All Forum Posts by: Igor Messano

@Carlos Webel I have not seen much in correlation between the two. To me, most lenders can or can't close by a certain time period. I haven't experienced any premiums on expedited closing times. Matter of fact, in my case, the lender with best rates ended up being one of the few that could close in my time frame. 

Seems high to me as well. I closed on a similar property with 80% LTV with 4.375% from a local credit union. Closing was as fast as the title search here in Philadelphia allows it to be. My credit scores average to around 765.

I own two properties in the city and one of them in Kensington. You are right that sometimes sections of these neighborhoods are not pretty. They are neighborhoods going through big changes and the same can be said for other locations near by 10 years ago such as Northern Liberties and Fishtown. People get priced out of an are, investors start to buy and build the neighboring blocks and abandoned properties turn into great future investment opportunities.

Phila is a block by block city so make sure to use all the resources you can to be sure about your investment. Other than that it is a great place to invest!

Good luck,

Igor

Hey @Carlos Guzman,

Let me know what you decide on. My wife has been looking into the same and she was strongly considering Temple also. Although she is questioning whether being an accredited institution really beings any value if you can pass the exam with either one. I would really like to know what you decide on.

I just posted about my first purchase if you look at my history. The 2% rule did not apply for me in any of the deals I looked at. These were some pretty risky areas and it still didn't work for me. Now the 50% did work although I am not a big fan of it. It takes a lot more effort but when you properly list all of the Capex and such, it usually comes out to a lot less than 50% for me depending on the area. Philly with the flat roofs and smaller properties in the city can have low expenses in comparison to the rent. If your area suddenly becomes popular and rent increase, it doesnt mean your Capex and maintenance will increase unless you do a significant remodel to make it a high end property.

Port Richmond isn't too difficult of an area to narrow down. Places such as Kensington can really be block by block but although there are certain blocks that are slightly more attractive in Port Richmond, the main attribute driving the pricing there is the proximity to Fishtown. So the further south towards Fishtown you go, the more expensive the properties get as investors are slowly moving to the area. 

Overall, great area to invest in. Stay closer to fishtown if you want faster gentrification and better bet. The further you go the cheaper and more potential for growth but you have added risk.

Hi everyone,

I closed last Friday on my first rental thanks to all of the help I received here. First I wanted to say thank you to everyone for making this process much less stressful than it could have been. I also wanted to tell you guys a little about the deal as my wife in tired of listening to me talk about this rental at this point.

2 Bed, 1
Value: $70,000

Purchase: $52,000 (or 65,000 Financed)
Down Payment: $0 (Financed)
Closing Costs: $3,969

PITI: $348
Rent: $850
Vacancy: 10% (Property Managers say it is only 6% for the area but we want to be conservative)
Maintenance and Capex: 8%

CoC: 105%
Cap Rate: 10.58%

The maintenance and Capex sound low % wise but I worked with the appraiser, contractor, and some other resources to create an exhaustive list of all of the Capex's and it came out to about 4.5%. The property is only $850 sq ft with a flat roof ($1150 replacement). The Capex includes everything from HVAC, Roof, Kitchen Cabinets, Appliances, and flooring. The first floor is all tile (hardwood looking ones) and there is only about 300sq ft of actual hardwood in the bedrooms on 2nd level.

Property was down to a shell 8 months ago so everything is brand new in terms of plumbing and electrical.

For the purchase, I officially purchased the property for $65,000 with a 20% down payment. The seller agreed to pay $13,000 as part of a "Home warranty" after closing, so we essentially purchased the property for 52,000 with no down payment. We only paid the closing costs out of pocket.

What I am really excited about is that there is an empty lot to the right of the property where there used to be an attached house. The city has already agreed to sell us the lot for closing costs only (Around $1,000). The lot has been cleaned of all trash and weeds by the tenant whose kids use it to play. We plan on spending a little once purchased to paint the fence and maybe put some gravel or paving so it is not an empty lot. This could increase the rent of the property as no one in these city blocks have private parking or a real yard.

Philadelphia.

I would be very careful with this as it is extremely easy to get sued over discrimination over a service animal. To be clear, a service animal can be anywhere from a seeing eye dog to an emotional support animal and unfortunately there is no standard. This means that anyone can ask a doctor to write that they need the animal for X reason and they have the right of any other service animal. This means that if they wanted to, they could bring that animal into a plane for no charge.

Unfortunately that is how the law stands right now and no you also do not need any "certifications" for this animal either and any certifications provided are generally BS anyway. You do need to be careful as even the act of asking what disability the animal is helping with can be a violation as even TSA and airlines do not have the right to ask that. Now if for any reason a person ends up in court, the court has the right to request proof of the animals need but do you really want to get that close to a law suit? Plus she has already fulfilled her obligation by getting that doctors note so she would be in the clear.

In terms of insurance I would check so you are covered but make sure to tell the insurance that the animal is service animal as they too cannot discriminate. But if push comes to shove, you still could not evict her if the insurance drops you, you need to look for another insurer even at an additional expense to you.

Sorry but the system sucks in this aspect and people have grossly taken advantage of something met to protect people with actual needs.

@Derrick Camber it sure is a great community and so much information available you can spend ages here. From the looks of it you are doing well in paying your debt and building that E-fund. Resist the temptation of spending it because there is nothing worst than having to used debt to fund an emergency. The feeling will be 10x worst than the good feeling of paying the debt off. Plus having an emergency fund is a good practice for when you will be required to have reserves for all of your future real estate rental (if that is the direction you go to).

Good luck with everything,
Igor

I was much like you where I was not the best at estimating my expenses when paying debt and would always pay a little too much and leave myself short. The thing that got me on the right track was YNAB! it is a great tool and they have endless amounts of information and community that will teach you all you need to know about budgeting and personal finance.

The biggest take away and what I think gave me my freedom was always being a month ahead in income and having a safety net in savings. By being a month ahead I mean that on Jan 1st of every month I transfer money for the entire month from my savings or other account into my daily checking account. This requires you to know what your average monthly expenditure is but it is great. This means that during the entire month I don't ever have to worry about when a pay check comes, when a bill is due or anything. All of the money that I need is already in my checking ready for use, and all of the money I make during the month just accumulates in a savings account until I am ready to move it the next month. This is when I decide how much goes into my checking, how much goes into debt payments, and how much goes into my long term savings.

The other side of this is having an emergency fund. You should first build yourself a buffer before trying to pay off debt quickly. There is no point in paying off debt like crazy if you don't have cash for an unforeseen expense when it comes up. You would just be in debt again.