New Investor - Looking in the Philly Market

Philadelphia, Pennsylvania
BRRRR - Buy, Rehab, Rent, Refinance, Repeat
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New Investor - Looking in the Philly Market

Samantha Storz
New to Real Estate · South Jersey · Member since 2023 · 8 posts · 8 votes

Hi BP Community!

I've been dreaming about investing in real estate for awhile now and I'm finally putting myself out there to the community in an effort to hold myself accountable & invest in at least one property this year! I'm from the Philly suburbs and definitely interested in tapping into Philly neighborhoods (thinking Brewerytown, Old Kensington) but as you know if you're from Philly, neighborhoods can be safe or not depending on what block you're on.

I've read a lot about BRRR and was thinking that would be the method I try out. Ideally, I'd love to partner with a private money lender on this. I'm so brand new here and it all feels a bit overwhelming but trying to take it step by step. My goal for 2024 is to purchase at least 1 property and go to at least 1 networking event a month or grab coffee/lunch with investors/agents/contractors in the area at least once a month to force myself into taking action.

Let me know if anyone has any advice for a newbie or if anyone in the Philly area wants to meet up for coffee and chat! :)

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Stuart UdisPro Member
Attorney · Philadelphia · Member since 2018 · 2k+ posts · 3k+ votes
2y

I would advise to do the exact opposite of what's being recommended. Particularly if this is your first real estate investment. If you have the credit worthiness and liquidity, use a traditional bank, not a hard money lender. Secondly, do not use credit card debt to cover the down payment. Have access to the credit card funds to assist with any contingencies but do not use it as your down payment. This is the playbook of the "gurus" who push these strategies because it captures an audience. However, all these "gurus" do is help their duped students buy lousy assets in zero barrier of entry neighborhood. Over leveraging yourself on your first investment seems like a bad strategy. As you become more experienced with a track record, using higher leverage makes more sense but not for the first investment. 

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  • Nate HerndonPro Member
    Lender · Springfield, MO · Member since 2023 · 277 posts · 195 votes
    2y

    Hi @Samantha Storz, welcome and congrats on setting 2024 as your year to start investing! I routinely work with new investors and have closed a number of rehab loans in Philly for first-timers. 10-15% down payments are pretty attainable, even for someone with limited experience. 

    I know that this forum is chuck full of resources. You are welcome to shoot me an email for a property data tape to track prospective deals, example scope of work templates, and a list of program options for BRRRR investors.

    I also have clients that I can put you in touch with in the Philly area who are BRRRR professionals.

    [email protected]417-605-2196
    0Reply
  • Gall Davidovitch
    Investor · Member since 2023 · 38 posts · 7 votes
    2y

    Hi @Samantha Storz. 

    Congratulations on your first step. 

    I recommended you use a hard money lender for a down payment and at the same time, use a business line of credit for rehab, I use cc funding with 0 %APR. 

    good luck with your investment.  

    0Reply
  • Samantha Storz
    OP
    New to Real Estate · South Jersey · Member since 2023 · 8 posts · 8 votes
    2y

    Hey @Nate Herndon,  Thanks so much! I'll definitely shoot you an email. 

    0Reply
  • Samantha Storz
    OP
    New to Real Estate · South Jersey · Member since 2023 · 8 posts · 8 votes
    2y

    Hi @Gall Davidovitch, Thanks so much for taking the time to respond. Do you have any recommendations for finding a hard money lender who will work with a first time investor? I know I can look on bigger pockets as well. Creative idea to use the BLOC for rehab. I assume you do that for the 0% APR, I'm curious if someone just starting out could get that. Do you buy all your properties under a LLC?

    1Reply
  • Monica Williams
    Real Estate Agent · Philadelphia, PA · Member since 2023 · 81 posts · 40 votes
    2y

    Hi @Samantha Storz, welcome to the world of REI! BiggerPockets is a great place to network and pick other investors brains about their experiences. I'm an agent that specializes in off-market investment properties in the Philly area, I'd love to connect and grab a coffee to chat more!

