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TABLE OF CONTENTS
1
Executive Summary
Property Description
Area Overview
Comparable Properties
The Market
Investment Requirement
EXECUTIVE
SUMMARY
EXECUTIVE SUMMARY
park in Philadelphias Northern Liberties a perpetually up-and-coming neighborhood that has permanently arrived. This former
PROPERTY
DESCRIPTION
PROPERTY DESCRIPTION
Exterior Rendering
PROPERTY DESCRIPTION
Interior Rendering
PROPERTY DESCRIPTION
PROPERTY DESCRIPTION
PROPERTY DESCRIPTION
PROPERTY DESCRIPTION
PROPERTY DESCRIPTION
PROPERTY DESCRIPTION
PROPERTY DESCRIPTION
Kitchen Rendering
PROPERTY DESCRIPTION
TO BE DEMOLISHED
PROPERTY DESCRIPTION
PROPERTY DESCRIPTION
3-STORY 38-0 H
UNITS 1-9
PROPERTY DESCRIPTION
3-STORY 38-0 H
UNITs 23-25
Foundation
Concrete foundations, cast-in-place basement walls and
basement slab
Footings and foundation walls built with reinforced bars
(REBAR)
Continuous vapor barrier under basement slab
Waterproof coating applied to foundation walls
Sump pump & pit in basement with French drain around
perimeter of basement
Exterior siding
Flashings and caulking as necessary to provide water-tight
system
Brick faade with metal, cement board, wood, or stucco siding
All exterior wall surfaces shall receive home wrap
HVAC
Dual zone HVAC
Duct-work and exterior venting for bathroom exhaust fans
Duct-work & exterior venting for dryer venting provided
Windows
Vinyl geld-wyn or equal
Electrical
200 amp electrical service
Decora outlets and switches per code
Recessed lights throughout
Smoke detectors & carbon monoxide detectors hard-wired
per code
Recessed lights throughout - 6 in main house & bedrooms,
low voltage in bathrooms
Most closets lighted
Exhaust fans in each bathroom
Lighting package provided on roof & exterior
Insulation
Exterior walls on 2nd & 3rd floor - R19
Exterior walls on ground floor - R19
Roof insulation - R38
PROPERTY DESCRIPTION
Plumbing
Kohler toilets, tubs, and bath fixtures Grohe bath fixtures
and faucets
Gas HVAC system, hot water heater, dryer and oven
Public water/sewer service
Drain, waste and vent piping
Sump pump
75 gallon Bradford White gas hotwater heater
Garbage disposal on all kitchen sinks
Cast iron waste lines
Pex water system
French drain in basement
Roofing
Fiberglass roofing
Aluminum flashings, roof edging, gutters and downspouts as
required
Rough carpentry
2 X 12 or TGI wood joists for floor framing and roof framing
Advantec sub-flooring shall be 3/4 tongue and groove
Zip wall system (or similar material) sheathing on exterior walls
Sub-flooring shall be glued to floor trusses with low VOC
adhesive
Demising partitions shall be 2 x 6 wood studs, 16 on center
with 5/8 zip wall system on the exterior surface and 5/8 drywall on the interior
Front and rear exterior partition walls shall be 2 x 6 wood
studs, 16 on center
Interior partition walls shall be 2 x 4 wood studs, 16 on
center
Finish carpentry
5 1/4 Flatstock baseboards
3 1/2 Flatstock door and window casing
Fully enclosed stairs, hardwood treads and risers
Modern style, brushed nickel lever handles and locksets
PROPERTY DESCRIPTION
Living Room
4-5 x 1/2 engineered flooring
9 0+ ceilings
Phone, cable and internet ready
5 1/4 baseboard moulding
Recessed lights (6)
Kitchen
Granite or manufactured quartz counters
Stainless steel appliances - Bosch appliance package
3/4 HP garbage disposal
Recessed lights (6)
Ultra Craft custom cabinetry with self close draws and
contemporary stainless hardware
5 1/4 baseboard moulding
9 0 + ceilings
4-5 X 1/2 engineered flooring
Tile backsplash
Powder Room
Tiled floors
Mirror over vanity
Ceiling exhaust fan
Dining Room
4-5 X 1/2 engineered flooring
9 0+ ceilings
5 1/4 baseboard moulding
Recessed lights (6)
Ceiling pendant light junction box
PROPERTY DESCRIPTION
Hallway
4-5 X 1/2 engineered flooring
5 1/4 baseboard moulding
8 0+ ceilings
Recessed lights (6)
Laundry/Mechanical Room
Full sized washer/dryer units - front or top loading
Tile flooring and baseboards (4 high)
Recessed lights (6)
Custom cabinetry where applicable
Bedroom #1 - Front
4-5 X 1/2 engineered flooring
8 + ceilings
Walk in closet with white laminate shelving and lighting
Phone, cable and internet ready
