Student housing has been a hot real estate investment subject. Philadelphia, with several major universities and hospital universities in the city and surrounding area, has become a great source for positive cash flowing properties.

In particular, the Temple University area has been  hot for investment real estate. We have posted several blogs about Temple University student housing investments over the years, and we’re always being asked by would be investors what is Temple’s future like.

I am a Temple alumnus, and receive the “Temple Review” magazine.  Also having toured the campus a few months ago for my daughter’s own college search, I must say it’s impressive. Temple University has come a long way since my 1980 graduation.

Over the last few years, property investing in the Temple area has become competitive. Investors and contractors have been rehabbing and building student housing properties along with Temple own housing expansion and Philadelphia’s revitalization plan for the area.

Temple has been involved with community outreach projects and will increase the partnerships with the community in the region and across Pennsylvania. As stated in the recent Temple Review, “Temple also will create new facilities for learning, living and recreation. Temple 20/20, the framework through which the university will become a true destination, will rejuvenate Broad Street and make it a vibrant corridor that thrives around the clock as a lively urban environment.”

In the Philadelphia Business Journal article of April 22, 2010, Temple has initiated selling $150 million in bonds for its $1.2 billion in development plan. “The school is hopeful the projects will continue to reinvigorate North Broad and re-establish the artery as the gateway to the campus. Once completed, the plan will create more green area and academic space, develop additional campus housing and link the core of the main campus to North Broad.

Read more: Temple’s $1.2 billion project – Philadelphia Business Journal

With the growth already experienced and seen and with what Temple is planning, the housing and rental market should continue to be an attractive area for real estate investments.

Check out the Temple Univ. area investment properties available at this time at SellPhillyProperty.com

The upheaval of the global financial market has produced one positive side effect: historically low mortgage interest rates. For the past year or so we have been hearing about historically low interest rates, repeatedly being told that the rates are the lowest that they have been in 30 years, since the tracking of interest rates began. This week the headlines have been blaring the same news again, with interest rates even lower than they were the last time that they were at 30 year lows just a few months ago.

Currently a 30 year fixed rate mortgage can be locked in for a 4.87% interest rate. Even jumbo loans have fallen, with an interest rate of 4.5%. While there is much hype about the tightening of the financial market and the hoops a borrower has to jump through to secure a loan, there couldn’t be a better time to refinance or purchase a new home.

It’s a great time to either own a home or buy a home. Low interest rates can shave a great deal of money off of the cost of a home over the lifetime of a loan. If you have good credit, a steady source of income and have been thinking about purchasing real estate then you owe it to yourself to get out there and start looking, unless of course you can afford to wait another 30 years or so.

On the real estate investment side, we have seen fast changing and more liberal criteria for both debt and equity (including some for development) in the last 30 days. The focus for capital continues to be on both ends of a “barbell” i.e. top tier product, sponsor, and location which justifies reasonable pricing and terms OR very discounted distressed assets which make sense to capitalize at a high cost of funds.

If you would like a source of various lending products and sources, go to our wholesale real estate investment website and click on the “Refinance” or “Hard Money” pages.

Understanding After Repair Value (ARV)

If you are thinking about using the extended and expanded home buyer tax credit to purchase a home this year you better act fast. The tax credit can be used on homes purchased by July 1, 2010, but the homes must be under contract by April 30, 2010. What does this mean? You have a little more than a month to locate your new home. The tax credit is for two types of buyers, first time home buyers (home buyers who have not owned a home in the past 3 years) or home owners who have lived in their home for 5 of the past 8 years and want to purchase a new primary residence.
Important aspects of the tax credit include:

• Homes must be closed by July 1, 2010, under contract by April 30, 2010.
• Homes must have a value of $800,000 or less and must be the buyer’s primary residence.
• There are income restrictions, $125,000 for singles, $225,000 for couples.
• The credit is also affected by being single or married. Married couples who file together are entitled for up to $8,000 for a first home buyer, up to $6,500 for current homeowners. Single people are entitled for up to $4,000 for a first time home buyer and $3,250 for a current homeowner.
• The credit will need to be repaid if you sell your home within a time period of 36 months.

Remember, time is running out. Contact a real estate professional today to start looking for your new home if you intend on using the tax credit.

Astute real estate investors have invested funds into purchasing and rehabbing homes throughout the country.  In Philadelphia, homes for new buyers are on the market in various parts of the city and at various price ranges.  Lists of available homes are either posted on the Multiple Listing Service (MLS) or listed some by For Sale By Owners (FSBO) on sources such as Craig’s List and can easily be toured set up by a realtor or the owner of the home.

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.