In today’s real estate market, property investors look at specific ARV as the end-goal that their investment  property must reach.  However, in the last few years, it seems that this “ARV goal post” was in constant movement.  How do you reach a goal when they keep moving the goal posts?

2008 and 2009 were frustrating years.  As market values started to slide, the ARV that you’ve determined today would not hold by the time you acquire your property and had it rehabbed.  That $120,000 ARV that you’ve correctly determined in December, was no longer valid according to the bank by the following March.  In a matter of 2 to 3 months, when it was time to refinance or sell your property, the bank has determined that your ARV was actually now around $108,000 – a nice 10% drop!  A constant frustration.

What is ARV?  Well, it’s exactly what After Repair Value means, the value of your property after it’s been rehabbed and ready to be flipped or rented.  That’s the number that will determine your return on investment – of course assuming that your other costs have been accurate.

On our website’s list of available properties, in the information area for each property we wholesale to investors, we use the lowest priced comparable sale (comp) out of at least three sold properties.  We might even go a few thousand dollars under that, just to be on the safe side and to show a conservative monthly cash flow or net profit.

We’ve even left out an ARV number in one of our listing to have the investor determine ARV themselves.

Often we receive questions from investors that they have looked on various online real estate websites, such as Trulia, Homegain, or Zillow and the value of the home we have is either too high or too low. Why they ask.

Well, it doesn’t matter what ARV Trulia states, or Homegain or Zillow or willow or schmillow.  What matters is WHAT DOES THE BANK SAY THE ARV IS.  And what the bank’s appraisers use to arrive at that number are comparable sales from the Multiple Listing Service (MLS), that can be provided by any licensed real estate agent.  True, online websites can get you close, but the bank’s ARV comes from comps.

The comp parameters for Philadelphia investment property is at least three (3) sales of similar property as the subject home (bedrooms, sq. ft., etc) within the past 6 months, within .3 of a mile of the subject property.  If they can’t find 3 sales, then the parameters are expanded incrementally.  For the Philadelphia suburbs, a greater distance parameter can be used.

Investor’s best bet is do your due diligence and look at your investment property as the bank would.

Be prepared for what a home inspection might reveal when selling your home.

Since the start of the $ 8,000 tax credit and its extension to the end of April 201o, the flipping market has been  quite popular in the Philadelphia area. Some realtors and other investors that I’ve talked to over the past few weeks, have expressed that first time home buyers that are qualified for the tax credit, are finding it difficult to find desirable properties.

It’s that home price range between $ 80,000 and $ 200,000 where buyers are seeking homes that they would like to move into without doing any work to the homes at all. Homes for sale in “move-in condition” seem to be just a bit difficult to find. Also, advice to the investor that is flipping the home, do a home inspection when your property hits the market.

Home inspections can often make or break a deal. If possible sellers should have one done ahead of time so any additional repairs can be made and a home can be in its best possible condition. However, often a seller does not do a home inspection first and is caught off guard by a list of repairs presented in the due diligence portion of the contract process.

Also, make sure that your home inspector is a member of ASHI (American Society of Home Inspectors).

The most common home ailments that show up in the home inspection process are:
-Faulty electrical wiring
-Roof damage
-Plumbing issues
-Poor drainage

Yes, these problems can occur in recently rehabbed homes. If you and your contractor have done a thorough rehab, then your flip investment property should come through with flying colors. These are issues that can add up to a potential home buyer walking away if a seller is unable to step up and make the repairs or commit the money to make the repairs.

Examine these aspects of your home yourself, if you and your contractor know everything is in good condition and the work that has been done to your home has been completed by your contractor then you can rest easy, otherwise be prepared to make additional repairs in order to sell your home.

Considering investing in Philadelphia residential real estate?  If you plan to purchase Philadelphia real estate and rent your property, you may want to invest in Philadelphia’s developing neighborhoods and one of the best, hot places is housing for Temple University students.

