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drbubb

The Philadelphia Story - the Case for Property investing

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" a complete police state as of 11:30pm on 9/24/15"

 

Past that moment now, thank goodness.

And the Pope is safely on the way back to Roma

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DISCUSSING the "JUBILEE STRUCTURE" - as explained in the following video

 

Interview with Jimmy Ngai of Jubilee Capital

 

(from another forum):

 

I posted the original version of the interview there -

(that's before I edited it when I heard Robert's Comments; see edited version below)

 

D-- is a frequent poster on another forum, and I thought you might want to read the back and forth between him and O--.

This goes into a reason why the yields are still so high - (ie prices so low) - in Philly.

 

Another reason might be that a portion of the cash flow return is actually a return OF capital, since the property may require another rehab in X years. That seems invisible now, because prices are rising.

 

What can one determine what the "X" (# of years) might be?

 

D---:

I don't know. How can guarantee a 3-year, 11% pre-tax yield? It doesn't make much sense. Why would anybody rent, if they can pay 1/3 of their house in 3 years, by buying with a mortgage. It means in 9 years you bought your house. That's too good to be true.
In addition, this company can't even make a website without spelling and grammar mistakes.
I don't buy it (in all senses).
And what is it post-tax? I believe in many places in the US taxes are quite high.

 

O--:

I own a property there.

It was originally build in 1925, and rehabbed last year after I bought it in July 2015..

I paid about $75,000 - and it was rented recently at $1,050 per month.

That's $1,050 x 12 = $12,600 / $75,000 = 16.8% Gross Rent.

The tenants are a professional couple working in the Center City (based on their jobs). From the house they can walk 2 minutes and get on a trolley that will take them to the CC in about 20 minutes. So they must be happy to get a spacious house (1,360 sf) that is considerably cheaper than a smaller Condo in the CC.

Why don't they buy the property, or one like it ?
(Someday they will, or someone like them - But it takes time for people to build capital, and learn the merits of being a homeowner)
Confidence in property was ruined by the slump of many decades going back to the 1950-1960's, when the population of Philly began to decline. It was only about 2000 that the population started to rise again. People are buying again. And buying started years ago in the areas that are walking distance from the CC. Prices have risen there, and the gentrification is spreading out from the core areas towards where I bought, (see the summary of the magazine article above) The question and the risk is this - will the wave of gentrification continue, and how long will it take for that core of buyers to march towards my property and pay a much higher price.

When I visited Philly last summer, I could see some signs that the gentrification could spread and was spreading to the street where I bought. Thus, I was not too surprised when I was Zillow make the following changes in its estimates - numbers are approximate:

============: -July'15 : Mar'16 :
Value Estimate : $75.0K : $ 94.0K : + 25%
Rent Estimate- : $0,950 : $ 1,100 : + 16%
Yield Estimate- : 16.00% : 14.04%

(BTW, I think I was very lucky to get such a big jump in valuations in such a short time.

I put this down to luck and my own careful research over many weeks in trying to find a property that was in the pathway of gentrification. When in Philly last summer, I visited the place three times, and walked from the central city along the trolley route so I could see how the neighborhood was changing. Remember when you were asking me where I was going to reploy my cash from selling my property in HK? I was not too concerned, because this was part of the answer, another part was the Philippines, and another part was gold... etc. Since September, HK property prices have fallen 10-15%, while the capital values rose, and I am getting a good cash flow.)

You may ask: How realistic are those estimates?
Here are two solid bits of evidence:
+ An independent inspection report received two weeks ago, which confirmed the rehab was done in a satisfactory fashion, and the house was ready for move in
+ A good quality tenant signed a lease at $1,050 - versus the $900-950 that was expected

I saw a property from the same source two months ago that I wanted to buy. In the end I did not buy it, because I had not yet had confirmation that the rehab was acceptable and the property was rented.

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Phila Prime dotcom, Landing thread :

> http://www.greenenergyinvestors.com/index.php?showtopic=21632

 

(back-up copy of the Initial post):

 

: PHILAPRIME.Com : ...... : Gateway page to PhilaPrime's threads ...

