All Forum Posts by: Mauricio Botero

I was looking for a 3 story shell property zoned RM1 for my new partner and I to invest in for a BRRRR and found a few in Strawberry Mansion. Then doing some due diligence I ran into the news on the overlay. It's making me hesitant, but I was not planning on doing a roof top deck and if I understand the rules correctly, this only affects new construction for preventing builds of new 3 stories. So I can still get my criteria.

Maybe other's hesitance (similar to mine at first) could be someone's future opportunity? What if this overlay get's voided and thrown out? 

I am educated and intelligent enough to follow everything y'all are saying, but not enough to disagree with any counterpoints or anything fancy like that. But this is great stuff and really appreciate you all putting in the time and effort, especially in disagreements/debate. I'd really be interested in more discussions about the impact of COVID-19 to the many many submarkets in Philly, but that might be for another thread. For ex, the Student housing market around Temple U. 

@Garrett Culpepper if I understand your situation is all about timing and making sure you don't lose this opportunity. Couple of suggestions/questions to think about if they haven't been covered yet:

* Talking to Hard Money Lenders, make sure you understand their seasoning/early pay off time lines. If you do go that route, discuss and plan the refinance now with the lenders that do that. Bonus points if you work with a HML that also has the refinance/long term hold product built in.

* Are you certain this is something you can raise the value of after fixing it up, enough to be around 70% of the ARV? Are your comps solid?

If you haven't worked towards someone who can help you with Private money, that would be my first way to go. Look inside your and your wife's immediate circle and see if you can get a loan for the DP and closing costs and combine that with a HML. More risk, but if you're confident on the ARV then it can be a win/win for everyone.

* Are you going to be selling your primary? 

Basically, if you have the cash right now for holding costs/DP/closing then Hard Money is the way to go. 

Shifting to looking for RM1 zoned properties built as SFH to turn into Duplex or Triplexes. I've spoken with my main contractor about which kind of properties and lots would be ideal. Wondering what our community here believes is an ideal lot size, specifically what I think is the most critical part which is the width of the lot. I haven't built any yet so I have not gone through the process of having drawings done up, but I've been advised stick to lots 15' or wider.

Anyone have any successful full gut rehabs where you turned a SFH into MFH where the lot size was smaller then 15'?

@Jeremy Levine Hey just wanted to add in here, didn't see anyone mention some of the names of the submarkets of Philly without so additional criteria of what you are looking for. I wanted to at least share some of the ones I am looking at since I look for BRRRR properties in 1-4 unit range as well, any maybe it can help you focus on some your searches:

- Take a good look at the Universities in town. Temple U, Drexel, U Penn, La Salle, etc. They have a housing shortage and the off-campus student rental market has been really profitable both for cash flow and appreciation for those who I've met that did it right, and especially at the right time. Who knows what the future holds in this post-COVID-19 world. With your background on some serious construction projects the shells there could make for a good BRRRR.

- Brewerytown. I'm looking at stuff now there for BRRRR Deals. I also really like Cedar Park and Walnut Hill and some spots of Germantown.

- I *kind of* successfully BRRRRed in Kingsessing, W. Germantown, and Wyoming/Olney. SFH though...and probably might not pick those locations again.

Good luck, let me know if you have any other questions. 

Holy Cow this is a ton of good feedback thanks everyone, kinda relieved in a way (sorry :) ) that I am not the only one who has experienced this.  I'm an out of state investor but I definitely see that going in person has value and in this case I should make the trip.

@Mike McCarthy

For the idea of escrowing from the seller the the amount of the water bill, I'll ask the lender but since I am the "seller" and the buyer in this refi, I'm wondering if that's why they didn't even give me the option. Going to PM you would love to get the gory details, let me know what else I am up against here.

@Ryan D.

I did. After my lender telling me the bad news, my very next call was to that closing office. I asked about the title insurance policy and they told me that since this is happening in the future, it probably wont be covered, but like you said I'm going to reengage and at least take a shot and get put in contact with the title insurance people.

@Karl Schnitzer

First Equity Funding. I can give you my POC there just let me know.

@Ethan Giller

Thanks Ethan I don't think I can in my situation put those funds in escrow. I COULD just have title pay off the existing crazy water bill then keep working to have Philly Water reimburse me, but I also have heard horror stories of getting the city to pay you back on something like that being difficult to near impossible to pull off once you've actually paid them. Definitely going to take a second look at that HUD and what the title company showed in their records from the city.

So I'm about to refinance on a house in Philadelphia that has been rented out for the last two months, and that I've owned for almost a year. At closing when I purchased it, the city did a water reading and it was just 30-40 bucks, no big deal. 

Fast forward to this past month when the title company started doing their thing for the cashout refinance, and I see that I am going to owe a few hundred dollars at closing! Coincidentally at the beginning of the month, I receive a water bill for over $3,000! Looks like the city realized that something was wrong with the meter for the last 6 years and they are charging me for what would have been the estimated usage. 

Needless to say I am beyond frustrated as I had closing scheduled for a Friday, was finally shown the HUD the day before, and immediately postponed the closing.

Property management called the water company and I followed up to put it under dispute. Their turnaround on this review is "up to 30 days". Ouch. 

Any recommendations on how to prevent this in the future? 

Has this happened to anyone with the Philadelphia City Water? 

Bump, @Sam Valme any updates to this spreadsheet? I'm always looking for someone else's work to plagiarize and consume for my business :)

Take this with a grain of salt, but my guesstimate with the lit bit of info you're giving, and thinking about what contractors would do for me: 50k-70k range. 

I studied, prepared, studied some more, and did trial by fire with getting into my first BRRRR project. Learned what to do and especially what not to do by making tons of mistakes.

BUT..other then the typical advice you might get with this question, one thing you could do and consider before someone beats me to the punch is consider partnering with someone who already is doing it. I have now had 3 new partnerships form where people who wanted to invest but didn't know how, they get a front row seat now. I can definitely think of a few BP podcast guests who have done the same.