All Forum Posts by: Kevin M.

@Stuart Udis I can tell you the math currently doesn't work in Philly as you've hinted above. There is no ROI for rental rehabs or investment in 90% of the market. Investment will be frozen until a new equilibrium is established. This will occur either through a drop in home values and investment/upkeep (Detroit) or through rising rents/returns to keep up with increases to costs/risk/scarcity (San Francisco). My bet is we meet somewhere in the middle in about 2 years with notable increases to the median rent and a decrease overall to quality inventory as the bottom quintile of operators dies off.

I'm already seeing rents increase this leasing season compared to '23 and '24. I think rents need to jump another 10%-20% in the next 2 years to make up for the increase in operating costs through property taxes, insurance, labor- plus added regulatory risk.

You could get away with bad deals and operations when interest rates were 3%. Not working anymore. The bad investments are beginning to die off. 

Run your proposed lease through A.I. as well. I would upload a few local statutes (Landlord Tenant Act, Renter's Access Act, Bed Bug laws) and ask AI to ensure your lease is fully compliant in review of the attachments. I have been pleasantly surprised that the major AI services are as up-to-date as most local lawyers on compliance. 

@Hussain Raza just keep in mind there are other potential hurdles in moving from a duplex to a triplex that may go beyond zoning. There doesn't seem to be 100% consistency in what L&I will require for a retrofit conversion from duplex to triplex- but you can at least count on a requirement for a fire alarm system (possibly monitored 24/7) and potentially a fire sprinkler system. I recommend you ask your zoning attorney if it's possible L&I makes you jump through these hoops to get your CO so you can more accurately predict the time and cost and make a fully informed decision. 

Lucas,

We manage 650+ units all around Philly and our owner clients have lots of different insurance solutions. I sent you a DM I am happy to connect you with a few highly recommended local brokers to shop around

I encourage most readers to just admire your efficiency instead of presuming they can get these results themselves.

I have not heard of a single investor able to get this kind of work done for $30k in Philadelphia. At least in the last 8 years or so. Congrats on your efficiency. You must have excellent connections, industry knowledge, experience, and project management skills to achieve this outcome for those numbers.

Paul, 

We are highly experienced in finding tenants in Philadelphia placing hundreds over the last few years. A few insights;

1) It's tough out there. 2023 and 2024 were both brutally difficult leasing years in Philadelphia. Supply continues to exceed demand throughout most of the city (with a few exceptions)

2) Your HCV strategy is certainly the hot thing right now. With payment standards significantly above market, many investors have shifted to this HCV focus. With more property owners competing for voucher holders, your HCV holders are currently the 'prettiest girls at the dance' and they essentially have their pick of quality rentals. For this reason- you really need a top-of-the-line rental to attract Section 8 tenants in Philly right now.

3) Historically speaking leasing activity spikes again around March. Hang in there.

Evan,

The best due-diligence you can perform is through trusted referrals. The wisdom of experienced local investors is even more valuable than any online research, Google Review, NARPM vetting you can perform on your own. 

A DM from an experienced investor like @Irfan Raza who can hopefully connect you with 1-2 other Philly-area property owners will go a long way. 

Personal referrals is how I make 90% of my business connections now whether it's contractors, insurance, mortgage brokers, etc.

@Stuart Udis is on point as always. Just to expand on his point about a glut of new housing- we are certainly feeling it when it comes to leasing and renewals throughout 90% of the city. 

We manage over 500 rental units in almost every zip code of Philadelphia, and our 2024 leasing year has been the most difficult in my 7 years of professional property manager experience. We have faced the longest average on-market times and fewest leads per day on market that we've ever recorded. In my professional opinion- supply currently exceeds demand throughout most of the city. Especially in the zip codes @Stuart Udis mentioned above, and around Temple University. 

New building permits have slowed down, relatively speaking, in 2024. I believe we are still 2-3 years out from the market equalizing toward the historic mean of leasing times. 

The easiest way would be to look up the permit history for the new construction. 

Type the address in to; https://li.phila.gov/property-history

This will give you the name of the contractor who pulled the respective permits for the work including the underlying Building Permit. You can then search for information about the contractor here;

https://li.phila.gov/contractor-lookup

In theory this will lead you to the builder. 

In reality it may lead you to some kind of shell company with no contact info or 'friend of a friend with a license', but it's at least a good place to start

Mark,

I'm a property manager in Philly. A few things I recommend asking during your PM screening process;

Are you licensed by the PA RE Commission and insured?

How long have you been leasing/managing in Philadelphia?

How many rental units do you currently manage in Philadelphia?

What is your in-house staff support? Admin, maintenance, legal, etc?

What are all the ways you (the PM company) make money?

How do you screen tenants and what is your eviction rate?

Are you a full service PM? Does the owner have ongoing operational responsibilities?

This should be a good start to your evaluation process. Please send me a message if you're interested in connecting directly