All Forum Posts by: Sheryl Sitman

Hey @Gabe Fermin ! Philly investor and manager of the Philadelphia Landlords Connect group here. I am trying to understand what you envision doing with a $50k budget and why you say it does not include construction -- so you want to buys something super distressed and do a big rehab for $80k? You have access to a construction loan at a good rate? Trying to understand the play.

Lately, a crazy number of people have approached me asking what they can do with $50k.  Who is out there pushing the idea that you can safely buy residential property at this budget today? Or use it for a downpayment at today's interest rates and be cash positive? Please tell them to stop :-)

There are safe things you can do with $50k in RE and make nice returns. I am not sure your idea is a safe one or even possible.

Quote from @Greg Kasmer:

@Sheryl Sitman - Great video! Looks like you were on the initial phase of an emerging market/section of the city. I invest in the suburbs and I'm very intrigued by your information. I'd like to learn more about your investing. Would you be willing to talk?

 Sure. Choosing where to buy is obviously an important part of investing. I think when you can master matching where you buy to your resources, strategy and goals you really can improve your performance. Real Estate has a very low barrier to entry and that's why so many get into it, but no doubt those who can leverage data, intuition and knowledge to make good decisions have the advantage.  Give me a call :-)

Quote from @Scott Mac:

This neighborhood is at a point that (IT) could use a vision.

Here is my quick though on a Vision for the neighborhood.

Rename the neighborhood Crystal Cove with name signage at it's boundaries on major roads.

Form  neighborhood "Push Committee" to get the city to spend rehab/improvement money in the neighborhood, vs just in front of the Mayors house. Attend the city meetings and get them to do the following:

Have the city bury all of the overhead wiring (to do it's part to revitalize the area).

Have the city jack hammer all of the quilt work patches and end of service life concrete walks and replace them with new to code modern concrete walks, as well as driveway aprons (to do it's part to revitalize the area).

Have the city put in modern curb and gutter, and resurface all of the roads in the neighborhood in new dark black asphalt with nice new white painted lines. (to do it's part to revitalize the area).

Ask for 15 year tax abutments for all boarded up buildings brought back to life.

Do not let them plant trees in the verge areas, as they obscure the views of the buildings and the area is already very crowded.

Good Luck!

.

 Creative ideas. Wish it worked that way in the NE of the country. I am sure the city will get right on it if we suggest :-)

Quote from @Eric Greenberg:

Great idea showing folks what the area’s actually look like. Is this Kensington? 

 Yup!  Good eye

@Amir Khan  tnx!!

@Rajiv Bm adding my experienced words of caution. I am not familiar on a personal level with the markets mentioned here and you did not provide detail about what you are seeking. But you do want to avoid what many new investors fall into which is to look for opportunities that provide good cashflow on paper. The reality of high ROI can sometimes hit you in the face really hard. If you are out of state NAD not experienced, distressed properties with less than ideal tenant pool can end up costing you money and not making you money. That is not to say that the approach is bad -- when you do understand the market, the risks and have a good trustworthy team, these types of investments can be great. I have a strategy of a mix of types of investments in multiple states and would suggest not to build all your hopes on one property, one market . . . The first one may only be a learning experience. Would be good to identify a trustworthy team and not prioritize choosing the locale -- you can do well in thousands of markets in the US when working with good people and getting the right info.

It is great to have a plan!! Check if your numbers will work with BRRRR given today's interest rates. You may have to wait it out a while for that third R to work. Some gurus will tell you it can still work if you find properties way under market value. That requires A LOT of work and luck and in my opinion if you are not totally dedicated and knowledgeable, can really drain your time with no results.

@Jacob Ocampo something I learned after years of RE investing is to try to always have a pivot plan. I am sorry you had a "failure" with the STR but then I wonder why it could not somehow have been salvaged through a pivot. I see that many people (probably most) go into STR without really understanding the business and the multitude of risks or how it differs from more traditional RE investing. They get blinded by the numbers - earn a month's rent in 3 days. . . Except that it's not exactly that simple ot consistent. S. Jersey surely has some opportunities as do other markets within driving distance. It all depends on what your resources are, your risk tolerance, your patience . . . The market continuously evolves - -what I would have suggested just a few years ago is totally irrelevant today. So make sure you are learning from updated resources and books, podcasts, courses, gurus whomever - that understand today's situation and can guide you to matching your personal situation to the opportunities that exist now.