 Consider these points about Temple housing:

•  Temple can only house their freshmen class.  This leaves a great demand for student housing in the city.
•  Temple is located in the area of North Philadelphia that has gone through and is still in the process  of revitalization.   This creates great opportunities to purchase turn-key properties that already have students in place and positive cash flow.
•  Temple students pay anywhere from $ 375 to $ 500 PER ROOM for rent, giving you positive cash flow every month.
•  You must make sure your property is zoned properly. 
•  Students begin looking for housing from May to August. Some spring rental searching starts in late March & April.

We have available several investment properties that fall into all of the criteria above.   Now is the perfect time to take possession of an investment property near Temple University.  The timing of rehab needed, will allow an astute investor to have a property ready for the upcoming rental search period.

There are lots available to build on – with permits and plans, as well as shell properties and also some that only need light cleaning and painting.   You can view of list of these properties by clicking here.

And not only do properties around the Temple area provide a nice cash flow and also appraise at a high After Repair Value (ARV) but the taxes are very low compared to other major cities.  The annual real estate taxes on the above mentioned property is $ 208 per year – that’s not a misprint.  $ 208 PER YEAR!

Well, finally something that’s been touted here at this blog site for several years is proving to be true, although it comes to no surprise for those of us seeking, wholesaling and purchasing cash flow real estate investments in Philadelphia and the region. 

Based on a Zillow “Home Value Index”, a slideshow released last week on CNBC’s website has two Philly zip codes coming in at second and third place in the U.S.

Philadelphia homes in the South Philly zip code of 19145 (# 2) has seen a “year-over-year price growth of 19.1%“, while the zip code of 19148 (#3) has seen a “year-over-year price growth of 16.9%”. 

At sellphillyproperty.com , we have wholesaled and purchased ourselves cheap investment houses in these zip code areas over the years.  We presently have an investment property in 19145.    They have become great cash flow investments for our real estate property investor client base.  There is also a spill over effect from these zip codes too.  With Philadelphia Zillow’s one year home value going down only .1%, there have been pockets of Philadelphia investment homes being purchased at great values resulting in cash flow and equity. 

These are the zip code areas neighboring 19145 and 19148.  The various neighborhood growth developments being acted out in the Philadelphia Northern Liberties, University City (19104 # 14 with 13.5% growth), West Philadelphia, South Philadelphia, Temple Univ. – North Philly, Nicetown/Logan (Temple’s newly opened medical school)  and parts of northeast Philly, are undeniable.

Continue looking into real estate investment to enhance and manage your retirement. Learn how to purchase investment homes with your self-directed IRA.

If you’re a real estate investor, and active seeking real estate deals, rehabbing them, placing tenants to provide cash flow in your properties, it’s been a rollor coaster ride when it comes time to refinance your investment property. 

The investors that we have wholesaled our investment properties in Philadelphia, as well as our  own properties, have seen the rates stabilize a bit. 

Stan Bril of GFI Capital Resources, has rates in the mid-5% area, fixed rates are available for terms from 10 years to 40 years, and most times Debt To Income ratio (DTI) is not an issue. And they have refinance programs up to 75% LTV.

The best thing to do is contact SEVERAL finance sources and see what they have.  Check out our website for some sources to start with.  Click on the “Refinance” and “Hard Money” buttons on the left.

Investors seeking cash flowing properties might take a look at the real estate we have available in South Philadelphia and West Phila.  Some are flips and some work both as flips or buy & holds.

It’s always recommended to get to know an area you’re looking to acquire property investments.  You’ll find a wealth of information for South Philadelphia in the South Philly Review. For West Philadelphia, West Philly News seems like a good source.  Especially check out the article on the Baltimore Ave. eateries.

We have a property on the 5400 block of Baltimore Ave.

If anybody has other local suggestions, click on the “Leave a Comment” link on the top right of the blog.  Check out our Philadelphia investment real estate properties by clicking here.

