THE most comprehensive post about buying in QV ! Advice appreciated - PhillyBlog

anandpillai · #1 (**permalink**) 02-27-2006, 12:52 PM

Here's a question to all the Excellent folk out there on PhillyBlog - any and all feedback is appreciated ! I think this post (and any replies) will help others also looking for houses in the area. I'm seriously considering making this puchase, and have been shopping around for a year. However, I understand that there are some areas I still lack information in, and this post is in hopes of uncovering some of things I should be worried about, (I'm giving everyone ALL the details so it helps with others in simmilar thoughts/situations)

House that I'm thinking of buying

Price : 280k

Taxes : 1.1k a year

Location : 9th & Christian - right in the center of Italian market, next to butcher's store. 845 Montrose is the address. (I'm not afraid of sharing

Anyone else looking to buy it, or curious as to why its been on the market since September? I am confused, it doesnt seem 'too' highly priced.

No of Bedrooms - 3/4 (2 bedrooms on 2nd floor with a seperate full bath , and 1 bedroom with a den (which has its own bathroom) on 3rd floor)

Fully refurb/done up with appliances etc

Situation

I moved to Philly 2 years ago and thought I was leaving. Have fallen in love with the city and would love to own property (for the long -term, ie keep it forever) in the city, particularly in the Bella Vista area. However, due to the constraints of my job, I will be leaving the country in approximately 18 months and dont know when I'd return again (could be many years) . The reason I'm thinking of buying is not so much as an 'investment', but so that I might be able to come back in 30 years and spend spring/summer in the city.

The Plan

I would put 10k down on the house, 10k on transfer/closing costs, (all I have is 20 !) take a loan out for 270k (which is $1700 a month), bringing my total expenses to approxiamtely $1900 a month (including taxes and insurance). The mortage would be for a Fixed 30 year term, I dont like messing with interest rates.

I would live in the house for 18 months, renting out the other 2/3 rooms to people I liked (hoping to get $1200 all in from renters) to help cover the mortage payments.

Meanwhile, since I'd be earning good money from my job, I would have been able to SAVE approx 25k by the time I leave the country, which I could either use to put back into the house ( and reduce the high-interest payments on the 80/10/10 type of mortgage that I'll be taking) or leave in the stock market to see some long-term growth.

The Problems

Here's the problems I'm facing with

a) Is 9th and Christian, right next to Bruno Brothers/ St. Anthony Coffee/ Meat Stores etc a good location? The house is located Directly next to the meat store's loading dock, so I'm REALLY worried about trucks backing up Montrose street at 6.am in the morning. I've never lived in QV, so I'm also worried about the smells and noise etc in general being that close to the 'thick' of it all. All the bedrooms in the house are in the 'front' which adds to this. What does everyone think?

b) Once I leave the country in 18 months, I was hoping to rent out the space for 2k a month. It would be an ideal apartment for 3 people to split, so maybe that justifies the high rent -or am I shooting too high or too low with that projection ? I would think in a renters market the location would be ideal since its right in the middle of the italian market area. Any thoughts on if this is a good projection ?

c) The way I'm describing it above, I'd be paying approximately $1900 in mortage+taxes+insurance, (have I forgotten anything ?!) and getting approximately $2000 a month from rental. Addtionally, lets not forget I'd have approximately 25k 'saved up' that would have been either put back into the house, or earning (hopefully) 5 - 10% in a mutual fund, which would aim to cover "management fees", and "maintanence" fees that I'll be charged by a firm. Basically, I know I need a buffer to cover for a proffesional firm to take care of the property for me, and pay any maintanence costs that might come up. But the problem is I dont have a good idea on how to estimate what this might end up costing, since the property is 'apparently' redone, and 'looks nice', but who REALLY knows? I'd love some thoughts on this idea.

All in all : I love Philadelphia and want to come back in 30 years and spend time somewhere beautiful with my family, something like a vacation home. Am I being stupid with the above proposal, or should I just take my money (the 20k I have TODAY) and any future earnings and store it in a safe investment somewhere else, and forget about all this speculation ? I'm worried I might not be able to afford a home in the future in QV, but then again - my money would also grow to a much larger amount in 20 years. Its hard trying to asses how much risk is out there.

Any and all thoughts appreciated !

UncleCranky · #2 (**permalink**) 02-27-2006, 01:03 PM

I think that is a major reach. Renting from afar is going to require you to have a local company manage the property which will add to your costs. What happens if you can't get the rent you want or need to sell the house for other reasons?

I would not want to live on one of those side streets.

If it were me, I'd go over seas and when I came back I would try to buy in the city again.

-UC

Malloy · #3 (**permalink**) 02-27-2006, 01:18 PM

Wow. 3 years ago, that home sold for $130k to someone from East Hampton, NY.
http://brtweb.phila.gov/accountDetai...?an=5682000845

I think $290k is top $$$ for something that small, in that immediate area. You should not expect much appreciation in the next 5 years. Have you realtor show you recent comparable sales "comps" for the immediate area, and you will see what Im talking about.

Also, thats considered Bella Vista.

cline · #4 (**permalink**) 02-27-2006, 01:37 PM

I would not want to manage a property from overseas. I agree with the previous poster that you would need to hire a manager.

If you want to do something like that, why not buy a condo instead?

As for 9th & Christian - no way. I love the Italian Market (was there Sunday) but not the noise, the rodents, the crowds in the summer, etc. Traffic from the school on Christian also gets backed up in the a.m. (but you can live with that - it's bad when it's backed up and deliveries are getting made).

Also, keep in mind, there's a good chance property taxes might be reassessed.

I have been considering a move out of the country for only 2 years. We would sell the house and just re buy if we did it.

Tim K · #5 (**permalink**) 02-27-2006, 02:05 PM

Why not save your money for 3 years and then come back and buy an even better place? I don't think there is any way you would get $2000/mo in rent. I also would not want to manage a property from long distance since you'd be paying someone a portion of the rent and adding to your overall costs.

anandpillai · #6 (**permalink**) 02-27-2006, 02:10 PM

All the feedback is making sense, and is appreciated. Once again, I've never lived in the area - so to me the amounts I could get for rent, or the actual situation with rodents etc is fairly new, so I'm learning a lot

On the whole, I've been reluctant to go ahead with the idea (for many of the same reasons people have described below), but it always helps to get feedback to know if you're making the right decision. Its always difficult leaving a place I like so much without something 'solid' on the ground, but my best sense tells me to NOT buy, its just good hearing others say it.

Keep it coming....

joey0 · #7 (**permalink**) 02-27-2006, 02:20 PM

Where are you going? Because with the American dollar right now, it might really be to your advantage to buy here and pay off the debt there.

Just a thought...

anandpillai · #8 (**permalink**) 02-27-2006, 02:38 PM

I'm heading to the non profit world in IndoChina - I wont be earning much at all ! I might be able to make approximately $200 a month payments towards any mortgage, but I doubt that helps much.

Queen Villager · #9 (**permalink**) 02-27-2006, 05:41 PM

Thirty years is a loooooong time. That is the time frame before your return, right? A lot can change in that time, including your desire to live in any particular place. Why not enjoy your time overseas without worrying about property and tenants back home?

Designer · #10 (**permalink**) 02-28-2006, 12:59 PM

IMHO that location, that property, that size, $2000 is way above market and is going to net you 4 students (which isn't allowed with your single family city rental license) and your property could potentially really suffer.