All Forum Posts by: Dan Powers

For anyone that has been living under a rock recently, lumber prices have tripled since the beginning of last year, peaking at a little over $1700 per 1000 board feet. That being said in recent weeks lumber has seen a slight decrease, with experts expecting to see a continuous decline in prices. Here are some articles supporting that theory.

https://www.bloomberg.com/news...

https://www.barrons.com/articl...

https://markets.businessinside...

This being said, with the decrease of lumber prices in the future, will we see an increase in new construction across the city and by who. Obviously, I expect the big players to continue to build because they can afford to, I'm more curious about what percentages will entice regular rehabbers to jump back into the game. Would love to hear everyone's thoughts on when they will jump back into the new construction market. 

@Nick Scullin Norristown is a very interesting area to look into for investment opportunities. Obviously, as you mentioned it gets a bad rap and there are certainly areas that aren't prime for investment, typically the closer to the riverfront and the courthouse the better. My team and I have been moving an increasing amount of properties in that area over the last year. Surprisingly a large amount of multi properties, ranging from 2-10 units, as well as the larger victorian style SFH.

In addition to what @Andrew K. said with the new turnpike ramp which will bring a ton of new traffic to the area, the city is dumping millions into development along the riverfront. The goal is to turn Norristown into the young artsy district that Phoenixville has become. Here are some links showing the development plans along the riverfront as well as a new luxury apartment complex.

https://www.timesherald.com/news/new-lease-on-life-for-condemned-sandy-street-building-in-norristown/article_d2f0efcd-6528-5a59-8ab6-20ad28153b03.html

https://www.norristown.org/424...

https://www.norristown.org/Doc...

Hope this helps shed some light on the area.

@Buyan Thyagarajan I know every podcast out there tells investors to refi out all your money from your  investments. Well ideally that is the goal of every property you pick up, espically in this market due to many factors (mostly increasing material costs) it is a very unrealistic expection to find a proprety in which you are able to pull out all of your money. 

I always tell my investors if your able to check 4/5 boxes for you pulling a trigger on a property and the last thing is leaving a small amount of money left in the property and it takes you less then a year to recoup the money, in this market I would pull the trigger.

One great thing is I also have a great refinance contact as opposed to the typical 3-6 months with a normal bank, my lender is able to begin the refinance process as soon as you lock in annual tenants. So, once you rehab your property and find an annual tenant whether that entire process takes 2 weeks or 2 months you can start the refi process as soon as that tenant is in place.

Hope this helps, and certainly reach out if you want to connect.

Investment Info:

Small multi-family (2-4 units) buy & hold investment in Philadelphia.

Purchase price: $160,000
Cash invested: $150,000

This was a fantastic opportunity my investor jumped on as soon as it was released. This property is located right between prime Point Breeze and West Passyunk. What made this property special was the legal ability to convert it to a duplex. With duplex comps selling in the range of 535-545k, there was a huge spread to make on this project.

What made you interested in investing in this type of deal?

What made my investor interested in this deal was the ability to convert the property to a duplex. While rehab wise it was going to need a full gut anyway, with the option of potentially adding a 3rd story and making the ARV even higher, the base numbers still satisfied my buyers. Also with 2 new build duplexes as the neighbors, by the time they complete their project the refi value could be even higher.

How did you find this deal and how did you negotiate it?

This deal was sourced through New Western Acquisitions. It was sold as a 24 hr highest + best, with the starting bid at 150k, thankfully this particular property was released on a Friday with bids due on Saturday, so less bids were submitted then normal which allowed my buyer to only have to submit a bid 10k over ask.

How did you finance this deal?

This deal was purchased with cash.

How did you add value to the deal?

The value being added to the home is extensive, first a complete full gut of the interior, all mechanicals + cosmetics. Now the conversion process for the duplex could keep the existing structure as a 2 story, or their is the possibility of adding a 3rd story which will boost the value even more.

What was the outcome?

The outcome is going to be a great 2 unit property, in an established area that is only going to continue to appreciate

Lessons learned? Challenges?

The only challenge endured during this property was the decision to either keep the existing 2 story structure or add a 3rd story.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Dan Powers - New Western Acquisitions

Investment Info:

Single-family residence buy & hold investment in Chester.

Purchase price: $65,000
Cash invested: $5,000

This property was a cash flow landlord's dream. Now I won't sugar coat it, Chester is well Chester, there's not to much I have to say about it. But if your able to get past that then the numbers are incredible, 65k purchase, super minimual rehab maybe 5k, bringing in $1000 a month, with an ARV of 90k.

What made you interested in investing in this type of deal?

What made my investor interested in this deal was simple, with a purchase price of 65k, and bringing in $1000 monthly, you can't beat those numbers.

How did you find this deal and how did you negotiate it?

This deal was sourced through New Acquisitions, it was a first come first serve deal.

How did you finance this deal?

The property was purchased with cash.

How did you add value to the deal?

Our property was in great condition as is, with stainless steel apps in the kitchen, central air, and super clean overall. With an ARV of 90k, we were a paint job away from hitting that.

What was the outcome?

The outcome is a massive cash-flowing property in great condition with very little maintenance costs.

Lessons learned? Challenges?

