All Forum Posts by: Dan Powers

Investment Info:

Single-family residence buy & hold investment in Darby.

Purchase price: $55,000
Cash invested: $5,000

This property was part of a package deal with another darby property right up the block bringing in a combined $1500 a month. These properties needed very little in terms of rehab, and the tenants were planning on staying with a slight rent increase.

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

My investor was interested in an already cash-flowing investment with very little work needed. Also with the slight increase in rent, the cash flow would be that much sweeter.

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

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

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 deal will be in minor cosmetic updates mainly to the kitchens and slight bathroom work as well.

What was the outcome?

The outcome is a turnkey cash-flowing property and the owner will not have any worry about the tenant leaving.

Lessons learned? Challenges?

Honestly, this transaction was pretty painless, investor liked the number and the condition of the property. Made sure there were no structural issues, and quickly wired the deposit, and locked up the property.

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

Dan Powers - New Western Acquisitions

Hey @Colin M. welcome to the Philly market. Philly is a very block by block city, you can have a 500-600k property on one block, and you walk 2 blocks over and you're in zombie land. Now to those not familiar with Philly, this seems absolutely insane, but that's just how the city is, and people are completely ok with that. 

Upenn is the largest employer in Philly, employing north of 45k people. Thomas Jefferson University and CHOP are the next largest employers both with over 25k people, and all three are currently expanding.

I will suggest if you're looking for multis in Philly, expand your search to outside the city as well in Delaware and Montgomery county. Both areas have significantly more inventory of multis than Philly. Hope this helps you in your search.

Hey @Tom Callahan, first off welcome to the Philly market. I agree very much with @Eric Greenberg, budget certainly comes into play with these properties. I mean who doesn't want a multi in Philly nowadays, that being said, especially looking for a new construction multi is gonna be near impossible because anyone who builds one is not looking to sell it, unless for an extreme premium, and even then just the inventory for that is next to none.

Definitely do your research on the builder, but I would recommend looking into a none turn key multi where you can rehab it and build more equity into it yourself. Also, Philly taxes are dirt cheap even for a multi so it's not the biggest factor. 

Investment Info:

Single-family residence fix & flip investment.

Purchase price: $135,000
Cash invested: $150,000
Sale price: $400,000

This was a 2 story shell located in Norris Square that came with stamped and approved plans for a 3rd story setback addition plus a roof deck. While this was an extensive project the return makes this project an absolute steal and it sold in less than an hr. With new builds in every surrounding block with ARV's of 400k+, it is impossible to not make money on this deal.

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

My investor was interested in this deal because of the area, Norris Square is a very underrated but extremely hot area in the city for development with new construction and rehabs everywhere.

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

This deal was an off-market investor-owned property. It was sold first come first serve.

How did you finance this deal?

My buyers financed this deal with hard money

How did you add value to the deal?

The value being added is by adding a 3rd story addition and a roof deck on top of the complete rehab to the interior.

What was the outcome?

The outcome will be a beautiful 3 story house.

Lessons learned? Challenges?

The only challenges encountered in this transaction came from the lender, but all was sorted out in time for closing, thankfully.

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

Dan Powers - New Western Acquisitions

With the absurd increase in the price of building materials across the board, specifically lumber increasing in price nearly 200% from pre-pandemic prices, what build costs are investors or developers typically accounting for in their calculations?

What prices for lumber are you encountering in the Philly market, and how much of an increase have you allocated in your rehab budgets?

Very curious what investors and developers answer because the current market is changing by the week and the rehab budgets I've seen from a month ago are often not accurate for the current market prices.

@Brian Amirian Ahh you are correct I mistyped, the higher rents are west of Germantown Ave. 

@Dwight Anderson It is going to be really difficult to find a bank that's going to do that kind of refinance due to your units. Typically that method is used for much larger projects, and the lowest amount of units I've found a lender using that method is 4.

@Santiago Marquez I would want to know if your property is east/west of Germantown Ave. Typically rents in Germantown hover around 1200-$1300, with the further east you are the higher the rents will be.

Hopefully this helps, always happy to discuss the market.

@Andrey Pak Yes, generally those numbers are for either new constructions or big projects such as adding a setback or an additional 3rd story. For smaller projects, I generally don't calculate out $/sqft. because the rehabs in Philly are pretty cookie cutter. You know exactly what you have to do, what it generally costs because all the rehabs generally follow the same blueprint.

Yes, there can be some fluctuations in the standard of finishes depending on the area but overall, the rehab is pretty cut and dry what you have to do to hit your target ARV.

@Jack Korbutov Generally from what my contractors have used is the range of $110-140 per sqft. Now in your case of keeping something to BRRRR, I would stay on the lower side of that range as your not going to be putting super high-end finishes into your rehabs.

That being said, with the price of lumber skyrocketing, those numbers could go up in the near future. I would always build into your budget some wiggle room for unseen problems that could occur to be safe until you have a few underneath your belt.

Hope this helped!

Hey everyone! The Philly market is certainly a crazy one right now. I have two duplexes right outside the city myself. @Gilda VanderHeyden, I agree with you in the demand being spiked by New York Investors flooding the market here, as well as the large amount of foreclosures that are set to hit the market soon. Back in July, nearly 10k people missed their mortgage payments, now that has certainly compounded over the months and will result in a large influx of supply to meet the ever increasing demand.

@Tony Kim, The best advice I can give is to an out of state investor is coming to the city and simply driving around for a day or two to get familiar with the different neighborhoods, differing levels of rehab, along with becoming familiar investing in the city.

Always looking to connect with people and discuss the market, reach out if you want to chat.