 

DATA : MAPS : Neighborhoods : WestPh : WayneJ : Skysc: Case : Oppty : ... Equities : Condo? : ssc : PP :

epmctua.png

Other: SSC : 30thSt : CcTwr : / GoWeb :

 

gvcYxbQ.png > view Data

 

CHAT with others about the possible slowdown of the Condominium market / on the CONDO? thread,
(To become a member and Join the discussion here, scroll down to post #3, below)

==========================================

Why Philadelphia is a Prime target for investors

+ One of America's most walkable cities, with a good public transport system.
+ key strategic location on the East Coast, and good universities and strong healthcare expertise.
+ much property is far more affordable than NYC, Boston, Washington; Yields are much better, like 2x, on average.
Now with steady job growth and a rising population and job growth, Rents and Property prices are rising again, hitting new highs. Gentrification is occurring along many of the transport links.

 

br9lW7p.png

Summary GUIDE to the principal Threads in the PHILA Prime section of the larger GEI Forum

 

This is the Landing page - the jumping-off point to many PP threads

 

Threads : those with restored images are marked with an asterisk below
ALL are in GEI's PHILAdelphia Property sub-forum : how to Join, see post #3, below

 

PHILAPRIME.Com (Gateway page & Links)*
=============== : views :
PP Landing Page- : 00,013 : http://www.greenenergyinvestors.com/index.php?showtopic=21632

DATA, Charts, etc. : 00,607 : http://www.greenenergyinvestors.com/index.php?showtopic=21331
MAPS, Transport- : 00,513 : http://www.greenenergyinvestors.com/index.php?showtopic=21332
Neighborhoods---- : 17,727 : http://www.greenenergyinvestors.com/index.php?showtopic=20036
Phila opportunities : 17,074 : http://www.greenenergyinvestors.com/index.php?showtopic=19682
====
Case: Ph.Property : 07,896 : http://www.greenenergyinvestors.com/index.php?showtopic=19729
Wayne Junction--- : 05,249 : http://www.greenenergyinvestors.com/index.php?showtopic=20655
W-Philly, Balt. Ave : 00,488 : http://www.greenenergyinvestors.com/index.php?showtopic=21427
Key Phila Equities : 00,236 : http://www.greenenergyinvestors.com/index.php?showtopic=21415

Phila Skyscrapers : 00,200 : http://www.greenenergyinvestors.com/index.php?showtopic=21546
Condos still good?: 00,112 : http://www.greenenergyinvestors.com/index.php?showtopic=21547
===============

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Philly and US Property Prices thread :

> http://www.greenenergyinvestors.com/index.php?showtopic=20764

 

(Back-up copy of the Initial post on the PP Data thread):

 

US House Price Data : Philadelphia, NYC & Other Cities

 

Philadelphia price breakout continues... Making new highs. Predicted early 2016.

 

> see special forum : Philly & the East Coast

gvcYxbQ.png

============================================

Northeast Corridor Home Prices
============================================

City --------- : Value (1) : Rent(1): Yield(1): Value (2): Rent(2): Yield(2): V: YoY: Value+% : R: YoY: Rent+% :
==========: Dec. 2012 : --------------------- : Jun.2017 : --------------------- :
NewYork City : $469,000 : $1,881 : : 4.81% : $685,000 : $2,400 : : 4.20% : +13.2% : +46.1% : +2.13% : +27.6% :
Washington - : $385,000 : $2,403 : : 7.49% : $551,300 : $2,650 : : 5.77% : +6.78% : +43.2% : +2.12% : +10.3% :
Boston ------- : $365,000 : $2,309 : : 7.59% : $558,300 : $2,550 : : 5.48% : +13.2% : +53.0% : - 1.16% : +10.4% :
Philadelphia: $104,000 : $1,081 : 12.47% : $138,800 : $1,204 : 10.41% : +9.90% : +33.5% : - 0.66% : +11.4% :
============================================

Philly prices can go a long way before they will be 1/4 of NYC house prices (over $680k)

 

June 2017: $685,000 vs. $138,800 for Philly ($685.0/ $138.8 = 4.94x)
Vs. RENTS : $2,350/mo vs $1,204/mo., Philly ($2,350/ $1,204 = 1.95x)

aa6ZkTh.png

May'17: Philly = 137.3: NYC Condo: 189.89 /1.50 = 126.6 : 20 Cities: 198.38 /1.45 = 136.8 : Philly Jun'17: 138.8

Philly is above its old peak, but 20 Cities & the NY City, Case-Shiller index is not (yet.)