I totally relate to so many of your comments  - been through all of the confusion, fears and analysis paralysis. 15 years after acquiring my first property, I am still learning. It is never ending - for every investor. I went full time into investing at the end of 2016 without knowing a fraction of what I know today. I thought that some may find this little insight helpful. 

This video was filmed in June 2023 when I was at one of my Philly properties to inspect after a deep clean. The vibe on the block was one of excitement. Neighbors were gathered to watch the cement truck pour two foundations for new construction of two single family homes. It was exciting to see what we expected to happen back when we bought the property, actually happen. Admittedly, we thought it was going to happen sooner when we purchased  but we did not account for a pandemic so there is that!

Buying distressed properties is not the only way to invest. And if you do, you need to understand what you are doing and what the real potential is. You need to have the ability to know if you are truly buying UNDER the market value and not fall into the trap of underestimating how much work needs to be done to the property, for example.

If you walk around the neighborhood where this video is made, you would have to look hard to see the signs of change, many of which are not visible. By the time you SEE the change, it might be too late. By the time there is a Whole Foods or Starbucks – those distressed properties that you may see and think you could grab on the cheap are going to be priced accordingly. The market is very smart these days. So you need to have the ability to make smart decisions based on a lot of data, facts and trends.   Enjoy. Feel free to reach out.   

Quote from @Carlos Ptriawan:

Quote from @Sheryl Sitman:

When i started investing 14 years ago while living overseas, here is what I imagined in my head. A PM will collect rent, have periodic friendly interactions with my tenants, handle maintenance issues the same way they would on their own home and manage getting the unit ready between tenants . . . end of story. I had no idea of the challenges and issues that could arise, of regulations and ordinances I would need to abide by, of paperwork . . . And I was so naive I was unaware of the high rate of non payment and major issues that can arise with a tenant.

Fast forward to today. I actually still work with the same PMs I started with 14 years ago -- in A neighborhoods in other states. It was my entrance into the Philadelphia market that was a rude awakening. The first two PMs that I hired in Philly did not just not meet my expectations. They caused me a lot of damage. 

So what did I learn from the experience and what do I suggest looking for when choosing a PM? 

Review the agreement in detail. If it does not explicitly include something, you can be sure, it is not included. For example, do you want periodic inspections of your asset with pictures? It needs to be in the agreement. Do you want owner draws by a certain date? It needs to be in there. 

Make sure that they define the policy regarding vacant property - will you be charged for months when your property is vacant?

Ask about how they handle correspondence. Do they guarantee response to emails within a certain time? Are they available for phone calls? 

Clarify in detail how maintenance is handled - from the system by which tenants are able to report an issue to how they choose if and who to dispatch and at what point if any, do they involve you in maintenance issues. I prefer a management company that will inform me immediately and allow me to be involved - to bring my own vendor, to ask for multiple estimates, to receive pictures . . . If they seem to be resistant to your involvement, keep in mind that you should be able to maintain records of everything going on in your property. Having repairs made without knowing the details or cost, is not a good idea. 

Many tenants pay late and eviction is something that most owners will need to eventually deal with. Clarify late fee policies, how late payments and evictions are managed. Some PMs are persistent and correspond with tenants. Others will do the minimum and may wait to start the process until you ask them . . .
Basically, a good management company has a defined process for most of the potential circumstances that arise. An example: I received a violation by mail for a property for trash and debris. I worried that I will end up needing to pay if it was not made abundantly clear to the tenant that they needed to handle it quickly. The PM then shared their process with me for managing what is a common occurrence in Philly. meaning that I did not need to ask, worry, check...
My conclusion is that big cities present big challenges for all landlords and management companies. It is a tough business and at the price point demanded by the market, PMs can struggle to provide the perfect service. Economies of scale, trained staff, well defined processes and responsiveness is the minimum that a PM must have in order to provide a good enough level of service.

 I would add one more:
- I prefer a pMC that has pop-and-mom vibes, very practical and very fast moving, there're just large Pmc outthere that only care with endless software upgrade while overcharging us for repair due to their heavy tech uses. This PMC should not be too difficult business that even without an excel sheet, processs can still moving on.

I would rather work with pmC that pay their staff higher salary , than investing too much into tech or business acquisition while not producing more advantageous result to the investor.

I work with both types.  Mom and Pop shop can work well in some markets. Less in others.  I tend to agree that super big tech oriented companies are not there yet and maybe never will be in this very people oriented business.  Tech can enhance  service. It can mot replace the people. That is not true in every industry but for now, houses, apartments and tenants need human being to manage them :-)