New Philly Triplex, newbie impatience or bad decision?

General Landlording & Rental Properties
5yFollow

New Philly Triplex, newbie impatience or bad decision?

Sean Ezeamama
Member since 2019 · 22 posts · 8 votes

Hi BP team,

I’ve been trolling the forum for years and just closed on my first rental property in Philly, a triplex.

Close date was 4/15 and no lie, the last 45 days have aged me with stress and anxiety(I’m 27).

I purchased just outside a college area, not really a prime location/there is a new property being built right next door, which started the week I closed and development on my block.

Long term, maybe my home value increases w the development — BUT it literally killed the lighting/views in a couple units which is making tenant finding harder (plus construction noise) and I kind of already knew my challenge would be in placing tenants. The house is renovated, clean and was delivered vacant to me.

It just has no amenities, it’s like very basic 2 bedroom housing. That said with a monthly mortgage of ~2800 - I thought once I can get the units rented, however hard - I’d be in decent shape with cashflow and have a base hit type of first investment. 

The 2 vacant units are listed at 1275 and 1300. In 45 days, I’ve gotten one tenant (high credit, seems decent) and a few applications that fell thru based on Tenent financials.

My actionable steps I’ve thought of:

1) lower price - I have $1580 liability left and 2 units to rent - maybe I’m just way to high on my rent price?

2) section 8 rental? On the other 2 units?

Any other thoughts guys?

Over the past couple of weeks, I’ve been so nervous/snappy and feeling awful. I’m currently living in an amazing place my gf bought as part of our plan but I can’t even enjoy it as my mind is on the vacant units. I was able to use my tenants first/last to make the first mortgage payment - I have a 3 months of reserves - work a great job. This won’t be life or death, but I feel like this isn’t the situation I intended in my first deal. I wanted $800 of cash flow rn I have a deficit of ~$1600..

Being that it’s only been 45 days, and this is my first. I need advice.

I make great money in my W2 and am a ninja with saving/investing , really need to find a way forward here. At least to break even, so that I can focus on getting myself out of this and back on the road to making $.

1Reply
10 views

Most Popular Reply

Jonathan GreeneBusiness Member
Real Estate Consultant · Madison, NJ · Member since 2016 · 6k+ posts · 7k+ votes
5y

You can rent a renovated row house in Philly for 1300-1350 with 3 BR so your rents are way too high. There is no science as to why something doesn't rent. You can talk about the lack of amenities or the building next door, but everything has a price - yours are just too high. What neighborhood is it in? It's still a good investment, you just might have mismanaged your expectations. Now you need to stop letting it sit there and remarket it and get tenants in at a lower rate so you can get money.

[email protected]Podcast Guest on Show #667
Zen and the Art of Real Estate Investing59 Reviews
WebsiteView Page
2Reply
See this reply in the discussion

22 Replies

Jump to latestLatest
  • Joe VilleneuvePro Member
    Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
    5y

    If you have to ask that question, you already have your answer.

    1Reply
  • Sean Ezeamama
    OP
    Member since 2019 · 22 posts · 8 votes
    5y

    Yeah , I think the post makes it clear I’m aware things could’ve gone differently. 

    I’m looking for suggestions/a way forward in the situation

    1Reply
  • David Birkey
    Rental Property Investor · Member since 2019 · 6 posts · 4 votes
    5y

    @Sean Ezeamama How are you marketing? It may be a great time to find a property manager at least for the first year to get off the ground and run fast. Once you are able to build your own system you could let the PM go and deal yourself.

    1Reply
  • James Mc Ree
    Rental Property Investor · Malvern, PA · Member since 2016 · 1k+ posts · 934 votes
    5y

    Your rent seems a bit high for a 2BR place, especially if it is becoming unfavorable due to the construction. I don't know the area, so check your asking rent to be sure it is competitive. Consider pricing a little under market to get more interest. For example, if you price at $1,200 instead of $1,300 and that makes your place the cheapest place around, you get a set of applicants to choose from at the cost of 1 month's rent ($100 x 12 months). You can then raise the rent for month 13.

    Reach out to your prospects who saw the property to see if they have further interest. If not, ask why. That feedback is likely to hold the answer to your question if you get prospects who are willing to share an honest opinion.

