What are realistic Cap Rates in Philadelphia?

9 Replies

Hi, I'm putting together financing and doing research for my first investment purchase. I'm in Philadelphia, my realtor told me that a 5%-6% cap rate is what most properties here see. That seems a good bit lower than the 10% outlined here...

http://www.biggerpockets.com/renewsblog/2010/06/30...

I'm wondering if anyone has any specific experience in Philly and what kind of numbers I can hope to expect.

Thanks for your time!

Hello Nathan,

10% are possible in Philly. I am here the next days in town to check locations and meeting turnkey provider.

How do you want to invest - via turnkey concept or rehab + manage by yourself?

I think there is a webniar the coming week about Philly. Let me check my inbox and I can forward.

Andreas

Hi Andreas, if you can find that webinar info please pass it along.

I'm looking to keep things simple right now.  I'm an experienced contractor, I have the skills to do rehabs but not the time or the cash really.  I'm comfortable taking on a project that needs sprucing up, painting, tearing up carpet, that sort of thing.  Under what circumstances would a 10% cap rate be likely?  Meaning where should I be looking?

Thanks!

I think if you are looking for a 10 cap you would be in a little dicier neighborhood. Maybe SW Philly or K&A area.

Hey G Nice, I think there's some truth to that.  I've been surprised at what some of the rents are around K&A.  

I'm not looking for 10% per se, right now I'm really just looking to understand my local market in relationship to all of the available info and advice here.

Sorry for reviving an old thread, but I've got the same question

@Andreas F.  were you able to find the webinar? I'm looking for similar 10% cap rate properties, and was thinking that I was limited to buy fix and rent properties, but I'd be open to turnkey concepts. My only concern is getting it with a bad tenant. Can you PM me with more information? To @Greg Wake  's point, I don't want to deal with dicy areas, definitely not in my first deal, so I'd rather take a lower cap rate if necessary.

@Nathan Flanigan  were you able to find additional info on realistic (but lofty) cap rates in our market are?

Thanks

@Nathan Flanigan  -

When you are reviewing the possibility of going Turnkey, be sure and read some of these BiggerPockets.com blog articles.  Know what to look for and what to ask and you may find that Turnkey is a really good option.  Sometimes an 8% consistent return may be better than the initial 12% you were quoted on paper.  Just for the sake of education, read before you go the Turnkey route.

http://www.biggerpockets.com/renewsblog/2014/12/17...

http://www.biggerpockets.com/renewsblog/2014/05/02...

And this one has more to do with management than actual Turnkey investing, but more turn key properties come with some form of management in place.  Property Management will the the difference in your property performing and not performing up to your expectations.  There will always be ups and downs, but bad management can kill a great investment.

http://www.biggerpockets.com/renewsblog/2014/03/12...

Best of luck to you - 

Chris

Medium memphis invest logo mdh 12 4 14Chris Clothier, Memphis Invest, GP | 901‑751‑7191 | http://www.memphisinvest.com | Podcast Guest on Show #224

@Chris Clothier  

  Mr. Chris It would be very interesting to see comparisons of actual cash flow or net rents received over a 3 to 5 year period from 8 caps from tK or 12 cap from tK

I will wager you a ride in my new jet... that the 8% wins out.

See below this is the ride you need to go from Memphis to TX... I had a deposit on one until the GFC  LOL>  But I could pilot this for you no problem.!!

http://www.cirrusaircraft.com/vision/

Medium ksqoekox 400x400Jay Hinrichs, TurnKey-Reviews.com | Podcast Guest on Show #222

Originally posted by @Jay Hinrichs :

@Chris Clothier 

  Mr. Chris It would be very interesting to see comparisons of actual cash flow or net rents received over a 3 to 5 year period from 8 caps from tK or 12 cap from tK

I will wager you a ride in my new jet... that the 8% wins out.

See below this is the ride you need to go from Memphis to TX... I had a deposit on one until the GFC  LOL>  But I could pilot this for you no problem.!!

http://www.cirrusaircraft.com/vision/

 My oldest son will flip out when I show him this picture Jay.  He has wanted to be a pilot since the age of 5 or 6 and flies this plane on his computer simulator.  He is only 13, but is pretty set on learning to fly.

Medium memphis invest logo mdh 12 4 14Chris Clothier, Memphis Invest, GP | 901‑751‑7191 | http://www.memphisinvest.com | Podcast Guest on Show #224

@Chris Clothier  

  there ya go.... I have a SR 22... next time I get out your way I would be happy to take you and your son up for a run around Memphis !!!  Once your son gets the bug watch out!!

I had a deposit on this one.. in the day it was going to come out at 950k and I could have swung it... ... but now its 1.9 ... so I won't be upgrading anytime soon.

But for MI to buy a corporate ride this is a very nice safe plane ....

Happy holidays and wishing you the best in 2015..

Medium ksqoekox 400x400Jay Hinrichs, TurnKey-Reviews.com | Podcast Guest on Show #222