All Forum Posts by: Kevin M.

Ty,

I recommend you check out @Tj Hock at Rentwell. They are experts in that area. You can send me a message for the contact info of my connections I have with the company if you'd like.

I am a property manager in Philly. We work with a lot of C Class units and some D Class as well. It's tough work. Tough to find quality tenants. Tough to send quality contractors and showing agents into these areas. Tough to navigate the tenant-friendly regulatory environment. 

That said- higher risk can result in higher return. Dollar for dollar the investors that are getting the best (and worst) returns are those working in these areas. If done right- you can make a better return than you can with A Class and B Class rentals.

I personally invest in some D Class because I'm confident that we can mitigate some of the risk with quality management processes and familiarity with the broken Philly regulatory environment.

Luke- I was in your shoes in 2018 when I was looking to transfer my self-managed triplex over to a PM company in Philly before we started our own management. Where are your properties in Philly? Some managers specialize in certain regions. Check out Google Reviews and NARPM. 

When you're screening a PM make sure to ask about;

RE License. Make sure they are a licensed management company. In PA property management is a RE activity that requires proper licensure. 

How do they make their money? Management fees, leasing fees, maintenance markup, etc. 

Sample listing. Have them send a link to a place they have on the market. So you can get a feel for the quality of the marketing they'll do for your property.

Yes it’s like pulling teeth recently. And they aren’t consistent in their standards. 

For example- only properties purchased in the last 6 months are supposed to require the proof of ownership in the form of the deed or settlement sheet, yet the system now requires it for every application. 

I am on eclipse every day pulling licenses professionally and they get kicked back almost every time for one reason or another.

My theory is that they’re doing it intentionally behind-the-scenes to curtail eviction filings. Leadership at these administrative agencies have no incentive to make it efficient for property owners since there is no competing agency to go through. They create a dozen hurdles in order to slow down or prevent the licensing process and therefor limit evictions before they can even start 

Thanks Jimmy this is a significant looming issue that courts have been dancing around for a while in Philadelphia. It's currently illegal to discriminate based on an applicant's source of income when evaluating a rental prospect, but does a voucher really qualify as 'income'? 

The voucher is tied to mandatory training certification for landlords, mandatory property inspections, and mandatory administrative work with PHA. There's a lot more to working with a voucher-holder than simply accepting the voucher as income. It's a significant burden and risk on landlords. 

Even if you agree to do all the required administrative work, you have to get all the way through the process to get a rent 'offer' from PHA that can be hundreds of dollars less than your marketed price. 

It's my professional opinion this is an even more important issue to monitor than 'rent control' and will have a significant impact on property rights.

@Robert Peruzzi I'm a property manager in Philadelphia. A few tips from the management side of things;

1) Make sure to ask your prospective managers if there are areas they do NOT cover in Philly. For instance- we don't cover the Kensington area or the far northeast

2) When evaluating your multi-family ask to see copies of the past or existing rental license and make sure the number of units on the license matches up to the number of units you're buying. This can be a real headache in Philly especially if it's not licensed for the amount of units

3) Careful buying around college towns in Philly right now. Especially the Temple area. We are having a particularly difficult time leasing in this over-saturated micro market

Best,

Kevin

@David Chen welcome to Philly RE investing. I'm a property manager and I got my start around Temple with a triplex in 2017. It's been wild since then. DM me if you want to talk more about the Temple area specifically and why I find it to be one of the most difficult areas to rent in the city right now..

It's a battle between the downward forces of the impending recession against the upward forces of current and future inflation. I think people are lying to themselves if they believe they can predict the timing and severity of an upcoming crash. Some people have been waiting for 5 years for the 'crash' already...

Time 'in' the market is better than tim'ing' the market

Great work. Thanks for sharing the details. The only big flaw I can find in your execution is that you didn't turn your phone sideways for the video...

There’s a reason the return is so high: risk. You are one phone call to L&I away from getting an order to vacate notice on the door. I’ve personally seen it happen.  

There are special rules for triplexes in Philly relating to egress, sprinkler systems, lighting, fire alarms, fire breaks, and more. You could be looking at a huge bill to become compliant and a fight that could take years. 

Or you could quietly make a great return for years like 95% of illegal multi-families throughout the city…