Let me take you through one of our recent properties that we’ve wholesaled to an investor, and maybe you get a perspective on how you can recoup all of your money invested in a deal and have positive cash flow every month. And plus there’s a little added twist to this story in the end.

This was a home in “HOT South Philly”. It was a typical Philly row home.

The ARV (After Repair Value) for this property, was at $ 110,000. Recently banks have been pushing down their appraisal numbers, so we try to stay conservative. We use comps of similar sq. ft. and within a .3 mile radius of the property, that are no more than 6 months old. With the volume of property sales taking a dip recently – we have to sometimes expand our parameters.

The comps ranged from $105,000 (which needed rehab too) to $258,000. The property we were wholesaling was a fixer upper, and the rehab was $23,000. The price for the property was $49,500, which included our assignment fee.

WHAT IS THE GOAL IN AN INVESTMENT DEAL LIKE THIS? Recoup all of your investment in the purchase and rehab of the property AND create a MONTHLY POSITIVE CASH FLOW by renting it out.

So how do the numbers work. Total into this deal for the investor was $77,239.50 – this includes purchase, rehab, closing costs and even refinance costs. After finding a tenant at $ 800, the investor has the bank refinance this property as income producing real estate. The bank ARV number was $ 105,000. $ 5,000 less than our projected $ 110,000.

The bank will give the investor a refinance loan at 75% LTV (Loan To Value) which equals $78,750.00.  So, not only does the investor get ALL of his money out of the deal AND pockets $ 1510.50, but now has a monthly positive cash flow.

Realize what happend here. The investor’s $ 77,239.50 value has increased to $ 105,000 within a matter of 4 to 6 months. This is a 25% increase. Can you tell me what investment can do that?

Now the twist to the story. The investor decided to spend an extra $8,000 on the rehab. Something I would advise against. The property manager found a tenant right away at $ 850 per month. He spent an additional $ 8,000 and received an extra $ 50 per month for it. Was it worth it? He should’ve stuck to the original plan.

We have various types of deals on our website. Take a look and sign up on our email list to get early notifications of upcoming income producing properties.

              A fellow investor that I know in California told me about this Nightline story that appeared on July 27, 2009. 

For us in the investment real estate market on the east coast, primarily the Philadelphia region, what the story claims that the buy, hold and rent strategy is the way to go.

You’ll see that he finds most of his properties from the REO/foreclosure markets.  We have wholesaled several investment properties that were bank owned.  Wholesaling bank owned properties is tricky and we went through our learning curve. 

Every bank has its own personality and knowing their rules and regulations allows us to pass along a great negotiated price to our investors, way below ARV, sometimes 30 to 40 cents on the dollar.

Check out our available properties and sign up on our email list to receive our latest cash flow properties. 

Bank owned property’s transactions can take a while to go through the bank’s mumbo-jumbo departments and manager’s approvals, but for those willing to be patient, the financial reward is there. 

And the profit margins are there for those who are looking for the fix & flip real estate too.

For those of us in the real estate investment business already realize that we help change neighborhoods for the better.  Removing those eyesores are what any homeowner in the areas we buy, wants to see.

Nightline video

Buy the investment property way below the ARV – or After Repair Value – rehab it, find a tenant, go to a financial source to recoup all the money aquiring and rehabbing the property. If you did your homework correctly, the tenant’s rent should pay all of your monthly expenses and you should be making a positive cash flow every month.

Your tenant’s rent is paying your mortgage from your refinance and now you seek your next real estate investment property.

Sounds simple – real estate gurus charge would be investors thousands of dollars teaching the details and to understand this concept. As a wholesaler of investment properties, I see this false belief that there is “no refinance money available”.

A few days ago, after sending out one of our emails to our investor list, I received an email asking me, “What bank/mortgage co. is still giving out cash-out mortgages?” Well, I kindly referred him to click on the link provided in the email and contact the various financial sources on our website.

