Investors with knowledge of Philly

9 Replies

Hello, BP. I've been on the site for about a year, but have really only been here for educational purposes. For the past 8 months or so, I've been working on getting a plan together and getting to a place where I feel I have the finances ready to jump into the REI game.

I live in Denver, where the buy & hold market can be a little difficult to get into.  As such I'm looking at areas outside my state.  I came across a multifamily property in Philly through a turnkey company with the following stats (based on their numbers, not mine):

  • 1920's triplex (1500 sq ft.) in 19143 zipcode (a few blocks off Cobbs Creek Pkwy and not too far from Mt. Moriah Cemetery)
  • Units are 2/1, 1/1, 1/1 
  • This is essentially a gut job rehab and a new roof
  • $135,000 purchase price and total rent estimated at $1950/mo
  • Estimated monthly expenses (including debt service, insurance, taxes 10% vacancy, 10% repair, and mgmt fee) = ~1200/mo

So, on paper, I'm thinking this looks pretty good.  I don't know Philly.  I expect this is not a great area.  Quick research on the Interwebs shows high rental market, low income, schools aren't good at all.  Does $135,000 sound like a decent cost for a triplex in this area?  Are my assumptions at least close to accurate?  What am I not thinking about?

Any help would be appreciated.

@Steve Perkins  

I am not an expert on the market, but have certainly done my numbers on Philly. That is very low, and is likely in the low C >> D end of the spectrum. 

That zip code is also on the rougher side of the river.

While I think that Turnkey companies can be immensely helpful for out of state investors, I have not seen one in Philly that makes sense to me. In part, split urban areas like Philly take a lot of gambling in regards to safety concerns and appreciation.

The urban gentrification bandwagon is something that tempts so many of us east coast folks. In part, it's because we have seen areas like Brooklyn rise from the ashes and we assume that bad neighborhoods in other cities are due for the same transition.

If you feel like talking about other out of state markets, I would be happy to chat. Philly's also a bit of a trip from Denver. Have you found anything of interest within a 4-6 hours drive?  

@Steve Perkins  

I suggest you talk with @Eric Baum  , as he has a lot of experience investing in Philly and I think it is with the turnkey company you are working with on this property.

Thanks, @Larry Fried.  I'll send him a message.

@Steve Perkins   you did not mention the rehab costs. What are those? They would definitely impact the quality of the deal. Also what about asbestos? That is something that can show up on older rehabs with a dated heating system. 

@Trevor Ewen  I agree. 

That is a rough part of town. 

Originally posted by @Steve Perkins :

Hello, BP. I've been on the site for about a year, but have really only been here for educational purposes. For the past 8 months or so, I've been working on getting a plan together and getting to a place where I feel I have the finances ready to jump into the REI game.

I live in Denver, where the buy & hold market can be a little difficult to get into.  As such I'm looking at areas outside my state.  I came across a multifamily property in Philly through a turnkey company with the following stats (based on their numbers, not mine):

  • 1920's triplex (1500 sq ft.) in 19143 zipcode (a few blocks off Cobbs Creek Pkwy and not too far from Mt. Moriah Cemetery)
  • Units are 2/1, 1/1, 1/1 
  • This is essentially a gut job rehab and a new roof
  • $135,000 purchase price and total rent estimated at $1950/mo
  • Estimated monthly expenses (including debt service, insurance, taxes 10% vacancy, 10% repair, and mgmt fee) = ~1200/mo

So, on paper, I'm thinking this lt

which interwebs , web sites did you use?

Originally posted by @Eli M. :

which interwebs , web sites did you use?

A simple Google search on zip code will give you a number of sites to look at the demographics of a neighborhood, including the renter/owner make-up, crime statistics, schools, etc.

I don't know about the deal you're considering, but I will state a couple of facts. There is currently 29 rental properties on the MLS in the zip code ranging from 550 to 1550. In that area by the cemetery you referenced, there are 34 properties for sale on the MLS ranging from 14.6k (not a typo 14,600) to 155k. The couple on the high end are completely remodeled and look to be nicely done. I personally don't invest that far down. I stay in the NorthEast or the suburbs.

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