 2011. Since then the neighborhood has only attracted more investment and deals are harder to come by. The last offer I put in was full price cash with 4 weeks to close (48 hours after listing). The property got more than 10 bids (it was off the MLS) before a contract was put in place for more than what I would have considered ARV.

Further north in Port Richmond you should be able to find higher caps.

Good luck!

Also being from Philly, I agree with @Troy Sheets in regard to where you can and can't get particular properties in our area. I do believe they are available but the time and effort necessary to find them is not something I would advise for someone just starting out. And based on your assertion that there are not other duplex's in the area you have a similar issue (unless you look somewhere else).

At this point I don't see any glaring issues to stop you from purchasing the property above. YES, there are better deals out there. But if this is your first property then the purchase will help to educate you for the next (which I'll imagine is 100% investment and you wouldn't live there).

Additionally, and this is BIG for me. What are you paying in rent now? How much will your monthly rent payment go down if you live in one of these 2 new units? Although not strictly considered cash flow, if you are able to decrease your expenses now it will effectively do the same thing as increasing income (cashflow). Obviously, this only lasts while you live in the unit. BUT, if you are having trouble with a down payment now this is something to think about as it can be an effective strategy for creating savings for property #2.

Good luck and let us know what you decide!

Hello everyone,

I'm looking for property insurance for a MF building in Philadelphia. My original policy was issued by Allstate and following some less than stellar service I'm looking for a change, immediately.

Currently 3 units with a vacant warehouse that will be built out into 5-6 additional units in the next 12-18 months.

Having said that, I'm not certain what the best course of action is. I've placed initial calls to 4 independent agencies (Graham Co, USI, Lockton, & HUB) as I'm guessing I will end up with the most competitive rate and knowledgeable agents.

Does anyone have experience with this sort of situation? I'm looking for guidance as to whether my logic is sound and other details I might be missing. Would it make more sense to go to a smaller local insurer? Maybe I'm over complicating this (it wouldn't be the first time). I'm also open to referrals if anyone has a great experience/policy.

Thanks.

Aaron Osgood, I would encourage you to speak with 3rd Federal, but you can also try reaching out to Customers Bank (http://customersbank.com/index.php).

I haven't actually used their services but recently I purchased a multi-unit commercial building (estate sale) that the seller had financed through Customers. I was negotiating with the bank to assume the loan or refi the existing into my name. It didn't work out since the property had been put on a delinquency list (which limits the bank's options), but they came off as being VERY receptive to non-standard financing at great rates.

Customers aside, there are a couple avenues I would personally explore in your situation.

First off, let's assume you have good credit (750 or better - I know this can be a wild assumption), get financing at 4.5% amortized over 30 years, and the bank uses next year's tax rates (taxes in Philly are inconsequential right now but AVI will come into effect next year and taxes will be jumping up - we'll use 1%). You're looking at just under $1,500/mnth debt service.

Now into you're specific scenario... with a net income of $3,450/mnth you're DTI (Debt to Income) ratio is favorable for a partially occupied $250,000 multi-family purchase. Even with only 10% down. The bank will likely want you to show a DTI of no more than 40% for a 90/10 loan. On a single family you won't get there, but with even a partially rented triplex, you could. In my experience, the bank will generally allow you to claim 50% of gross rental income (this is conservative as often they allow for more). If even one unit is rented for $300/mnth, then you're DTI will be okay.

I would imagine you can find this financing and work this scenario.

Another option or variable that you could work in would involve SA (Seller's Assist). Maximize it! Granted it may make your offer look slightly weaker (this is debatable) and decrease your buying power on a 1:1 scale, but you're interested in putting as little money down as possible and this is a great avenue to do so. You may be limited to 3% SA with only 10% down but it will still help.

I feel like I may have left something out...if I think of it I'll add another comment, but maybe someone else can pick up my slack.

Good luck!

P.S. Keep us updated on how the financing search goes. The rest of us in Philly could use the information :)

Welcome to the forum Larry! I also do business in Philadelphia as an investor and agent. Maybe we can connect down the road.