Yuriy: 0:00

We're here to share insights and experiences, not legal or accounting advice. Be sure to talk to your attorney, accountant or professional advisor before making any decisions. Everyone's situation is different. Get the help that is right for you, and today we're looking at Northeast feeling From the price that you would post online to the price that you actually get what's happening at city hall.

Yuriy: 0:33

Hi, welcome back to the philly landlord guy, the podcast for rental owners, investors and managers who care about doing things right in philadelphia. I'm your host, yuri Skripnichenko, the guy with his impossible last name. Just think of me as the Philly landlord guy. I am a licensed real estate broker in the state of Pennsylvania and certified property manager, and today I'm bringing you two big topics that matter right now and very important to know in the city of Philadelphia. So today I'm flying solo, and the way how we set up this podcast or this show is that once a month we will have a guest that we will discuss topics about Philadelphia, or investing in Philadelphia, or leasing and anything that goes into real estate in the city, and once a month it will be me only, where I will break down neighborhood by neighborhood, giving you market analysis or some details, statistics on the market, how long it takes to find a tenant, what is the median rent price, and so on. Last episode we spoke about rental license and compliance with rental license Basic but essential stuff. Today we're diving into something a little more political but just as important New bills from city council that will change the way how we do business in city of Philadelphia, how we screen our applications and how we process security deposit. So stay tuned and let's go.

Yuriy: 2:03

And today we will be talking about Northeast Philadelphia. This is where I am from, this is where I invest and this is my background. It's a big area of the city. There are a lot of different neighborhoods that compose the Northeast Philadelphia and at least six to seven different zip codes, and they all are different. So today I will give you an overview of the area in general and, moving forward we will go. In the future episodes we will go zip code by zip code or area by area. Then I will break down new proposals from city council that could change the way how we do business in the city of Philadelphia, how we collect application fees and security deposits. I'm not here to get political. I just want to share the process, the proposals that city council has and what they work on and what they're trying to pass in the city, which is super important for us to know as landlords. So let's start with something every landlord cares about market conditions, and today we're looking at Northeast Philly.

Yuriy: 3:09

So this is a section of city that is often overlooked by investors and landlords because they focus on more trendier parts like Fishtown or maybe South Philly. But if you're thinking long term, northeast has a lot going for it. You've got neighborhoods like Mayfair, tacony, baselton, foxchase, parkwood and other. There is a good mix of single family homes, duplexes, triplexes and small apartment buildings and small apartment buildings. Tenants here are typically working families, often long-term renters. The vibe is stable, community-oriented, people take pride in their blocks and keep them clean. So of course it goes again as most of the city, block by block, neighborhood to neighborhood, and all of these neighborhoods that I named and there are more of them they may be different and they are different. They have different vibe, they look differently, they were built in different time, so all of that you need to take into consideration. But the area in general is a great area to invest if you get a decent deal that makes sense.

Yuriy: 4:25

Right now we're seeing solid rent performance, a typical house we're just talking about average here, right or median. So for the whole area it's not one bedroom is 19111, 19115, 116, 135, 136, 49, and 54. So this data is compiled in the report on local MLS and if you're looking at the report for March, we're looking at March because we're recording this in the beginning of April, so the data that we have available is for the last month and the median listed price through all of those areas was $1,800. The median rented price so the price that actually the lease was signed for was $1,600, which tells us that rents drop in a little bit from the price that you post online to the price that you actually get and average days on the market is 49. So what that means? That means that from the time when you post your property on the market to the time when you actually have a tenant and you have signed lease, it takes on average 49 days, which is much bigger number that we've been seeing previous years. But it's going on everywhere in the city, not just in this part, and Northeast was historically performing better than other parts of the city and we will see it in different episodes when we will be talking about other parts. What kind of numbers we see in the reports right now.

Yuriy: 6:15

One other big theme that I'm noticing is that tenants are getting more selective, and it's not just about the price. Of course, price it's one of the biggest factors when it goes to rent, but it's also about the condition Tenants looking for properties that are clean, freshly painted, with decent kitchens and bathrooms, not from the 70s or 60s, but something that recently was updated. Plus, they're looking for appliances, so washers and dryers make a big difference. So if you're looking to invest in Northeast Philadelphia or buy a property, prices are still somewhat reasonable compared to other parts of Philadelphia, but they are creeping up and catching up. But there is still room for value at place, especially if you're willing to manage them properly and it's not just a quick flip for a quick buck. So northeast Philly, it's a stable area that is for stable, long-term investing, neighborhood deep dive coming. In the future episodes I will be breaking down each neighborhood one by one, talking about the different trends, rent comps, market analysis, blocks to avoid, if any, and what kind of tenant base you can expect in this area. So if Northeast Philly is on your radar, stay tuned, it will be coming up.