    0Reply
  • Alan AsriantsBusiness Member
    Real Estate Agent · Philadelphia, PA · Member since 2019 · 1k+ posts · 1k+ votes
    2y

    Hey Samantha! Welcome to the Bp Community. I am an agent and investor in the Philadelphia area. You already know you can expect out of the market in the areas you mentioned, and its also important to know actually whats going on, and how the market is behaving with current inventory, local policy, etc. 

    I'd be happy to connect and chat on the phone to talk about the market and your strategy to get into your next rental in the area. 

    Reach out anytime!

    [email protected]267-767-0111
    Alan Asriants - New Century Real Estate 591 Reviews
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    0Reply
  • Gall Davidovitch
    Investor · Member since 2023 · 38 posts · 7 votes
    2y
    Quote from @Samantha Storz:

    Hi @Gall Davidovitch, Thanks so much for taking the time to respond. Do you have any recommendations for finding a hard money lender who will work with a first time investor? I know I can look on bigger pockets as well. Creative idea to use the BLOC for rehab. I assume you do that for the 0% APR, I'm curious if someone just starting out could get that. Do you buy all your properties under a LLC?

    yes I have, send me a DM
    0Reply
  • Stuart UdisPro Member
    Attorney · Philadelphia · Member since 2018 · 2k+ posts · 3k+ votes
    2y

    I would advise to do the exact opposite of what's being recommended. Particularly if this is your first real estate investment. If you have the credit worthiness and liquidity, use a traditional bank, not a hard money lender. Secondly, do not use credit card debt to cover the down payment. Have access to the credit card funds to assist with any contingencies but do not use it as your down payment. This is the playbook of the "gurus" who push these strategies because it captures an audience. However, all these "gurus" do is help their duped students buy lousy assets in zero barrier of entry neighborhood. Over leveraging yourself on your first investment seems like a bad strategy. As you become more experienced with a track record, using higher leverage makes more sense but not for the first investment. 

    [email protected]
    1Reply
  • Samantha Storz
    OP
    New to Real Estate · South Jersey · Member since 2023 · 8 posts · 8 votes
    2y

    Thanks @Stuart Udis! I think Gall was saying that she uses a business line of credit for the rehab portion, not the downpayment. If I'm looking to buy a property in Brewerytown (let's say) that I'll purchase for say 125K and it needs a 50K rehab, that's (50K rehab, 24k is 20% + 10K closing costs) 84K I would need to bring to the table in cash. Unfortunately, I don't have 84K to spend. I think in this case, in order to get creative, wouldn't the hard money lender & then refi be the most creative way to make this work? Otherwise, I'm unable to get a seat at the table and invest. I do agree that in a perfect world, I'd have the liquidity. Curious on your thoughts? 

    1Reply
  • Samantha Storz
    OP
    New to Real Estate · South Jersey · Member since 2023 · 8 posts · 8 votes
    2y

    @Monica Williams - thanks so much! I'd love that. Send me a message and lets exchange numbers!

    0Reply
  • Gall Davidovitch
    Investor · Member since 2023 · 38 posts · 7 votes
    2y
    Quote from @Samantha Storz:

    Thanks @Stuart Udis! I think Gall was saying that she uses a business line of credit for the rehab portion, not the downpayment. If I'm looking to buy a property in Brewerytown (let's say) that I'll purchase for say 125K and it needs a 50K rehab, that's (50K rehab, 24k is 20% + 10K closing costs) 84K I would need to bring to the table in cash. Unfortunately, I don't have 84K to spend. I think in this case, in order to get creative, wouldn't the hard money lender & then refi be the most creative way to make this work? Otherwise, I'm unable to get a seat at the table and invest. I do agree that in a perfect world, I'd have the liquidity. Curious on your thoughts? 


    So I just got for my LLC BELOC of 500K I use for a down payment, and for Rehab I use the 0% APR credit card

    0Reply
  • Stuart UdisPro Member
    Attorney · Philadelphia · Member since 2018 · 2k+ posts · 3k+ votes
    2y
    [email protected]
    0Reply
  • Chris Pelc
    Investor · Philadelphia · Member since 2023 · 104 posts · 46 votes
    2y
    Quote from @Samantha Storz:

    Hi BP Community!