In fact, our email was promoting a 6.75%, 30 year, 1 point refinance mortgage – with still providing a 75% LTV (Loan To Value).  This is from a bank that just sent me their updated loan and refinance programs.

Yes, the banks have pulled back on handing out money for investment real estate – but the sources are still there. You have to look for it.

I can’t understand going on the internet and checking out several websites for prices of books or airlines tickets – but contact one or two banks, get a “no”, and you stop? Isn’t your financial goals important enough to call 5 banks, 7 banks….even 10 banks?

And if you don’t have the funds to get started, there exists the hard money sources. Do your due diligence and make sure all or your costs and expenses are covered at the end of the deal.

Your best bet is checking out the local small banks in your area.

SELL YOUR HOUSE FAST! STOP FORECLOSURE! – are the ads are very commonly seen around the country. Here in the southeastern part of Pennsylvania and the New Jersey area, hasn’t been hit as hard as some other parts of the country when it comes to home foreclosures. But a growing number of home owners are finding themselves in financial trouble.

How did this home foreclosure scenario come about? Financial experts attribute this huge number of home foreclosures to properties bought between 2004 and 2006, when the real estate business was at its peak.

But there is help. Global Portfolio Management Solutions (’GPMS’) is dedicated to helping people buy or sell their homes within Bergen County NJ to Mercer County NJ and from Bucks County PA to Montgomery County PA.

If you are faced with the following:

- Behind on Mortgage Payments

- Pre-Foreclosure

- Divorce

- Probate

- Tax Liens/Delinquent Tax Payments

- Expired MLS Listing

- Or You Can No Longer Afford the House

GPMS can help you. The GPMS team provides solutions to help homeowners sell their home and leverage the equity needed to secure their financial position. In addition, GPMS works with credit challenged families looking to acquire a home but do not qualify for a conventional mortgage. GPMS’ programs support facilitating fast, fair and equitable transactions for all parties involved. They strive to support the community during these financially challenging times.

This works out to be a win/win situation for both the seller and buyer. How can GPMS Find Homes for Financially Challenged People? Applicants enrolled in the Equity Buyer Programs will have the ability to work with a credit specialist and select homes from the GPMS network inventory.

If you’re financially challenged, don’t wait for a Stimulus Package or Job Offer to Help Your Financial Situation!

Regarding real estate investment in Philadelphia, ask anyone who hasn’t been back in University City and West Philadelphia in the last 15 to 20 years, and they’ll be pleasantly surprised of the ongoing changes taking place in that part of the city.  But, “you ain’t seen nothin’ yet”. 

Just take a quick glance at the map above and check out Univ. of Penn’s Penn Connects website, and see the multi-billion dollar changes that are under way now and will be for the next several years.

What does this mean for the real estate investor looking for cash flow and appreciation?  Plenty.  As the various colleges and universities in Philadelphia expand, it is one of the ingredients in the recipe that is keeping the city’s real estate downturn at a minimal level.  Far from the debacle of areas like Detroit, Phoenix, Las Vegas and parts of California & Florida.

As wholesalers of real estate investment property, we have seen the local and long distant investor continue to move into parts of Phila. within close proximity of Univ. City.  Some investors have taken advantage of the spillover effect and are presently acquiring properties within a 1 to 2 mile range of University City, at low minimal investments.

These minimal investments become positive cash flow properties with a nice chunk of equity as soon as they’re rehabbed and rented or flipped.  And there are the investors that are looking for turn-key student housing that need no rehab, with students in place and positive cash flow.

Even students attending one of the schools in Univ. City or Temple are now renting rooms in the South Philadelphia, Kensington/Fishtown and Germantown areas.

Adding to this, the neighborhood improvement organization, University City District (UCD) announced the appointment of Matthew Bergheiser to “oversee more than 85 administrative, public safety, and maintenance employees, and an annual budget of more than $9 million.”