Hi there, My name is Stephany and I'm looking to secure and flip my second piece of property. My first purchase was the Condo I'm currently living in located in NJ. I think the target is Philadelphia for the fix and flip, aiming for a property priced at $140K or less with low taxes to get my feet wet. I've also obtained a blanket loan commitment for $500K, which adds to my excitement and nerves, as I know these deals can move quickly. I'm reaching out for any advice from experienced investors and would greatly appreciate recommendations for reliable licensed contractors in Philly. Thank you. FYI I have downloaded the BP First Deal Checklist to get started.
Rental Property Investor · Philadelphia, PA · Member since 2015 · 476 posts · 360 votes
1y
@Stephany Gibson congrats on your loan and the leap into Philly! That $140K-and-under target is smart for getting your feet wet. A few thoughts that might help:
Taxes and zoning vary a lot by neighborhood, so checking city assessments and zoning overlays early can prevent surprises.
Scope and budget management are crucial right now—materials and labor costs are high, and a vague scope that leads to surprises or a problematic contractor can tank your profit margin fast.
Many Philly contractors are sole proprietors juggling multiple jobs - some better than others :-), so clear expectations and a good team really make or break a project.
Permits and inspections can add time—something to build into your plan. (and now the strike is creating a backlog)
I’m part of a local network here in Philly and work closely with others navigating their way through projects. If you'd like contractor recs or insights, feel free to message me—happy to help you avoid some common early mistakes.
Hi Sheryl, thank you so much for this feedback I truly appreciate it and will definitely keep in in mind as I continue on in my search. I will take you up on the offer of recc for contractors when the time comes. Your reply means a great deal and I will be following you and your progress for inspiration. Thanks again and have a wonderful Sunday. Stephany
Specialist · NJ · Member since 2022 · 1k+ posts · 649 votes
1y
Philly is a very, very tricky city to flip in. I grew up there and live 20 min away in Jersey now. My parents still live there and so does most of my family. I have set-up 6 flip projects in Philly over the last 3 years. All looked great on paper. The first three were losers. Projects took longer than expected, lots of hidden issues, delays, permitting issues, overages, and then at sale, nothing moved for the ARV that was on the appraisal. Everything was going for 15% - 20% less than what was thought.
I have three more going on now that are about to be finished with the rehab. They'll hit the market in August and we'll see. And the areas are decent, South Philly, Fishtown, Point Breeze.
The properties you are speaking of for the 140k are in West Philly. The last person I met on BP that was in the middle of a flip in Cobbs Creek, they thought they were gonna make 30k - 50k. They lost 20k.
Your ARV is going to be capped in the low to mid 200s on those west philly houses and you are gonna buy for 120k - 140k and the house will need EVERYTHING and you may need to dig out the basement to finish it. 100k easy on rehab. So at 140k purchase and 100k rehab, you'd need the ARV to be 350k and then even if it is, no one will pay 350k to live in West Philly. There's more gunfire there than the Gaza strip.
I'd seriously consider another market. Once my final 3 projects are completed there, I won't be in another project with a Philly zip code for some time. Tread carefully.
It's possible, and was there pre pandemic, but it's very difficult now especially in that price range.
Costs of everything went up, but wages didnt, and they are relatively high atm.
I don't think you're able to do much in that price point without getting your hands very dirty, even after the flip.
Anyway you slice it, for these prices you're gonna need to find a property with alot of work or in a non so dersirable area with low or no rent growth.
I think past the univeristy area, thats a place where your money goes to evaporte lol.
If i was you and wouldnt mind getting my hands dirty, I'd buy a property with an existing renter and have the seller pay the downpayment,
so hypothetically,
if There is a property for $150k with a renter paying $1k/month,
I would do a seller assist, so the buy at $160k and make the seller pay $32k (20%) in downpayment and closing costs.
This would need alot of underwriting and legal stuff and must be in an LLC to protect yourself from imminent future liability, but it could be a great cash flowing deal.