    1Reply
  • Sean Ezeamama
    OP
    Member since 2019 · 22 posts · 8 votes
    5y
    Originally posted by @David Birkey:

    @Sean Ezeamama How are you marketing? It may be a great time to find a property manager at least for the first year to get off the ground and run fast. Once you are able to build your own system you could let the PM go and deal yourself.

    Yep, did this - really helpful too Bc I work long hours during the day. They're showing the apt - it's on MLS, Zillow and I'm doing FB and managing those inquiries. Thank you for the feedback

    0Reply
  • Sean Ezeamama
    OP
    Member since 2019 · 22 posts · 8 votes
    5y
    Originally posted by @James Mc Ree:

    Your rent seems a bit high for a 2BR place, especially if it is becoming unfavorable due to the construction. I don't know the area, so check your asking rent to be sure it is competitive. Consider pricing a little under market to get more interest. For example, if you price at $1,200 instead of $1,300 and that makes your place the cheapest place around, you get a set of applicants to choose from at the cost of 1 month's rent ($100 x 12 months). You can then raise the rent for month 13.

    Reach out to your prospects who saw the property to see if they have further interest. If not, ask why. That feedback is likely to hold the answer to your question if you get prospects who are willing to share an honest opinion.

     Yes, this is really good feedback. I’m going to rerun analysis and ensure I’m putting the price in a reasonable spot. 

    Will also see what feedback I can collect from viewers. 

    I know I can/will learn from this. Just want to ensure I get out alive :)


    0Reply
  • Scott M.
    Real Estate Broker · Rochester Hills, MI · Member since 2009 · 2k+ posts · 2k+ votes
    5y

    Generally speaking this market is pretty hot right now both on the sales and rental side.  If things are slow the market is telling you the price is too high for the conditions of the home.  Doesn't mean someone won't come along but being in the red each month isn't easy I know.  When this happens always good to:

    - Call prospective tenants back and ask them why they passed.  Be open, don't argue or judge, just listen to the feedback as that feedback is gold!

    - Look at your marketing.  I don't see that you really answered that question here, but how are you marketing it?  Where?  Good to know where the breakdown is.  You getting a lot of leads but few showings?  A lot of showings but no app's?  Where does the drop off happen....or is it right up front with few interested?  Depending on where the breakdown is happening that could mean different things.  If you put up your data, we can probably help you assess a bit better.  IN the past 45 days how many of everything have you had?  Interested parties, people filling out pre-qual forms (if you have it), people at showings, people at showings VS people saying they are going to show up for a showing, applications etc....

    - Lowering rent or doing work is always an option too, but if you have a week I would look at the two above and maybe post more feedback here so we can better assist.  

    1Reply
  • Daniel Pierson
    Investor · San Francisco, CA · Member since 2015 · 75 posts · 25 votes
    5y

    @Sean Ezeamama

    I bought a triplex out of state as my first investment and the first year was definitely a challenge. But I’m so glad I stuck it out. Feel free to PM if you need a hype speech, you’re going to be just fine.

    0Reply
  • Nicole Zell
    Rental Property Investor · Philadelphia, PA · Member since 2020 · 4 posts · 1 vote
    5y

    Hey Sean,

    I have a few student rentals in Philly. Your prices are on the higher end but definitely not "too high" depending on the amenities and the location. Philly is very much block by block, especially for student rentals. Are you inside the college police patrol zone? Depending on the school, rental prices fall off sharply if you're outside.

    0Reply
  • Sean Ezeamama
    OP
    Member since 2019 · 22 posts · 8 votes
    5y

    @Nicole Zell good question, I'm not sure - If I had to guess, I'd say right outside - Just thinking about my property tax in relation to other places a min or so closer to Temple. 

    It's definitely block to block in Philly. And honestly, I hear ya... I'm thinking that I was able to get one tenent at $1200, so maybe the other units should be about that as well. 

    Based on my mortgage of ~2800 - 3 units at 1200 would put me in an OK spot to be able to put money away for cap ex and maintenance monthly while covering my liabilities. 

