I have been trying to find some deals in west and south west philly around 19139, 19143. The prices are very high for a 3b 1bath property and for brrr deals, it is like 20 to 30k money left in the deal after rehab we are seeing. I am looking at a strategy of recouping the costs with an appreciation value in 3 to 5 years. Is there any resources that can predict future appreciation by zipcodes that you guys use? How do you guys make decisions on deals where the costs for acquisition is said 110k, rehab is 30k and ARV is around 150k for a lighter rehab and a flip rehab it is 190k? For me, it is a buy and hold strategy and I am torn on the rehab costs determination and how much money should I leave in the deal?
Real Estate Agent · Philadelphia, PA · Member since 2020 · 294 posts · 245 votes
5y
@Buyan Thyagarajan 19143 + 19139 are some of the hottest areas in Philly right now, and the appreciation in this pocket has exploded in the last year. Over the last 5 years, West Philly in general has seen the average home price rise from 90k-190k. Now that is a broad statistic and values vary drastically from block to block.
In 19139 a huge divider is obviously Market St., in Haddington you will see a purchase range of 85-110k with your ARV values 190-220k, you see a similar purchase and ARV range south of Baltimore Ave in Angora + Kingsessing areas. Now a year ago, a purchase in these pockets ranged from 55-85k while your ARV values were only 150-190k.
Cobbs Creek has seen a huge amount of appreciation in the last year, with pre-covid prices hovering around 85-110k with ARV values around 190-220k, in today's market you can't find a house in true Cobbs for less than 110k unless its simply 4 walls and some joists. Most houses are trading between 110k for a full gut, up to 135k for a cleaner rental-ready home, with ARV values rising by the week but consistently ranging between 220-250k with some properties even pushing north of 250k.
Typically my contractors have been pricing full guts between 60-80k depending on what lumber is priced at for the week (thank god it's finally on the decline).
Investor · Philadelphia, PA · Member since 2018 · 61 posts · 62 votes
5y
@Buyan Thyagarajan we actually had a deal just like the one your describing that sold yesterday. $110k purchase and $190k ARV in 19139 if you were going to flip it. It already had a lot of work done: new paint, wood flooring, recess lighting and apex plumbing etc. It also had duct work so putting in Central A/C wouldn't cost much. As far as whether it's a buy and hold versus flip, thats up to the investor. If you were to rent it out, it wouldn't need much work at all. No finished basement, no additional half bath needed. That's something you need to take into account when doing buy and hold versus flip. In zip codes like this, you don't need to do everything to the property to make it rent ready.
Whether or not you want to flip something like this depends on what kind of returns you're looking for on a project. If this is your first project, you may want to look for a little more wiggle room. The person who bought the example I provided is going to flip it but they have their processes and systems in place and knows what it will take as it's not their first rodeo.
As you know, there's been a lot of appreciation in most markets in the U.S. in the past year. Philly is no different. Prices are up in most areas of Philly. But, when it comes to predicting future appreciation we look at spillover from nicer areas, new construction etc. I hope this helps.
@Kevin Uzelac Are you interested in looking for shell rehabs for me in Fishtown, Kensington, etc? Specifically, looking for single family properties that are zone appropriately, such as RM1, to be converted to duplex/triplex as a matter of right. Obviously the closer to the El train and commercial corridor’s the better.
Real Estate Agent · Philadelphia, PA · Member since 2020 · 294 posts · 245 votes
5y
@Buyan Thyagarajan 19143 + 19139 are some of the hottest areas in Philly right now, and the appreciation in this pocket has exploded in the last year. Over the last 5 years, West Philly in general has seen the average home price rise from 90k-190k. Now that is a broad statistic and values vary drastically from block to block.
In 19139 a huge divider is obviously Market St., in Haddington you will see a purchase range of 85-110k with your ARV values 190-220k, you see a similar purchase and ARV range south of Baltimore Ave in Angora + Kingsessing areas. Now a year ago, a purchase in these pockets ranged from 55-85k while your ARV values were only 150-190k.
Cobbs Creek has seen a huge amount of appreciation in the last year, with pre-covid prices hovering around 85-110k with ARV values around 190-220k, in today's market you can't find a house in true Cobbs for less than 110k unless its simply 4 walls and some joists. Most houses are trading between 110k for a full gut, up to 135k for a cleaner rental-ready home, with ARV values rising by the week but consistently ranging between 220-250k with some properties even pushing north of 250k.
Typically my contractors have been pricing full guts between 60-80k depending on what lumber is priced at for the week (thank god it's finally on the decline).