The only challenge we encountered was initial access to the property due to the tenant being on vacation. Other then that closing was a breeze.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Dan Powers - New Western Acquisitions

As everyone knows the cost of rehabbing a property continues to rise, lumber being the biggest factor in that. In the south philly market your typical full gut used to run roughly 80k for a standard 1000 sqft row. With construction costs soaring I'm now seeing quotes for nearly 100k+ all said and done, I want to know what rehab budgets are everyone allocating to your projects? What costs have increased the most (besides lumber), and what entry price still makes sense for you to jump on an opportunity given how hot the market is. 

Investment Info:

Single-family residence buy & hold investment in Philadelphia

Purchase price: $121,500
Cash invested: $25,000

This was a rare find in the Northeast region of Philadelphia. The property was owner-occupied delivered vacant, and mechanically was in great shape. The majority of the rehab was purely cosmetic, redoing the kitchen, bathroom, paint, and carpets. Once that rehab is completed this is going to be a great rental property in one of the most sought-after areas in Philly.

What made you interested in investing in this type of deal?

What made my investor interested in this deal to start was the area. Northeast Philly is one of the hottest areas in the city, a good investment property in this pocket only comes around maybe once a month if that, so given the chance my investors had to jump on it. Also, the condition was a huge selling point, being owner-occupied it was in good shape as it sat, and simply needed cosmetics to turn this property around.

How did you find this deal and how did you negotiate it?

This deal was sourced through New Western Acquisitions and was sold as the highest + best offer. With the starting bid at 105k, I instructed my buyer to place a bid at 121.5k if he wanted to win this property because I knew there was another bid at 121k.

How did you finance this deal?

This deal was purchased through cash.

How did you add value to the deal?

The value being added to the property is going to be through redoing all the major cosmetic items. A completely new kitchen and bath, as well as new carpet and a fresh coat of paint.

What was the outcome?

The outcome is going to be a great rental property where the market rent is $1350 for a good clean 3 bed.

Lessons learned? Challenges?

The only challenge experienced in this project was the seller left behind a lot of her belonging so my buyer had to hire a cleaning crew to move out all the junk, it was an unexpected expense, but was quickly resolved.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Dan Powers - New Western Acquisitions

Investment Info:

Single-family residence fix & flip investment in Philadelphia.

Purchase price: $240,000
Cash invested: $100,000

This was a great project my investor is undertaking right now, it is a classic grandma home that needs a full gut. With the possibility of adding a setback or even a 3rd story the ARV you have tons of room on the spread to make a killer return.

What made you interested in investing in this type of deal?

What made my investor interested in this property was the area, prime fishtown. I don't have to say much about the area because it sells itself.

How did you find this deal and how did you negotiate it?

This was a first come first serve deal, sourced from New Western Acquisitions.

How did you finance this deal?

This deal was purchased through cash.

How did you add value to the deal?

Value is being added to the deal by completely rehabbing the interior of the property. The layout of the property is being changed from a 3/1 to 2/2 so there is a master suite instead of 3 tiny bedrooms. There is also the possibilty to add a 3rd story setback or flush full story.

What was the outcome?

The outcome is going to be a great new modern property in a super hot area.

Lessons learned? Challenges?

Honestly, the biggest challenge was my investor deciding what rehab he wanted to do. Obviously, a full gut is needed, but any addition on top of the property was still up in the air due to needing a variance for any additional work.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Dan Powers - New Western Acquisitions

Investment Info:

Single-family residence fix & flip investment in Phila.

Purchase price: $135,000
Cash invested: $60,000
Sale price: $255,000

This property was in fantastic rental shape as is, but my investor decided to flip it. The house had new drywall, recessed lighting, a rental grade bathroom upstairs, laminate floors, and clean ductwork. My investor was going to finish the basement, add 1 1/2 baths to the property, and redo the kitchen.

What made you interested in investing in this type of deal?

My investor loved this deal because of the area, cobbs creek has been absolutely blowing up in recent years, with rehabs going on on nearly every block.

How did you find this deal and how did you negotiate it?

This deal was sourced through New Western Acquisitions and was sold on a first come first serve basis.

How did you finance this deal?

This deal was purchased in cash.

How did you add value to the deal?

My investor is adding value but finishing the basement, adding 1 1/2 bathrooms, redoing the existing bathroom and the kitchen.

What was the outcome?

The outcome is going to be a great rehabbed west philly home. This area is exploding with DOM averaging around 30 days, some as low as under a week on market. On top of that most hot properties are getting into bidding wars with your closing price far exceeding the asking price.

Lessons learned? Challenges?

The biggest challenge for this project was showing my investor the value of the area. A year ago your entry price to Cobbs Creek was anywhere from 80-110k, while your ARV values hovered at 210-225k at the top. In the current market your entry price has shifted to 110-135k while your ARV values have increased to 230-255k on the right blocks. This change was something my investor did not realize, when he originaly thought he overpaid for the property, but he did not consider the increased ARV.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Dan Powers - New Western Acquisitions

@Tom Veit While I know building material costs are through the roof right now I have only seen it be a major influence in my investors decision making when debating on whether or not to develop a new build property. Most of my investors are continuing to rehab their properties with the consideration that your ARV values continue to rise on a weekly basis.

I would recommend going forward with your project, on the grounds you still make enough on your spread for you to be happy.