Moving to Philly next summer
Hi all,
I'm moving to Philly next summer because of the job I'm planning to buy my first house ever (if the numbers work out).
After reading 3 books (4th one is halfway done) and listening to 50 of the Biggerpockets podcasts and many Reddit posts (before knowing BP) I'm freaking out more than before.
Things you need to know about my situation:
- I'm within the 1 hour and 30 minutes driving distance of Philly but do not know the city.
- My job is in Ogontz/Belfield, PA which I know is not a good neighborhood yet I'm kind of a safety freak and my highest priority is safety.
- Through my job, I have access to a loan with a 5% downpayment with a 30-year fixed-rate loan of 5.5% interest with no PMI.
- For the downpayment, I can put 50k which is equivalent to a 1m hose (with some room to stretch) and I'm looking for at least a 3:2 house.
- I'm NOT considering a townhouse at the moment (I like to be distant from my neighbors).
- I highly prefer the house to be within less than 30 minutes of commuting distance to Ogontz by car.
- I'm planning to stay there for 3-4 years and then move to Baltimore where part of my family is and buy another property there. In that case, I would like to rent the property out, and ideally, I would like to hold on to the property as long as possible.
Things that you could potentially help me with (and I highly appreciate it):
- I read a lot of posts and analyses here and there that house prices are gonna drop in 2023. I know nobody knows for sure, but what's your take on house prices in 2023? Is mid-2023 a relatively safe time to buy, or should I wait?
- Should I consider buying at all? I used the NYTimes rent vs buy calculator that told me unless the rent is higher than $4500, I should consider renting. Is that too high of rent for Philly? No matter how I calculate it, I feel like buying is not a good choice (unless I'm doing my modeling incorrectly). Can you please give me some insight?
- Can I apply the investment rules on the property I'm buying, e.g. 1% rule, or a property manager cost, even though I'm going to live in it myself so that when I'm leaving I will have some cash flow?
- Can you please introduce some neighborhoods within 30 minutes of commute distance that are "very safe"? It's a plus if it's close to public transport which makes it easy to go to NYC every now and then. Based on my research (which could definitely be flawed) areas around Narberth could be an option, what do you think?
- Since this is my first house, I'm going with the rule of thumb of trying to see at least 100 houses before making an offer. Is it a realistic goal in the span of 7-8 months with a 90 minutes driving distance?
- How can I find a good buyer's agent in Philly?
Thank you for your time
You may be overthinking it a bit. Not that there’s anything wrong with going to see 100 houses before making a decision, and Im sure that would make you a more intelligent buyer in that specific area, but realize thats also alot of time spent that could be utilized in a more efficient way.
First thing I would do is map out what areas are in a 30min radius of your work. Make sure to look at that during commuting hours as the drive time will change drastically. There are some great/‘safe’ areas north & east of that area that could fit what you are looking for.
Then start to determine what you want in a property. Do you want turn-key? Something to do a small or large reno to force appreciation? Anything you absolutely dont want?
Next see what homes in those areas rent for since the goal is to move and keep it as a long term buy/hold. Id also reach out to a few PMs to make sure they will service the area when you move and theyll have great rental info as well.
I dont think it worth spending too much time on trying to time the market. If the goal is to buy to eventually rent then just make sure your numbers work.
@John Smith - Welcome to BP! I think its wonderful, you are doing some homework and thinking through buying a property. I agree with @Eric Greenberg, I think you are overthinking this. Also, as an agent, if you wanted to look at 100 houses, I would not work with you. If I did, my compensation on that transaction would be measured in pennies per hour.
Perhaps a mind-set shift would be helpful. You also seem to be suffering from analysis paralysis. You are searching for a place to live, that is the primary function. If you buy a HOME today responsibly, chances are that in a few years it will be a good INVESTMENT and you will have options. When buying a HOME, the first thing you need to know about is money. You seem to like research, so learn about the "4 C's of underwriting", points, mortgage insurance, conforming vs. non-conforming loans, DTI ratio and how those things impact what lenders will loan to you. How are property taxes calculated in the area, and how does that impact your mortgage payment? What is PITI?
How much will you be approved for, and do you want to spend that much? Just because a lender approves you for a $3000/mo mortgage, would you be better with a $2500/mo so you can pay down student loans, or buy a new car because the current one is about to die? Your first actual step is to talk to at least 2 lenders! I would suggest a credit union and a mortgage broker in the area. Do not take out any new loans (credit card, auto, etc.) until you buy a house, unless you really have to!
I don't know your market, but as an example, if you can rent a house that meets your criteria for $2500/mo and buying puts your mortgage payment (PITI) at $2700/mo, its probably a good move. You are really investing $200/mo because you need to spend $2500 on a place to live anyway!
Become familiar with neighborhoods and general areas. Subscribe to the local newspaper or some regional on-line business magazine. Spend a weekend in the area. A good agent should know block-by-block details.
3 big things will make this a good or bad investment in a few years.
