All Forum Posts by: Ross Yeager

Hi @Chris Harper. What type of records are you referring to? Most information on properties within the city proper is easily accessible:

• Property search: https://property-beta.phila.go...
• Taxes: https://www.phila.gov/revenue/...

@Jason Appel, I have several properties, both SFH and Duplex/Triplex in Philly.

In Philadelphia, water is lienable if the account goes delinquent, which is why most landlords do not make it the tenants responsibility and instead either cover water utilities or do some sort of bill back. I've done it several different ways. For my SFH's, I simply just bill the tenant the entire water bill. For my multi-family properties, I charge a fixed amount ($30/mo/unit) to them each month. To give you real numbers, the average cost per unit per month for my portfolio has been ~$34 over the past 12 months.

For other utilities, I have the tenant sign up and manage those accounts on their own. This is very typical for the area. The one exception is garbage for multifamily properties. The city mandates this be paid by the owner and is $300 annually. This I typically don't bill back to remain competitive.

Happy to share more numbers from my portfolio if you'd like! Best of luck.

Hi @Brian Raike, I am also about to start a very similar process on a triplex in Philadelphia. However, my strategy is to work on moving out the tenants as quickly as possible even though I would also inherit tenants that are paying rents on time (although considerably below market). Ideally I move them all out before construction (while getting permits so I'm not wasting time).

My reasoning behind this:

1. In this Covid world, there are many laws in place that protect the tenants and prevent any sort of evictions or displacement. Working on a property with people inside is bound to cause some tension and annoyance. Do you really want to risk ticking off a tenant so that they cause trouble when you actually try to get them out?
2. Legislation in general has been very tenant friendly. As we continue in the pandemic, you risk legislation changing that is outside of your control 
3. With rules and regulations, it already will take time to give proper notice and move the tenants out, even if you start from day 1. If you wait until later in the construction to start the move out process, you may end up stalled anyway, just at a later point when more money is tied up in the deal (and if you're using a bridge loan that can be a significant difference in holding costs if your interest is based on total drawn amount).
4. If you get the tenants out early, you can likely move faster on the construction which may very well be comparable to doing things one unit at a time. 
5. Getting the job done faster results in doing your next BRRRR sooner, which likely would outweigh the holding costs you'd give up to get it done sooner

Basically, I think reducing risk is the most important factor for me in this situation compared to saving a bit in holding costs over the duration of the rehab. I will say that I am using bridge financing for my project, which places a premium on getting the job done as quickly as possible. 

If you live in a landlord friendly area and own the property outright, I could see taking a strategy more like you outlined above and making it work as long as you don't end up adding too much time to the project.

@Account Closed I think you're going to have to make some compromises here. There are definitely airbnb property management companies in Philly. I know several people who do this strategy in a purely hands off way. 

If you don't want to do airbnb, remodeling the property into separate units sounds like the best option to me (you'll also be able to charge a little more in rents as well) if you want to keep it. Otherwise, sell it in this hot market and use your learnings to make a decision that works better for you on the next one.

@Andre Clarke I’ve been investing in Philly for the past few years and love the area. Great combo of cash flow and appreciation. I’ve got several lender connections as well as a team there that I’ve built to purchase 15 units in the last 2 years. Happy to help you out in your journey. Shoot me a connection and let’s see how we can get you going!

@Harry Brodsky I am an investor living in California and I have had several PA LLCs that I own. I have a registered agent in Philadelphia, pay my business licenses and taxes there, and that's really the only requirement.

@Edwin Giraldo that's awesome work. I'm also an engineer (my company is Engineered Cash Flow) and have built up a decent sized portfolio doing what you're doing over the past 2 years. Would love to connect and talk about your next deals sometime. I love the Philly area and have an established team there at this point. I'd recommend you establish your own team next. Networking here on BP is a good first step! 

@Jay Ogilvie I purchase my first rental in Philly in cash 2 years ago and did that one all with my own financing to minimize risk while I learned. 

After that, I had "experience" (believe it or not having one under your belt makes a difference for lenders) and that opened a lot of doors for lending (along with good credit score). I've done every deal since then using private financing. I use a private lender in the area sometimes and other times use some of the bigger financial institutions (your Corevests, FOAs, and Visios). I have a few calculators that help analyze financing from different private lenders. If that would be useful for you dm me.

@Jovan Ellis congrats on your first flip! I love South Philly, it's a great area. I've been investing in Philly as a remote investor for the past 2 years by accruing buy and holds (if I close on the next two I have under contract I'll be at 15 units). If you ever have any questions about rentals in Phillly I'd be happy to answer them! 

I'm an investor in Philadelphia, and after having done 2 recent full guts in the area I will attest to that being a lot of effort and risk. It is very competitive in Philly right now, and the remaining properties tend to be extremely old and bring with them a high risk of foundational issues which can put you in the hole pretty quickly.

If you're going to take on the risk of a full rehab, make sure it's worth your time and risk. In this case, I would say it is definitely not good for a buy and hold. 

Others have touched on the flip side of this above (I agree not a great flip either), but here are the numbers from my Philly market analyzer using a hard money/private money lender and then refinancing out for 75% afterwards with 6 months of construction (which is probably not long enough for that job given how slow Philly License and Inspection department is taking with Covid). 

Note I used the low end on the ARV and high end on the rehab, which is what I would always recommend when starting to analyze a deal (aim to be on the conservative side).

As you can see, you'd bring about 11k to the table initially and then at the refinance would likely have to bring another 3-5k to the table and would not be cash flowing at all (basically 0% cash on cash return). I would never do this deal for a buy and hold. 

For reference, I only even start to look at deals when I'm making $350+/month and have at least a 20%+