Yuriy: 7:40

Now I want to say thank you to our sponsor, trust Art Realty property management in Philadelphia. So, for all of our listeners, trust Art Realty is offering free rental analysis or free management advice. If you would like to schedule your consultation, email us at trustour3lt at phililandlordguycom, or just look for a link in the show notes. That will take you to a form that you can fill out and somebody will get in touch with you and you can talk property management. Now let's talk about what's happening at City Hall.

Yuriy: 8:16

So we have two new bills that were recently introduced that affect how we manage our rentals, and I want to be clear I'm not coming at this from a political angle. I'm coming at it as a landlord, property manager and someone who is dealing with this stuff every day. So one of the bills is trying to cap application fees. So all of us, when you have tenants applying, we collect application fee, and I've seen it anywhere between $40 to $120 and maybe even more. So this bill would cap how much you can charge for an application fee, and they're trying to cap it at $20.

Yuriy: 9:03

The goal is to prevent tenants from being taken advantage of by landlords who keep collecting application fees and don't really do anything with that, but in reality I don't think there are too many of the landlords who do that just to collect the application fees. That's not what we do. We're here to actually find tenants and place them in our properties and the fee covers background checks, checks, credit pools, admin fees, and it's not an extra income, not at least for us. So capping at that amount, it's just too low. It's not even enough to pull background credit on the tenant and that means that us as the landlords, we will have to put money out of pocket for every single application that we receive to screen it, which is absolutely not fair. If we're talking about fairness here and we're not supposed to be subsidizing the tenants, I think if government is looking to do that, they should be providing the funds, not us.

Yuriy: 10:06

And the second bill it's talking about security deposits and that the landlords will have to provide tenants with an option to pay security deposit for equal installments, meaning, let's say, your rent is $1,000 a month, you sign a lease in January, so you will have to provide tenant with an installment plan to pay your security deposit with four installments of $250 per each. So they will pay you $250 in January, february, march and April. However, it doesn't tell anything about what's going to happen if tenant moves in in January, doesn't pay anything, moves out February. Property is destroyed. You don't have a security deposit. Nothing mentioned about that. That's very concerning for us as landlords and what actually might happen? That either will increase the rent, which they're not looking to do the goal of both of those bills is to provide more affordable housing to people, but I think they do not realize that by actually doing that they will have less affordable housing or all of you will decide that your screening criteria will need to go way up higher to be able to deal with the security deposit installment plans.

Yuriy: 11:30

So yesterday, which was April 7th, city council had a public hearing that I went to and I testify in front of city council. I can tell you they are definitely not landlord-friendly place. They had a lot of different tenant support organizations, activists and different nonprofits who were actually on a panel to testify for both of these bills and, of course, all of them supported. And then there was a bunch of different landlords who didn't really have much time to testify, but we still did and of course, all of us gave them reasoning why they should not do it how that will hurt us, how it will hurt tenants they should not do it how that will hurt us, how it will hurt tenants. So it's very important if you are in the city of Philadelphia, reach out to your city council member and tell them how those two bills will affect you and that it's not going to provide any value to the tenants or to you and that actually will hurt everyone. And for more information, you can just look it up. The bills are 220044 and 220045, so you can look them up online and see what the language, what is the exact language of those bills?

Yuriy: 12:57

To wrap up, northeast Philly is solid, steady market right now, with a lot of upside for landlords who are in it for the long haul. If you own there or thinking of buying, keep an eye for those upcoming neighborhood pieces in the future. And when it comes to city council new proposals, it's important to stay informed. These changes can impact on how we run our businesses and they do impact that. So I will keep bringing you updates as they move forward and I will include them in this neighborhood-specific episodes.

Yuriy: 13:36

I will give you some updates on everything that's happening. If you have any questions, you can just post them in the comments section. You can follow us on social media at phililandlordguy. You can email us at info at phililandlordguycom. Please like it, share it, subscribe, and thanks for listening. I will catch you next time.

Yuriy: 14:00

And just as an update, since I recorded this episode that came from city council, after testimony from both sides tenants, advocates, renters and property owners like myself the committee decided to hold the bills for further consideration rather than moving them forward for a full vote, which is good for us. Just to recap, the proposed legislation would cap rental application fees at $20 and require landlords to accept security deposits in four monthly payments instead of upfront. So the idea of this legislation is aimed at lowering the barriers to affordable housing, but many landlords, including myself, spoke out about the impact this could have, how it might lead to tighter screening, more financial risks or push small landlords out of the business. So for now, the bills are on hold, but they are still very much alive. I'll keep you posted here on the show as things develop.