    I've been dreaming about investing in real estate for awhile now and I'm finally putting myself out there to the community in an effort to hold myself accountable & invest in at least one property this year! I'm from the Philly suburbs and definitely interested in tapping into Philly neighborhoods (thinking Brewerytown, Old Kensington) but as you know if you're from Philly, neighborhoods can be safe or not depending on what block you're on.

    I've read a lot about BRRR and was thinking that would be the method I try out. Ideally, I'd love to partner with a private money lender on this. I'm so brand new here and it all feels a bit overwhelming but trying to take it step by step. My goal for 2024 is to purchase at least 1 property and go to at least 1 networking event a month or grab coffee/lunch with investors/agents/contractors in the area at least once a month to force myself into taking action.

    Let me know if anyone has any advice for a newbie or if anyone in the Philly area wants to meet up for coffee and chat! :)


    Hey Samantha! 

    I'm a philly suburb local as well. It's certainly exciting to start venturing into the real estate market when you are looking for investments. I know that you mentioned Brewerytown, and Old Kensington. Have you by any chance looked into Point Breeze, and parts of W. Philly? If not, i would definitely recommend looking into them. With a fairly close proximity to Rittenhouse square in Point Breeze, and the proximity to universities and transportation in w. philly, they are great spots for BRRRR rentals.

    I just helped another out of state investor get set up with private equity lending on a house we just closed on last week. Definitely a great resource, as well as hard money lending for getting into your first property!

    Give me a call if you would like to connect. 

    0Reply
  • Mike Klarman
    Specialist · NJ · Member since 2022 · 1k+ posts · 653 votes
    2y

    Philly can be tricky.  I lived in South Philly most of my life and I live in South Jersey now as well.

    Philly is a major metro area. Major metro areas are a tough place to start. Competitive markets drive up numbers that make it hard to work inside a BRRRR formula. Then if you intend to flip, you're hoping to get close to your ARV as a list price, lots of times the agents want to list lower cause it makes their job easier and faster.

    I run an investment group.  We started in Philly, we are now out of Philly.  The group did 4 deals in Philly and I didnt like the timeline of the projects, the time to liquidate, appraisal values.  Not to mention Philly loans will be expensive.  You can't buy a 80k house in Philly unless you want to go where there's gunfire every night.  You wanna work in Fishtown, South Philly, Northern Liberties, East Falls/Mannyunk area, certain parts of Old kensington.  Purchases and rehab jobs in those areas can be costly, that's if you win the bid.  I've worked with certain wholesalers as well in this market.  One property they asked for a non refundable 10k deposit and the house wound up having major structural issues that inflated the budget so much the property didn't work.  He wanted to back out and they didn't wanna refund his 10k.  So you really have to be careful of structural/foundation/plumbing/electrical issues.  Someone who really knows what they're doing should check them all out.  Cause all a wholesaler is trying to do is get you in an as-is contract with a non refundable deposit.  When you sign an as-is contract that means anything that comes up is on the buyer to fix.

    My group pivoted to a market where you can get in for 70k - 100k in a house in a c+/B area that has real ARV potential and you get much closer to the 1% rule than you do in Philly.

    I still have a group member who has a project going on in Fishtown on Salmon street. It has an ARV of 675k, but it wouldn't rent for more than 4k. 1% rule says should get $6,750/month.

    I sent you a PM.

    0Reply
  • Jake BakerBusiness Member
    Flipper/Rehabber · San Diego, CA · Member since 2020 · 1k+ posts · 695 votes
    2y

    @Samantha Storz

    Philly is a great place to invest. Some nuances to consider with the BRRRR methods:

    Financing - be sure you talk to lenders about the refinance process before you purchase a property.

    Rehab Costs - it is easy to go over budget. Expect overrun here

    Permit - Understand permit timelines

    Appreciation - don't rely on appreciation

    ARV - Analyze your ARV conservatively

    [email protected]
    BookkeepingRE - Bookkeeping for Real Estate & Service-Based Businesses58 Reviews
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