 

.

national-realty-investment-advisors-llc-

Philadelphia Property prices, 1980-2014

 

Inflation-adj, back to 1890:
360px-Case-Shiller_data_from_1890_to_201

> source : http://www.multpl.com/case-shiller-home-price-index-inflation-adjusted/table

 

2017 Tax Rate:

+ To $9,325 : = x10% =
$9325-37950 = x15% =
37950-91900 = x25% =

========

> C-S wiki: https://en.wikipedia.org/wiki/Case%E2%80%93Shiller_index

> 20Cities: https://research.stlouisfed.org/fred2/series/SPCS20RSA : (monthly data back to 2000)

DataGrid : http://data.okfn.org/data/core/house-prices-us

Fels Chrt : http://www.biaofphiladelphia.com/ufiles/fels_phpi_2013q2.pdf

> RShiller:

========

 

mo Ph-Zhv : YoYr : Nyc_Zhc: YoYr : 20cityI : YoYr : condo: C-NYC : C-Nyc2: C-Wash C-Bost.
'15 116,000: : 532,000 : : 175.38 : 4.40% : 244.50: 176.57 : 174.76 : 205.24 : 175.73
F : 117,000: : 534,000 : : 177.09 : 4.84% : 245.82: 177.57 : 174.82 : 205.70 : 175.35
M : 116,800: : 536,400 : : 178.91 : 4.87% : 247.12: 178.39 : 174.37 : 206.88 : 176.12
A : 116,000: : 538,000 : : 179.43 : 4.86% : 249.01: 179.00 : 175.68 : 209.63 : 176.52
M : 116,000: : 543,000 : : 178.53 : 4.81% : 250.41: 178.82 : 177.27 : 210.98 : 179.26
J. : 117,000: : 548,000 : : 178.48 : 4.82% : 253.08: 178.36 : 179.52 : 212.51 : 181.87
jl. : 119,000: : 553,000 : : 178.48 : 4.95% : 253.87: 177.92 : 180.81 : 213.01 : 183.85
A : 121,000: : 558,000 : : 178.77 : 5.06% : 254.86: 177.80 : 181.66 : 212.88 : 184.56
S : 122,000: : 564,000 : : 179.61 : 5.28% : 255.56: 177.98 : 181.66 : 211.88 : 184.42
O : 123,000: : 569,000 : : 180.87 : 5.38% : 255.78: 178.70 : 181.40 : 210.77 : 184.14
N : 122,000: : 574,000 : : 182.49 : 5.28% : 256.45: 180.02 : 180.96 : 210.52 : 183.24
D : 121,000: : 565,000 : : 183.81 : 5.38% : 257.71: 180.71 : 180.48 : 210.27 : 182.82 :
'16 121,000: 4.31% : 569,000 : 6.95% : 185.31 : 5.66% : 259.40: 179.51 : 179.51 : 208.94 : 182.11 :
F. : 122,000: 4.27% : 572,000 : 7.12% : 186.66 : 5.40% : 261.18: 179.12 : 179.12 : 208.22 : 181.88 :
M : 123,500: 5.74% : 576,000 : 7.46% : 188.56 : 5.39% : 262.90: 179.61 : 179.61 : 209.59 : 184.07 :

A : 124,500: 7.33% : 580,000 : 7.81% : 188.04 : 4.80% : 258.96: 180.45 : 180.52 : 212.88 : 186.73 :
M : 125,400: 8.10% : 585,000 : 7.73% : 187.91 : 5.25% : 260.36: 181.43 : 181.25 : 214.99 : 189.33 :
J. : 126,300: 7.95% : 590,000 : 7.66% : 187.75 : 5.19% : 262.23: 181.72 : 182.73 : 216.36 : 190.35 :
Jl : 129.000: 8.40% : 596,000 : 7.78% : 187.78 : 5.21% : 264.17: 181.00 : 183.68 : 216.98 : 191.49 :
A : 130,000: 7.44% : 602,000 : 7.89% : 188.23 : 5.29% : 266.94: 181.06 : 184.75 : 217.77 : 192.09 :
S : 131,000: 7.38% : 608,000 : 7.80% : 189.03 : 5.24% : 266.40: 181.51 : 184.75 : 217.59 : 192.30 :

