All Forum Posts by: Zachary Paul

Congrats - from the photos the rehab turned out great; the stairway really pops and looks A+

As an agent the "quick tip" I always let new or new to Philly Investors know about is our Transfer Tax. In the state of PA, whenever property is bought/sold there is a transfer tax. In most counties of PA the tax is 2% of the purchase price and is typically split 1%/1% paid by Buyer and Seller. 

In Philadelphia County however, the Transfer Tax is a total of 4.278% (2.139% paid by each side of transaction). It's always important to plan accordingly when factoring in closing costs estimates. 

Just a tip that most people don't think about until it's too late. Let me know if I can be of anymore assistance/knowledge. Best of luck! 

As a full time Agent and Investor I will say that there are many benefits of having your real estate license, however, being able to be an active agent is just not as simple as taking the license courses and passing the test - there are a lot of fees and costs to consider and if you are only going to buy 1-2 homes a year, it may just not be worth the time and financial costs.

Costs for being an active PA Real Estate Agent include:

1. MLS Fees

2. E&O Insurance (Errors and Omissions)

3. Real Estate Association Dues 

4. Continuing Education Classes and State Licensing Fees 

5. Broker's Cut (varies on brokerage but starting out your split is not going to be amazing ~30-50%)

Also commission are taxable income so also expect some of that as well. Not to deter you from getting your license, however, as stated above, if you are not selling 5+ homes a year, you are usually losing out financially. Also, if you are not familiar with the Agreement of Sale and other pertinent documents, you will have an initial learning curve - the license test does not teach how to be an agent. My advice, get an agent that is fast and able to make appointments right away. 

Best of Luck! 

I will echo the above comment; low available inventory in Philadelphia. Seller Financing and Rent to Own has never really big that big in the Philly metro area. 

FHA 3.5% is very common.

@Timothy Casallas - Real Estate Agent here working in both Philadelphia as well as Montgomery and Delaware counties (Philly Suburbs). Feel free to reach out if I can be of any assistance when it comes to getting an idea on market conditions, areas, etc. 

I will say right now at certain price thresholds in the market we have a lack of inventory (not enough sellers) thus creating an ineffective process where some properties are seeing multiple offers and higher prices. Again this is a case by case situation and specific to certain areas of the city and price ranges, but yes, there are still decent deals out there too. 

@Ramon Robert Rios - as a Real Estate Agent and Investor, I would always say to go for a Duplex or Multifamily property to maximize leverage. With that being said, knowing the Norristown and Philadelphia markets as an agent, I will tell you that there is usually pretty limited inventory in those markets for multifamily properties and you might be paying a premium as a result of that limited inventory. 

The best advice is to truly reverse engineer the deal/property and think about what you personally would be comfortable doing initially. I started out investing in single family rentals so that I could get a handle on the process as well as interacting with tenants, contractors, etc. 

Let me know if you have any questions/concerns. Best of Luck! 

Justin - hope all is well. First off I will say that I am not an Insurance Professional (just a Real Estate Agent), but will give you my thoughts and input:

1) Your mortgage lender will definitely require insurance typically for replacement cost coverage, loss of rent coverage (if using rent as approval criteria), and some level of liability. 

2) What I have done in the past for my properties is talk with an insurance professional and purchase additional liability insurance (not that much more annually) as well as Loss of Income or Business Insurance to protect if I have a elongated period of no rent. 

If you need any help finding a multifamily property in NE Philly, feel free to reach out. Thanks! 

Another point to consider are the tax implications. *I am not a tax attorney*, however, you can sell your primary residence exempt of capital gains taxes on the first $250,000 if you are single and $500,000 if married. This exemption is only allowable once every two years. You can add your cost basis and costs of any improvements you made to the home to the $250,000 if single or $500,000 if married.

If you continue to hold onto the property you might lose out on this exemption and have to pay a significant amount of capital gains if/and when you sell. 

Fairmount/Art Museum area of Philadelphia is a pretty stable residential market in the city with not many major swings (as compared to other up and coming neighborhoods), but with your intentions of not returning to Philly, my thoughts are it would be best to sell. Another benefit to think of would be that since the Buyers are currently Tenants, they might not ask for a home inspection (w/ potential repairs) and buy the condo in as-is condition, thus saving you time, money, and headaches. 

For Delco I would say a 55-60% would probably be more feasible mostly due to the higher taxes. 

Also as you probably already know too, in Delco the rental rates can be across the board town from town, street to street. I haven't been able to find any sort of map or graph showing average rents for the suburbs, however, I would say the MLS, Zillow, and other sites would be a great roadmap.

@Jason Polykoff - my biggest advice as a Real Estate Agent as well as Investor is being confident and knowing your numbers inside and out. 

I see that you are in Drexel Hill and as you can probably relate, property taxes can be high in Delaware County. I always like to run super conservative numbers when it comes to Market Valuation (Before and After Rehab) and really get a good grip of any and all financial hurdles. Reverse Engineering every deal is key.