All Forum Posts by: Kevin M.

Yes this would require a permit and drawings in Philly. The architect submitting your drawings would know the code but a bedroom requires a window, closet, and certain square footage. A kitchen requires a window close to the range or a ventilation system.

Can I ask why it’s so important for it to be a ‘legal’ 1BR? I really haven’t heard of people undertaking this kind of work just to change from a studio to 1BR on paper. Unless it will significantly improve the layout and rentability...

Make sure to check with your mortgage provider about borrowing down payment money. Since they want to be the first (and only) lender in line, they will often times make you promise you don't have any other debt or loans related to the property. They will pull bank statements in underwriting to make sure you don't have any money transferring around that could indicate another lender in the picture. 

It's best to be open and transparent with your mortgage provider so there are no surprises. You don't want to find yourself in a shady situation at closing..

@Catia T. can I ask how you got your 5% Property Management numbers? Generally the larger managers in the area are 7%-8% with a per-unit minimum rent price that may be above some of these D-class units. Also don't forget to factor in leasing fees in your PM calculations. This number generally seems low for any reputable manager, which is legally required for HCV properties.

Did you account for rental license? 107 units annually is another $5,992. 

Also the city is requiring lead testing now for all residential units constructed before 1978. Are the units already tested or are you prepared to pay for testing & remediation of all units if necessary? 

I'm not in the business of buying seller-financed 100+ unit portfolios but this zero-down proposal just seems too good to be true. But hey- great achievement requires great risk. Just things to add to your analysis. 

Not sure how you've been reaching out- but you may have better luck emailing as opposed to calling.

abatements @ phila . gov

At least this way there's a paper trail of your efforts as well. They are particularly swamped right now since everyone is trying to squeeze in abatement paperwork before they reduce. 

If that doesn't work I have an individual contact I've worked with in their office with success. DM me for more info. 

I use TenantCloud as a property manager for 75 units. So I deal with owners and tenants and all the accounting features. Once you really familiarize yourself with the accounting setup it becomes pretty useful. I think the accounting, notices, and owner distribution calculation are the best features. 

I personally find the biggest downside to be on CRM for lead management on listed rentals. It has a very clunky interface to communicate with prospective tenants. It's a huge disappointment there. Overall 7/10 I'm hoping they continue to improve and add features. I'd be happy to pay extra $$ for a more robust software package. 

I think it's interesting that rent control tends to be viewed as one of the most extreme/scary tenant protections in a local rental climate. In my opinion it's low on the list of anti-owner regulations.

As a property manager in Philly- I really don't have much of a problem with limiting rent increases at the end of a Term. Assuming I've placed a good tenant at market rate, I think it's only reasonable to limit your rent increase to inflation (or tax increase). I wouldn't be overly concerned if city council mandated this as long as it contained reasonable carve-outs. I tend to want to keep my tenants and not increase their rents.

There are much larger regulatory issues in my market that tend to just fly under the radar: An eviction process that takes up to a year. A dysfunctional L&I department. Property taxes increasing by 300% in a single year. Trash fees increasing from $300 to $500 in a single year. About 60 pages of required lease disclosures and paperwork that are required to be included in an agreement to utilize eviction courts. Proper Good Cause documentation required to end a month-to-month lease. Lead Safe testing required for every single rental unit in the city built before 1978. $300 violations to a property owner if a neighbor dumps trash on your adjacent sidewalk. 

I would trade any of these for rent control personally/professionally. 

In the interest of avoiding the typical legal answer "it depends"...

Pros and cons to all options. Yes some states have slightly more favorable LLC laws (no annual fees or certifications, less stringent physical office requirements, service laws, etc), but I generally think the logistical headaches of maintaining a foreign LLC just aren't worth the slight procedural favorability. Pennsylvania as a state has a pretty favorable regulatory/legal environment to operate an LLC- so if you conduct business here (especially with real estate) it probably makes the most sense to have a PA LLC.

Would like to hear @Chris K. opinion on this.

If you can avoid a Philly address that may be your best strategic filing decision...

That certification is a good sign but I wouldn’t rely on it. Call the office to get more info. Ask if they have the CO on file. 

don’t be afraid to ask for a supervisor or inspector in the office. The administrative phone-answering position can have a lot of turnover and sometimes they don’t really know what they’re talking about.. good luck 

Can you specify what the 'certification' is from the city? Is it a certificate of occupancy for 3 dwelling units? If you can verify the authenticity of the CO by calling your local L&I office then you should be good to go. They wouldn't issue the 3 unit CO unless zoning was approved. OPA/Atlas doesn't have everything. Your local L&I office should be able to dig through and tell you what it's approved for. 

A couple other things to ask;

1) what are the cancellation terms if I'm unhappy with services? Locked into a year?

2) How do you handle evictions and at what cost to owner?

3) Do you automatically dispatch your maintenance tech for every tenant request? Do you attempt to troubleshoot through call or message first?

4) Are you able to bill tenants directly for water use in the owner's name? Do you charge extra for this?