All Forum Posts by: Robert Palladino

What is the address?

@Clay Tolbert, there are a couple of things to be aware of. Philadelphia recently introduced a new rule with regards to EZ permits. EZ permits, which allow a contractor to pull a building permit for one and two family dwellings without the need for drawings are no longer permitted for non-owner occupied buildings. Essentially, if this is not your personal home, you are now required to submit architectural drawings with your permit application. For non-structural work, this would not cost a terrible price, but something to be aware of. 

Regarding digging out cellars. It seems like you're just referring to adding an egress well, but if you intend to actually dig the cellar floor out to create higher ceilings, PLEASE READ.  Please never let a contractor dig out a cellar without proper monitoring. This practice has led to hundreds, if not thousands of catastrophic structural failures throughout the city. Many contractors dig below the existing foundations causing the party walls to slip out. For every great contractor out there, there is another who doesn't get this basic concept. This could cost you an immense amount of money to correct. sometimes complete demolition of both properties is required. Imagine if you had to rebuild your neighbor's house as well as your own. There are safe ways to do this, so tread lightly. I'd be glad to answer any questions about this. 

-Rob-

@Mayer M., In what areas of the city are you particularly interested?

@Harsh Thakker, thanks for your insight. can you give me an idea of a site that you looked at, in which the number didn't work out? I think that would help me get a feel for the market. Thanks in advance.

-Rob-

@Greg Dickerson, thanks a lot for the valuable advice. From the nature of my day job, I’ve become very familiar with the different zoning requirements, and have seen first hand the misfortune of someone purchasing a property without doing a thorough zoning review, only to find out after the fact that they can’t build what they thought. I suppose that you’re right, and a zoning contingency couldn’t hurt. 
I’ll have to look more into opportunity zones. That’s a great idea. 

Has anyone had experience flipping vacant lots in Philadelphia?

I am experimenting with the idea of purchasing a vacant lot in Philadelphia, and obtaining the zoning & building permits for new construction so that the lot is shovel ready, then advertising the property to developers. I think that it would appeal to developers who want to limit their holding costs/time. 

I am an Architect, so I can avoid most of the associated soft costs (+/-$10k). I have my eye out for lots zoned for multi-family, or single family that have the potential to be subdivided.  

Any thoughts or experience would be greatly appreciated

@Ronan Donnelly & @Whitney Hutten, Thank you both very much for the very insightful replies. I think that the addition to my property is definitely something that I'm going to do, but was thinking of keeping it in my back pocket for a later investment, while BRRRRing a few other properties first as Whitney has suggested. I'm thinking that waiting on the addition may be a good idea to see how the new project across the road affects rents in the area. It may not turn out to be a bad thing in the next 10 years, as they are predicting a lot of development along the river in this area.

Regarding the amenities of the new construction, they are basically building a whole new catchment, with retail, residential, etc. Below a link to an article describing the project. 

https://whyy.org/articles/a-th...

Whitney, I've been quickly moving backwards through the bigger pockets podcasts, and as chance would have it, I just listened to your episode earlier this week. Very cool!!

Again, thank you both very much!

I have a client who regularly purchases properties from Auctions. As such many come with squatters. He simply offers them money to move out. He will typically offer $2,000, and pay them the minute their stuff is out. He says that it almost always works.

Hello All,
My name is Rob Palladino. I am an architect in Philadelphia, who’s client base is made up largely of real estate investors. It goes without saying that when you see that type of success on a daily basis, it gives you a drive to throw your hat into the ring. I am currently working on my first real jump into real estate investing. A little about my situation; I bought a fixer-upper, single family home in Philadelphia back in 2012 (when prices were low), and rented two of the bedrooms out to friends, using the rental income to slowly pay for the rehab. In 2018, my girlfriend and I had a baby, and decided to no longer rent those two bedrooms.

I took a local investor friend out for drinks to pick his brain as to what I should do next, and he suggested building an addition over the garage of my existing home to create a 1-bedroom apartment, with a parking space. (parking is very valuable in Philly). He has a similar sized apartment in my neighborhood, with a garage parking space that is renting for $1,600, and says they had no problem renting it. On his advice, I’ve since been going through the zoning variance process to get approval for a duplex. My final hearing is on January 29th, and I’m fairly confident that I will get approval. Once I get approval, I have a 3 year window to apply for building permits.

I estimate that I can get this project built for under $100k.

I plan to fund this construction with either my existing HELOC, or do a cash-out refinance, in which I could pull out as much as $175k.

The benefits of constructing on my own property are:

• Doing so will allow me to apply for a 10 year tax abatement, which means that not only will my current property taxes not go up for that time, but I will essentially own a rental which is property tax free for 10 years.
• Everything will be new, so my maintenance & cap ex fees will be reduced.
• Property insurance will be much cheaper. (spoke to insurance agent to make comparisons, and the added cost to my current insurance was on average $800 cheaper per year than insuring a single family alone).

Here is my question:

I have access to $175k in cash, so does it make more sense to:

- Build this addition as mentioned above, and hopefully have money left over to put down on a second rental.

-or-

- Spread the $175k out to use as down payments/renovation for multiple properties

-or-

- Use that $175k to BRRRR my first property.

Big Side Note:

As an added caveat, In the past few months it has been made public the very large parcel of land on the river, right next to my property has plans to construct 1,100 units, made up of 136 fee simple single family homes, and almost 1,000 rentals.

Should this scare from a rental standpoint in this neighborhood. For instance, should I assume this may drive rental prices way down?

If you made it this far, thanks for sticking with me.

What areas of Philly are you considering?