Recessed lights (6)
Ceiling fan junction box
Full Bathroom Including:
Ultra Craft custom cabinetry with self close draws and
contemporary stainless hardware w/ marble or quartz tops
Tiled floors and baseboard (4 high)
5 drop in tub with tile to ceiling
Mirror over vanity (or medicine cabinet)
Ceiling exhaust fan (Panasonic or equal ultra quiet)
Recessed lighting
Linen Closet
White laminate shelving
PROPERTY DESCRIPTION
Master Bathroom
Ultra craft custom cabinetry with self close draws and
contemporary stainless hardware w/ marble or quartz tops
9 + Ceilings
Ceiling exhaust fan
Custom tile shower with frameless glass enclosure
Overhead rain shower, ceiling & handheld shower heads
Mirrors over vanities (or medicine cabinet)
6 Recessed lighting
Hallway
4-5 X 1/2 engineered flooring
5 1/4 Baseboard moulding
9+ Ceilings
Recessed lights (6)
Linen Closet
White laminate shelving
Master Bedroom
4-5 X 1/2 engineered flooring
5 1/4 baseboard moulding
9+ ceilings
Up to 2 walk-in closets with built in shelving system-white
(if layout permits)
Phone, cable and internet ready
Recessed lights (6)
Junction box for ceiling fan
PROPERTY DESCRIPTION
Roof Deck
Fiberglass roof deck
Hose bib (frost free)
Surface mount light fixtures
Powder Room
Tiled floors
Mirror over vanity
Ceiling exhaust fan
PROPERTY DESCRIPTION
PROPERTY DESCRIPTION
AREA
OVERVIEW
Philadelphia is the largest city in the Commonwealth of Pennsylvania and the fifth largest metropolitan area in the United States
with over eight million residents. As the second most powerful city on the East Coast after New York, Philadelphia serves as the
business capital of Pennsylvania and one of the most important economic and cultural hubs in the country. The City is ideally situated
100 miles from New York City and 140 miles from Washington, DC, strategically located in the epicenter of the wealthiest corridor in
the United States.
AREA OVERVIEW
Philadelphia:
The 5th Largest Metropolitan Area in the United States
Northern Liberties, formerly known as a an industrial & manufacturing hub is a neighborhood of great current signifigance in
Central Philadelphia. The neighborhood extends from Girard Avenue to Callowhill Street and from North 6th Street to the banks of
the Delaware River. Northern Liberties was in existence long before the city of Philadelphia had even been established. Its name
comes from Northern Liberties Township, which appeared in local legislature from the 1770s. By 1854, it was annexed to the district
of Philadelphia, allowing Philadelphia to surpass Baltimore as the second largest city in the United States. Being located outside
of the bustling city allowed Northern Liberties to thrive industrially. Many manufacturing mills, factories, and plants produced the
tools and commodities needed within the city. By the 19th century, many Immigrants began to populate this area. Their heritage can
still be seen today in the areas numerous and highly varied churches. In 1985, the area was declared as a historic district that is now
dedicated to preserving the Italianate, Greek Revival, and Federal style buildings that characterize the area. Today Northern Liberties
is a beautiful community with close to 4,500 residents and known for its eclectic and hip collection of restaurants, shops, and art
galleries.
AREA OVERVIEW
Area Overview
Subject Property
SoNo26
AREA OVERVIEW
Northern Liberties:
Neighborhood Boundaries
Philadelphias economy has undergone a dramatic transformation from its traditional manufacturing base to one driven by a variety
of industries, with a special emphasis on the healthcare and higher education sectors. Philadelphia is home to 98 hospitals and more
than 90 institutions of higher education, which employ more than 580,000 highly educated professionals across the region. The
Philadelphia Metropolitan Area is also home to nine Fortune 500 companies, including AmerisourceBergen, Aramark, Campbell Soup
Company, Comcast,Crown Holdings, E.I. du Pont de Nemours, and Lincoln National, among others. In 2013, these nine companies
generated in excess of $249 billion in annual revenues, representing nearly 67% of the Philadelphia Metropolitan Areas gross
metropolitan product (GMP).
