One-Family Deal in Philadelphia 2005

After quite some time of research and deliberation with other investors, I decided to go down to Philadelphia and take a serious look at the housing market. I knew that the properties were still quite cheap, especially in areas such as Kensington. But I also realized, that the housing stock was often quite dilapidated and in need of some serious rehabbing so it was very important to have a competent contractor take a look at everything first to minimize the risk. Due to a lack of time on my part to check everything out sufficiently, I decided to go with Jake Komar’s National Properties Group. Jake does the work of finding a property, evaluating it, taking care of rehabbing with his construction crew, handling the closing, title search, insurance and everything else. You as the investor provide all the funds for the purchase, the rehab, fees etc. and you then split the rent 50/50. Once the property is sold, you recoup your entire cash outlay and the remaining funds are also split 50/50. It seemed like a good idea to me, I knew Jake for some time already and I had a few friends that had used his services to good success before. In October of 2005 we found a one-family house in Kensington for approx. $26 K. The neighborhood was working class, there were a few empty lots and houses in dire need of repair but in general it was a functioning community. We bought the house, completed the rehabs (total of approx. $12 K) in early January and began the search for a tenant. In Spring of 2006, someone broke into the house, stole the entire kitchen and several light fixtures. When they ripped out the sink in the kitchen, they also stole the copper piping and damaged the boiler in the process (total loss incl. kitchen: ~$2500). In response we added iron bars to the windows in the bottom floor and replaced the doors with thicker security doors. The search for a tenant proved to be difficult as well. The renter pool was getting smaller due to very low mortgage rates, allowing more people to buy their own house. And was left was more often than not unacceptable (bad credit, bad rental history, unemployed, etc.). Finally in November 2006 we had a tenant moving in, that has since worked out fine. All in all, I can say that the process with National Properties has been fairly easy. It took a lot longer than I had anticipated and cost more than we had assumed as well. Including all additional expenses and fees I have spent approx. $40K on this property. The rent roll is $675/ month of which I get 50% each month. Not something to write home about. I will most likely try to sell the property sometime in the end of Spring/ early Summer of 2007. In general, I can recommend National Properties if that is the kind of deal you are looking for. Jake is knowledgeable in the Philadelphia market. I find his accounting system to be slow (in end of January 2007 I still hadn’t received December ’06 or January ’07 rents). There are several companies that do what National Properties does. Always shop around and talk to people who have dealt with the company before you go into business.

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