1) your loan terms when you buy. You have some control by shopping around and learning about mortgages. Do you buy down the rate (are sellers offering to pre-pay points, that is happening in my market), will you need mortgage insurance, etc...
2) the market in general. You have zero control over the macroeconomic factors that cause recessions and crashes.
3) location and condition of the property – You have absolute control. You choose location and condition based on what you can or will spend.
As an agent, if you call me and say you talked to 2 different lenders, pre-qualified, and you prefer 3 neighborhoods or parts of town, I can help you. I also see that you are moving out of the tire kicker (analysis paralysis) phase. Now we can go look at a dozen houses over 2-3 weeks, not 100. After looking at 12 houses, you will not recall what you liked/disliked about the 4th one :)
Good luck and enjoy the journey!
-
Real Estate Agent Nevada (#S.179748)
- 775-741-2326
- http://RenoSparksRealtor.com
Hey,
I am a local and an investor in the Philly area. Would love to talk about the market and any specific areas that you have questions on.
PM me if you wanna talk further.
Thank you all for your thorough responses.
Hi! I’m an investor friendly PHILLY Realtor. Happy to connect!
Quote from @John Smith:
Hi all,
I'm moving to Philly next summer because of the job I'm planning to buy my first house ever (if the numbers work out).
After reading 3 books (4th one is halfway done) and listening to 50 of the Biggerpockets podcasts and many Reddit posts (before knowing BP) I'm freaking out more than before.Things you need to know about my situation:
- I'm within the 1 hour and 30 minutes driving distance of Philly but do not know the city.- My job is in Ogontz/Belfield, PA which I know is not a good neighborhood yet I'm kind of a safety freak and my highest priority is safety.
- Through my job, I have access to a loan with a 5% downpayment with a 30-year fixed-rate loan of 5.5% interest with no PMI.- For the downpayment, I can put 50k which is equivalent to a 1m hose (with some room to stretch) and I'm looking for at least a 3:2 house.
- I'm NOT considering a townhouse at the moment (I like to be distant from my neighbors).
- I highly prefer the house to be within less than 30 minutes of commuting distance to Ogontz by car.
- I'm planning to stay there for 3-4 years and then move to Baltimore where part of my family is and buy another property there. In that case, I would like to rent the property out, and ideally, I would like to hold on to the property as long as possible.
Things that you could potentially help me with (and I highly appreciate it):
- I read a lot of posts and analyses here and there that house prices are gonna drop in 2023. I know nobody knows for sure, but what's your take on house prices in 2023? Is mid-2023 a relatively safe time to buy, or should I wait?
- Should I consider buying at all? I used the NYTimes rent vs buy calculator that told me unless the rent is higher than $4500, I should consider renting. Is that too high of rent for Philly? No matter how I calculate it, I feel like buying is not a good choice (unless I'm doing my modeling incorrectly). Can you please give me some insight?
- Can I apply the investment rules on the property I'm buying, e.g. 1% rule, or a property manager cost, even though I'm going to live in it myself so that when I'm leaving I will have some cash flow?
- Can you please introduce some neighborhoods within 30 minutes of commute distance that are "very safe"? It's a plus if it's close to public transport which makes it easy to go to NYC every now and then. Based on my research (which could definitely be flawed) areas around Narberth could be an option, what do you think?
- Since this is my first house, I'm going with the rule of thumb of trying to see at least 100 houses before making an offer. Is it a realistic goal in the span of 7-8 months with a 90 minutes driving distance?
- How can I find a good buyer's agent in Philly?
Thank you for your time
Some areas to consider: Ambler, Willow Grove, Abington, Blue Bell, Plymouth Meeting, Jenkintown, Huntingdon Valley, Hatboro, Bala Cynwyd, Narberth is indeed a good choice, Manayunk. There are more, but that is off the top of my head.
If you're planning to buy residential real estate, buying a property you will later be able to rent out makes sense. Otherwise, I would say don't buy for a short term living situation. In either case, don't try to time the market. Figure out if the house makes sense both as a primary and as an eventual rental and if it does, then buy. Consider what your plan will be for managing the property when you move away and make sure you're setting those wheels in motion. Also, have you considered house hacking?
$4500 seems high for Ogontz/Belfield area; I don't think that's a valid comparison. Also, at that price point, you will have a hard time finding qualified tenants (especially in Ogontz). If you are talking Center City, different story. Philly rents vary depending on neighborhood, and sometimes even block by block.
Also, tread carefully - Philadelphia is very tenant friendly, and gets more so each year. You may want to consider the suburbs of Philadelphia more than the city itself.
I haven't read all the responses, but I assume others have chimed in on the rest of your questions. Otherwise, I apologize for skipping a few.
If you'd like an amazing realtor, message me for contact details. It's not me, and I get nothing from referring them. I've just had great experiences in the past and use them for all my transactions where I require a realtor.
Best,
Karen.
Trying to see 100 houses before making an offer. I hope you plan to see them by going to open houses and not wasting an agent's time. Any half decent agent would fire you as a client well before you got to 100.