O : 132,000: 7.32% : 615,000 : 8.08% : 190.48 : 5.31% : 263.26: 182.27 : 184.14 : 215.36 : 192.32 :
N : 132,000: 8.20% : 622,000 : 8.19% : 192.18 : 5.31% : 264.59: 184.31 : 184.61 : 215.23 : 193.19 :
D : 132,600: 9.59% : 627,000 : 10.1% : 193.97 : 5.53% : 265.89: 186.07 : 185.26 : 215.75 : 194.16 :
J. : 133,700: 10.5% : 630,600 : 10.8% : 195.47 : 5.48% : 267.66: 186.75 : 185.16 : 215.87 : 194.93 :
F. : 134,100: 9.92% : 631,300 : 10.4% : 196.80 : 5.43% : 269.43: 187.86 : 185.44 : 216.39 : 195.60 :
M : 136,100: 10.2% : 650,000 : 12.8% : 198.52 : 5.28% : 273.20: 189.88 : 186.85 : 218.11 : 198.26 :

A : 136,500: 9.64% : 657,900 : 13.4% : 198.18 : 5.39% : 271.98: 191.01 : 188.37 : 220.26 : 199.25 :
M: 137,300: 9.49% : 672,400 : 14.9% : 198.38 : 5.57% : 272.08: 189.89 : 188.65 : 222.48 : 200.82 :
J : 138,800: 9.90% : 685,000 : 16.1% : 198.62 : 5.79% : 273.52: 189.44 : 190.38 : 222.52 : 202.16 :
Jl: 138,900: 7.67% : 686,400 : 15.2% :

mo Ph-Zhv : YoYr : Nyc_Zhc : YoYr : 20cityI : YoYr : condo: C-NYC : C-NyNs: C-Wash C-Bost.

===

Zillow: Philly : ------> : NYC-Z : -------> : 20-city: 20c-Nsa: condo: NY-rsa: /(NSA): NYC : Wash : Bost :

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PHILLY as a Showcase?

 

160711-trumpwharton-editorial.jpg

 

Here are some thoughts that connected like Dots for me

 

+ President Trump went to school at Wharton (Univ. of Pennsylvania), in University West,

and he must be very familiar with the city

 

+ He travels over Philly every time he flies from Wash.DC to NYC (Trump Tower), and he must be aware

of the transport advantage of having an express train operating between the cities he knows so well

 

+ Trump has spoken of improving the life of Urban dwellers, and bring more jobs back to American cities

 

+ PA state voted for Trump, but the City of Philly did not

 

I think we could see a situation develop where Trump could make Philly a showcase of what his policies and creative efforts can do for a city

 

Let's see if this idea emerges in the Months to come. The new focus on allowing higher buildings near transit stations, seems like a good start, and using private money to develop around transit is another positive step that we are seeing

 

(Later, I found this report from the time of the election):

 

Donald Trump’s Closing Argument: Reactivate The Philadelphia Navy Yard!

November 8th, 2016 by Tina Casey

 

Republican presidential candidate Donald Trump made his closing pitch in a series of campaign stops last night, one of which was the city of Scranton, Pennsylvania. If you were listening closely (disclosure: I was), one new line stood out like a beacon of new light among the now-familiar roll call of complaints about his Democratic opponent, the media, and war refugees. If you guessed that line was “reactivate the Philadelphia Navy Yard!” run right out, buy yourself a cigar, and smoke it down to ash while trying to figure out what he really meant.

==

> https://cleantechnica.com/2016/11/08/donald-trumps-closing-argument-reactivate-philadelphia-navy-yard/

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Philly's Demographic advantage - fast-growing Millennial population : +42% ! since 2005

.

march-investor-update-24-638.jpg?cb=1488

> source: slide#24 : https://investors.preit.com/investors/overview/default.aspx

 

I reckon the large number of Universities in Philadelphia has helped to create this trend

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