Any recommendations or advice for a first time investor in Philadelphia?

Question

Hello, Philadelphia Bigger Pockets Community,

After lurking the Bigger Pockets community for a very long time, I'm excited to make my first post! I've Recently temporarily relocated from Southern California to Philadelphia to be with my girlfriend as she finishes up at UPenn. I thought this would be the perfect opportunity to explore “Out Of California” real estate investing! With a family background in California real estate and a personal passion for real estate and financial analysis, I'm eager to venture into the world of real estate investing.

My primary goal is to invest in a rental duplex or triplex in the vicinity of the city of Philadelphia - preferably something that requires some work that I can Rehab. This will be my first time ever purchasing a home or investing in something of this scale. Definitely a bit overwhelming especially considering such a large investment and being new to the city.

I am looking at properties in the price range of $350 to $500K, with a 20% down payment, and I am open to properties in need of renovation. Based on my research, I've focused my attention on the following neighborhoods: Point Breeze, Manayunk, Roxborough, and Wissahickon. Over the past month, I have scoured various forums on platforms like Reddit, Bigger Pockets, and YouTube to build an Excel file listing recommended contractors, plumbers, roofers, HVAC specialists, agents and more, as suggested by experienced individuals and investors.

Despite the extensive research, I know that nothing surpasses firsthand experience. Was really just hoping to hear anyone elses recommendations, experiences, advice and or guidance for going through rehab and investing in rentals in Philly. Can be pretty overwhelming especially for the first time so appreciate any advice you all have!

I'm eager to learn from your insights, recommendations, and experiences related to rehabilitating properties and investing in rentals in Philadelphia. The initial stages of such an endeavor can be overwhelming, especially for a first-time investor, so I genuinely appreciate any guidance and advice you can offer.

I genuinely appreciate any guidance and advice you can offer and thank you all in advance!

Eric Greenberg · Answer

Lots of great input here. My advice is do a great deal of homework on the zoning/variances on a small multi in Philadelphia. This can burn you very easily.

Brian Cauldwell · Answer

Hi @Yusuf Shaikh!

I do not have personal experience in Philadelphia but I do have some clients who invest in Philadelphia and the surrounding suburbs.

You should be able to find a fix and flip loan with less than 20% down payment.

Also, if the purchase price is scaring you can always start smaller. I have several clients in Chester, PA, and homes are definitely more affordable.

Alan Asriants · Answer

Hey Yusuf! I am an agent and investor in the area and own properties in the Phila area. I would be happy to find a time to connect and talk more about the market and my experience as an investor here!

Chris Pelc · Answer

Hey Yusuf,

Glad to see that you're looking to venture into the Philly market for investment property. I think that Philly is a great place to start as the price-to-value ratio in the Philadelphia is generally better than all the other neighboring cities..

Those areas are great areas to focus on. I would presume by those options, you are looking for areas with higher rental potential and B+-A neighborhoods? I have a few investors that are looking in these same areas.

When you say that you are looking for lending for that price range and 20% down, what sort of financing were you thinking? Conventional, FHA, HML, DSCR? If you are going to finance construction costs, HML might be the route to go and look to refi down the line. Obviously your cash on hand will be the biggest factor in obtaining financing with no experience.

It seems like you've done a lot of due diligence on your part to source information and find contacts. If you are looking for another to add to your arsenal, PM me.

Saaj Patel · Answer

Yusuf,

Welcome to Philadelphia. There are a good amount of strategies and options to use in the areas you describe. I often look to off-market sources to find a discounted property.

Another suggestion I have for you is to work with a real estate agent who knows exactly how hyper-local and block-to-block the city of Philadelphia is.

Let me know if you ever want to chat further.

Saaj

Yusuf Shaikh · Answer

Hey @Christopher Pelc @Brian Cauldwell

Yeah you're on point - I'm looking for rental potential homes, that are semi near the city/good walk scores. Not necessarily looking for the fix and flip homes.

In terms of type of loan - I'm looking to just get a Conventional loan with 20%, and then for the rehab work to do it all in cash (hopefully). And obviously reappraise and refinance down the line as well

I think my concerns aren't around the loans - Rather more around finding a deal that turns out to be more problematic and costly in rehab than anticipated and eventually not giving the same ROI in rent as I was expecting. Looking at redfin the last few weeks what i've seen the better deals tend to need some work. I have also seen some homes in areas that are rehabed - sitting on the rental market for several months without being rented out.

So was really looking for advice around anything i should watch out for while looking at deals, or while inspecting the work that is needed to rehab to be rent ready! I know I won't really know until i make that leap and just hit it and will only learn from my mistakes. But just trying to see what advice i can get haha!

Brian Valdivia · Answer

Hey Yusef! I own Beltway Lending. A Bigger Pockets Preferred vendor. We would be happy to help out, and we can likely do so without 20% down. Our fix and flip loans are usually 10% down! Feel free to send me a dm, and I'd be happy to connect!

Any recommendations or advice for a first time investor in Philadelphia?

Any recommendations or advice for a first time investor in Philadelphia?

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