Hey all- Once I wrap up a couple major projects in my current live-in flip I'll be in the market to buy a second rental property in Philly. I plan on tapping into my 50k HELOC for the down payment, although I would prefer to not use more than 30k for the down payment. This puts me at a cap of 150k purchase price for my next property.
I currently own my primary residence (live-in rehab) in Fishtown + 1 rental in Olde Richmond. I'm pretty familiar with these neighborhoods, but finding any value add properties in 19125 at my desired price point is difficult.
Ultimately I'm looking to hone in on Philly neighborhoods that are in my price point and that will cashflow at 1% rule. I'm noticing a lot of my developer clients building single families in Norris Square and further north by Temple Hospital. I've also been analyzing deals in Tacony/Mayfair that look pretty good on paper, although I'm not too familiar with the area. Kensington and Harrowgate- I'm hesitant because of the crime factor, but man, if people are actually paying $400K+ to live on Frankford & Lehigh, these neighborhoods could be great long term plays with a low barrier to entry in today's market.
I'm also planning on receiving criticism for essentially using leverage to buy leverage. I welcome all constructive criticism about using a HELOC as a down payment. However my plan is to use the cashflow from this property and my existing rental to pay down the HELOC in, hopefully, a matter of a few years.
I am having the same issue, trying to find something in that price range in a decent neighborhood. Feels like Philly is really picked over for smaller investors :( I have hope for Kensington/Harrowgate in the future, still seems too terrible to take the risk, but worth keeping an eye on the area.
Hey @Matt I. welcome to the community! Congrats on your first property, I hope everything is going smooth with that. You are very correct about all the development in the Norris Square area that area is definitely up and coming and will continue to appreciate.
One area that I would recommend that fit within that set purchase price budget area actually east of Frankfort & Leigh. If you drive the area while you might see some drug users, there are large amounts of new development and new builds going up. Now those new builds are not by individuals like us, but large developers like V2 Properties who own 1000's of doors across Philly. This is the beginning stage of the neighborhoods changing.
Other areas I would focus on is West Philly (specifically cobbs creek), and the West Oak Lane/ Mt. Airy area. I would say West Oak Lane is a little more expensive then cobbs, but by a small margin. Both areas are great markets for flips and rentals.
I hope this helps you with your search, and shed some light on everything.
Dan Powers - Real Estate Agent
@Kelsey Herbst The development is definitely pushing in that direction. Seems like the textbook definition of 'path of progress' to me. Could be worth the long term hold as long as we could find good tenants for the years between now and then.
@Dan Powers Thanks for the feedback. I've analyzed some deals in Cobbs Creek that look decent. The area east of Frankford & Lehigh is definitely interesting. I feel like every week I'm seeing new renderings for large scale development In upper Port Richmond and Kensington. It could be a smart play to buy some single families across the street from the big dirt pits with construction equipment ;)
I've also been looking for neighborhoods at this pricepoint. Seems like a lot of the options are in the West Philly area - ideally Cobb's Creek, but I've also been watching Carroll Park, Haddington, and Kingsessing.
Anyone have experience with those areas? They seem a bit rougher to me, but I've heard there's been some decent population flow out to those areas.
Hey @Ryan S. ! I've done several deals with my investors in those areas. Your post has a wide net with a whole variety of values that strongly intertwined with what block you are on. What is your specific strategy? What level of rehab can you handle? And what are you valuing more favorably, cashflow or appreciation?
@Matt I. have you considered pairing with a higher net worth individual that can trade your sweat equity for funding? Setting up your team to be a well-oiled machine AND finding deal flow is harder than finding money today. There are plenty of people who will throw money at a solid model that gives better returns and is nearly laissez-faire.
Hey @Jimmy O'Connor thanks for the reply. That was a wide range of neighborhoods, let's narrow it down a bit more to west of 52nd and north of Market (so just Carroll Park + Haddington). Looking at recently sold on Zillow, it definitely seems like prices vary widely block-by-block. I'm still trying to figure out the good blocks vs the bad.
My plan is to BRRRR (& hold for many years) up to around this level of rehab: https://www.zillow.com/homedet...
What has been your experience out there? Have you noticed any changes in recent years (good or bad)?