    I appreciate the insight so much, I know that my next investments will be better since I'll make 1000% sure to make rentability/location top priority even over the cashflow :) 

    0Reply
  • Sean Ezeamama
    OP
    Member since 2019 · 22 posts · 8 votes
    5y
    Originally posted by @Daniel Pierson:

    @Sean Ezeamama

    I bought a triplex out of state as my first investment and the first year was definitely a challenge. But I’m so glad I stuck it out. Feel free to PM if you need a hype speech, you’re going to be just fine.

    Honestly, I think I just needed to hear another human say this. I really appreciate the support - I'm going to stick it out.

    There are some positives, I'm learning a ton AND I'm forced to push harder at my W-2 sales job for more income. Won't make the same mistakes on my next one, guaranteed.

    0Reply
  • Jonathan GreeneBusiness Member
    Real Estate Consultant · Madison, NJ · Member since 2016 · 6k+ posts · 7k+ votes
    5y

    You can rent a renovated row house in Philly for 1300-1350 with 3 BR so your rents are way too high. There is no science as to why something doesn't rent. You can talk about the lack of amenities or the building next door, but everything has a price - yours are just too high. What neighborhood is it in? It's still a good investment, you just might have mismanaged your expectations. Now you need to stop letting it sit there and remarket it and get tenants in at a lower rate so you can get money.

    [email protected]Podcast Guest on Show #667
    Zen and the Art of Real Estate Investing59 Reviews
    WebsiteView Page
    2Reply
  • Sean Ezeamama
    OP
    Member since 2019 · 22 posts · 8 votes
    5y
    Originally posted by @Scott M.:

    Generally speaking this market is pretty hot right now both on the sales and rental side.  If things are slow the market is telling you the price is too high for the conditions of the home.  Doesn't mean someone won't come along but being in the red each month isn't easy I know.  When this happens always good to:

    - Call prospective tenants back and ask them why they passed.  Be open, don't argue or judge, just listen to the feedback as that feedback is gold!

    - Look at your marketing.  I don't see that you really answered that question here, but how are you marketing it?  Where?  Good to know where the breakdown is.  You getting a lot of leads but few showings?  A lot of showings but no app's?  Where does the drop off happen....or is it right up front with few interested?  Depending on where the breakdown is happening that could mean different things.  If you put up your data, we can probably help you assess a bit better.  IN the past 45 days how many of everything have you had?  Interested parties, people filling out pre-qual forms (if you have it), people at showings, people at showings VS people saying they are going to show up for a showing, applications etc....

    - Lowering rent or doing work is always an option too, but if you have a week I would look at the two above and maybe post more feedback here so we can better assist.  

    Marketing I've done: 

    Listed property w/ local property managers - they post on MLS and syndicates to Zillow, apts.com and craigslist

    I'm posting myself in off-campus forums and forwarding qualified applicants to property managers for showings 


    April 15-30th (when I didn't have the property managers)

    8-10 showings mostly off Zillow/FB

    ~3 Applications

    0 qualified renters/0 tenants booked


    May Stats:

    9 or 10 showings 

    4 applications

    1 tenant booked in unit #1

    There are 2 remaining units, unit 2 and 3, which were initially priced higher than unit #1 because they are slightly larger -- That said, I'm thinking that I reduce prices and take advantage of the higher demand in the coming months...

    Does this answer your question? Thanks so much for the feedback on this - I'm looping back to applicants now.

    0Reply
  • Scott M.
    Real Estate Broker · Rochester Hills, MI · Member since 2009 · 2k+ posts · 2k+ votes
    5y

    the one number you left out was how many inquires you are getting.  You are getting a decent number of applications for the number of showings.  40% plus give or take.  Also, is this student housing?  Is this a great time of year to find students in this market?  I don't know as I do not invest there.

    I really don't think you would be getting 40%+ give or take people applying for the home if it was priced WAY to high.  So maybe slightly high and it would appear you are doing the rejecting VS the other way around.  

    Other locals have chimed in some saying your prices are too high, some saying you are not too high but on the high side so you might wan to lower it.

    But, you are doing the rejecting and are getting a decent conversation rate on apps.  