The citys large and diversified economy has helped generate a GMP of $364 billion, one of the highest in the United States. As of
August 2014, the Philadelphia Metropolitan Areas unemployment rate stood at 6.7%, lower than major U.S. cities such as Atlanta,
Chicago, and Los Angeles. More recently, Philadelphias fast-growing biomedical and pharmaceutical industries have brought 14
major pharmaceutical firms and nearly 100 biotech firms to the area. Eight of the worlds largest pharmaceutical companies are
located within a 50-mile radius of Philadelphia, including Astra Zeneca, Bristol-Myers Squibb, GlaxoSmithKline, Janssen Biotech,
Merck, and Novo Nordisk. Philadelphia is also one of the top 15 markets in the U.S. for venture capital investment with nearly $350
million of committed capital across 105 dierent investments.
AREA OVERVIEW
Philadelphia:
Diversified Economy
AREA OVERVIEW
Philadelphia:
Home to the Nations Leading Universities
Center City:
Impressive Population Growth
AREA OVERVIEW
AREA OVERVIEW
COMPARABLE
PROPERTIES
Subject Property
SoNo26
COMPARABLE PROPERTIES
Comparable Properties
Comparable Sale # 1
322 Brown Street, Unit A, Philadelphia, PA
Sale Date: 12/05/2014
Comparable Sale # 2
718 N. 4th Street, Philadelphia, PA
Sale Date: 12/03/2014
COMPARABLE PROPERTIES
Comparable Properties
Comparable Sale # 3
310 Fairmount Avenue, Philadelphia, PA
Sale Date: 07/29/2014
Comparable Sale # 4
822 N. American Street 3, Philadelphia, PA
Sale Date: 9/30/2015
COMPARABLE PROPERTIES
Comparable Properties
THE
MARKET
THE MARKET
The city best known for Rocky, cheese steaks and sharp-elbowed
sports fans is developing a new reputation as a nexus of oil and gas
transportation, which bodes well for its economy.
With little fanfare, Philadelphia is undergoing a revolution powered by
the U.S. energy renaissance. Renewed investment and activity in the
regions sprawling railway network and aging infrastructure is turning
the City of Brotherly Love into a potential energy hub that some believe
can rival Houston.
Energy experts cite two major factors working in Phillys favor: its
proximity to the booming Marcellus Shale, where 5,400 shale wells
churned out nearly 2 trillion cubic feet of natural gas during the first six
months of the year; and the citys bustling commercial railroad system,
which has made it a transit point for oil being shipped from North
Dakotas Bakken formation.
Along the Northeast corridor, there are maybe six distribution pipeline
proposals for natural gas, said Vincent Devito, a law partner at
Boston-based Bowditch & Dewey. A lot is intended for exports and
the quickest and easiest way is through Philadelphias infrastructure.
Devito, a former Department of Energy ocial, said the city is already a
draw for gas and energy related businesses that like to be close to the
pipeline for easy access, he said. Philly is in a fortunate spot because
they are part of the Northeast corridor, theres a lot of business and
remarkable opportunities for business and economic development.
Most recently, Philadelphias profile in the energy sector got a large
boost from Sunoco Logistics Partners, a pipeline investment vehicle that
announced it would construct a $2.5 billion pipeline from the Marcellus
into Philly. The new pipeline will complement an existing gas artery that
may hike the regions natural gas transport by fourfold.
THE MARKET
Once its up and running, Sunoco Limiteds pipeline will funnel nearly
300,000 barrels per day of natural gas liquids (NGL) to Philadelphias
Marcus Hook Industrial Complex.
The city is not what most would normally consider an energy hub.
Traditionally, oil and gas production has taken place in locations
further south, like Houston and New Orleans.
However, the U.S. energy boom has upended many of those assumptions,
transforming unlikely cities into hubs of fossil fuel production. Combined
with a set of refineries that are being retrofitted for natgas purposes,
Philadelphia could eventually rival energy powerhouses in Texas and
Louisiana, some energy watchers say.
Houston is not as close to the demand centers as Philadelphia is. The
East Coast is an amazing engine of demand, said Michael Krancer, chair
of the energy industry practice at Blank Rome law firm.
