Small multi-family (2-4 units) buy & hold investment in Philadelphia.
Purchase price: $150,000
Cash invested: $32,000
My first legal duplex near Temple University! This marks both my 3rd property and both my 5&6th units!
What made you interested in investing in this type of deal?
My goal for the year was to purchase two units. This satisfied that goal and was within a market I am very familiar with.
How did you find this deal and how did you negotiate it?
I found this deal on MLS. It was relisted and I put in an offer within 5 days of the listing being up. I offered 20k less but was willing to beat any other offers with proof. Another offer came in as cash, but mine was higher. However, after inspections I was able to renegotiate a drop of 35k from listed price.
How did you finance this deal?
The deal was financed with a conventional loan and 15% down.
How did you add value to the deal?
My knowledge of the area helped me realize this property was a good deal. If offers both positive cash flow and appreciation potential.
What was the outcome?
Now I have my first legal duplex and I have the rest of the year to work on other goals!
Lessons learned? Challenges?
Have a structural engineer on hand. I was lucky enough to get a structural engineer to come within 3 days of our counter offer to be due. Simply because they were already in the area. Their report allowed me to renegotiate my offer with the seller.
@Anthony Zayas , way to go, congrats!
Can you share some numbers? Rents, cap rate, cash on cash, repairs, etc? How did you identify it was a good deal?
I moved to the West Coast a few years ago from Philly, but I'm interested in investing in Philly.
@Anthony Zayas Great work negotiating the deal down to a better price for the work needed. Found this one on the MLS and I can tell appreciation and proximity to Temple will make this one a slam dunk of a longterm hold for you. Good luck on the rehab and I wish you nothing but success on this one. Multis near Temple can definitely be tougher to find but getting in at the right price makes them a no brainer.
@Alexandru Nedelcu rents in that area vary depending on the condition of the property and whether or not students are renting them out. His duplex is one 2bd/1bth unit and a 1bd/1bth unit. I see recent rental comps for 1bds at $600/mo and $1295/mo and 2bds at $1350 and $1550. The goal would be to maximize these and rent for a total of $2700+. Obviously COVID has affected the student rental market making this a great long term hold for the growing Temple area. Would love to see your target rent for these units/what rehab you plan to do to get them up. Philly is definitely a hot market for investment and I have seen many investors pick up properties in the area remotely from the West Coast.
Thank you! The units themselves will eventually need full rehab to make them competitive in the future, but for now I was going to simply update the bathrooms and kitchen.
In regards to numbers, I currently plan on renting each unit for possibly 1000-1200 and 800-1000$ respectively. This makes it a minimum 14.4% or more cap rate, 27.3 CoC, which include about 4k on repairs.
I identified it was a good deal because I know this specific market (19122) very well. Including all the reasons @Alex Uman mentioned.
@Alex Uman Unfortunately, I feel like those prices would be a bit high if my target demographics were students given the current condition of the property and it's distance from Temple University itself. Generally, new construction finished places rent for about 700-750$/room. Given how much new construction is occurring in the area, AND the fact that students are renting them. It made me feel confident in the deal. For this property, I am aiming for about 500-600$/room for the 2 bedroom unit.
Covid did lower demand for student housing, but this will change in the Fall as Temple University has restricted on-campus dorm offerings.
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