    0Reply
  • Sean Ezeamama
    OP
    Member since 2019 · 22 posts · 8 votes
    5y
    Originally posted by @Jonathan Greene:

    You can rent a renovated row house in Philly for 1300-1350 with 3 BR so your rents are way too high. There is no science as to why something doesn't rent. You can talk about the lack of amenities or the building next door, but everything has a price - yours are just too high. What neighborhood is it in? It's still a good investment, you just might have mismanaged your expectations. Now you need to stop letting it sit there and remarket it and get tenants in at a lower rate so you can get money.

    It's on the brewerytown/sharswood line -- You're right, I'm emailing the agents as we speak to reduce the price.

    I'm going to update you all in a couple weeks on what happens. I appreciate the support and insight a ton, thanks

    1Reply
  • Pamela Berkeley
    Member since 2021 · 5 posts · 6 votes
    5y

    I just wanted to say congratulations on getting your triplex! I'm planning on getting a multi-family in Pennsylvania too (though in western PA.)

    0Reply
  • Sean Ezeamama
    OP
    Member since 2019 · 22 posts · 8 votes
    5y
    Originally posted by @Pamela Berkeley:

    I just wanted to say congratulations on getting your triplex! I'm planning on getting a multi-family in Pennsylvania too (though in western PA.)

    location's important, learn from my mistake :) - best of luck 

    0Reply
  • Sean Ezeamama
    OP
    Member since 2019 · 22 posts · 8 votes
    5y
    Originally posted by @Scott M.:

    the one number you left out was how many inquires you are getting.  You are getting a decent number of applications for the number of showings.  40% plus give or take.  Also, is this student housing?  Is this a great time of year to find students in this market?  I don't know as I do not invest there.

    I really don't think you would be getting 40%+ give or take people applying for the home if it was priced WAY to high.  So maybe slightly high and it would appear you are doing the rejecting VS the other way around.  

    Other locals have chimed in some saying your prices are too high, some saying you are not too high but on the high side so you might wan to lower it.

    But, you are doing the rejecting and are getting a decent conversation rate on apps.  

    Yes, I have been doing most of the rejecting -- I had a couple applicants recently who passed the credit check but were so low on bank verified funds it made me super nervous. 

    I am getting many inquiries daily, that said, most are on facebook and a lot of them are random/instantly disqualified. I officially changed the pricing yesterday to $1200 for both remaining units. My silver lining right now is the fact that I can go down to 1050 on both units and still have positive cashflow of ~500.

    My plan is to let it sit at 1200 for another 3 weeks and go down again if they're not rented.

    0Reply
  • Scott M.
    Real Estate Broker · Rochester Hills, MI · Member since 2009 · 2k+ posts · 2k+ votes
    5y

    My personal opinion is that is you are getting a lot if inquiries and then 40%+ of the people who see it are submitting applications and you are doing the rejecting of those this is not a price issue.  You are being picky and that is a good/positive thing and you should be.  Not being picky will cost you a fortune.  I think you are doing a great job @Sean Ezeamama

    0Reply
  • Nicole Zell
    Rental Property Investor · Philadelphia, PA · Member since 2020 · 4 posts · 1 vote
    5y

    I agree with @Scott M. I tend to be conservative, but I feel strongly that while you can always raise prices in the future, tenants who damage your asset or stop paying rent will be more costly in the long run. 

    0Reply
  • Sean Ezeamama
    OP
    Member since 2019 · 22 posts · 8 votes
    5y
    Originally posted by @Scott M.:

    My personal opinion is that is you are getting a lot if inquiries and then 40%+ of the people who see it are submitting applications and you are doing the rejecting of those this is not a price issue.  You are being picky and that is a good/positive thing and you should be.  Not being picky will cost you a fortune.  I think you are doing a great job @Sean Ezeamama

    I lowered the price to $1200 and days later locked down my second tenant. 2/3 units are rented, I'm about breakeven with one additional unit to rent.

    Thanks so much for the kind words, will keep striving to learn and improve.

    0Reply
  • Scott M.
    Real Estate Broker · Rochester Hills, MI · Member since 2009 · 2k+ posts · 2k+ votes
    5y

    @Sean Ezeamama That is great news congrats!  You are doing awesome!  

    0Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free