The citys 8.4 percent unemployment rate is well above the national
average, and even above Pennsylvanias. Many of the cities and states
that are ground zero for shale production have seen jobless rates
plummet. For that reason, energy watchers are reasonably optimistic
that Philly can see some of the same magic other oil and gas producing
regions have experienced through the shale boom.
Energy development in the region can help stem a brain drain of
educated professionals out of the area, Krancer added.
The potential is even greater than Houston, he said. The parts of the
state that are benefiting the most from this are the parts of the state
that have been economically challenged for a generation or two.
THE MARKET
THE MARKET
THE MARKET
The closer in to the city center, the higher that median price rises.
I have sold more homes this year within the first day or two or three
that it goes on the market because there is such a shortage. If something
shows nicely and is priced right, there will be multiple bids, and it will sell
right away, said Mike McCann, a real estate agent with Fox & Roach.
Closed sales are up just 2.4 percent from a year ago, and signed contracts
are down 13 percent. Homes are also selling nearly 5 percent faster than
a year ago. Demand is coming from what McCann calls meds and eds
growing demand from the citys many hospitals and universities.
After falling in the last decade, Philadelphias population has rebounded
since 2010, putting ever more pressure on housing. Comcast, owner of
NBCUniversal, parent company of CNBC and CNBC.com, is building a
second tower in the city, which is creating spino jobs in the downtown,
especially for young millennials. Downsizing baby boomers are also
adding to Philadelphias new residents.
They want to be in town. This is the first time weve had growth in the
city. The downtown marketplace has been expanding dramatically.
There are a lot of renovations of old neighborhoods that are being fixed
up and new construction. The market has expanded because of the
shortage of inventory, added McCann.
Helping the growth is a 10-year tax abatement for new construction.
That is adding new product to parts of South Philadelphia and
Kensington. The center core is spreading farther, and retail and
restaurants are following suit.
THE MARKET
As the country gains more renters, the demand for aordable rentals is
outstripping supply.
Real estate investors who are able to provide aordable rental housing
should have no problem finding tenants in many of the countrys major
metropolitan areas, according to a joint research project about renting
from New York Universitys Furman Center and Capital One, which
indicated the need for aordable rentals is growing.
The center noted that rents rose faster than household incomes in five of
the cities. This issue was most noticeable in Los Angeles and New York.
In Los Angeles, gross rent rose 11 percent while incomes fell 4 percent
between 2006 and 2013. In New York, gross rent rose 12 percent and
incomes had no growth. Conversely, incomes grew faster than rents in
three cities: Boston, Chicago and Houston.
According to the study, the number of major U.S. cities with a majority
renter population rose from five to nine, from 2006 to 2013. Further,
more than 50% of the population rents in these nine cities: Boston,
Chicago, Dallas, Houston, Los Angeles, Miami, New York, San Francisco
and Washington, D.C., according to Furman. Miami had the highest
share of renters as of 2013 65 percent but Boston, L.A., and New
York had 60 percent or more as well.
Even as rental stock rose in each of the 11 cities studied, it didnt match
the pace of growth in the rental population, with the exception of
Atlanta.
Since 2006, there has been an increase in the share of low- and
moderate-income renters who are severely rent-burdened facing
rent and utility costs equal to at least half of their income.
THE MARKET
THE MARKET
THE MARKET
Want double-digit returns and rents that soar more than 10 percent a
year? Its possible for the savvy real estate investor. A new report just
released by RealtyTrac identifies 20 markets with the potential to deliver
returns of more than 15% and several over 20% during Q1 2015.
In a contributing article to Next City, Emma Jacobs reports that Philadelphia could be in the midst of an unprecedented housing boom. The
growth spurt is evident throughout the city, which was ranked in third
place by the Associated General Contractors of America in a list of metro
regions who saw a rise in construction jobs.
Neither of us can remember, in our lifetimes in this city, a construction
boom of this magnitude, said deputy mayor of economic development
Alan Greenberger during the announcement.
According to Jacobs, the Center City District estimated that in 2012,
developers had constructed 463 residential units in the area. The CCD
now predicts developers could build up to 2,600 residential units, most
of which would be luxury and mid-market housing, this year. Victory
Pinckney of the Homeowners Association of Philadelphia added that
whats going on in Center City is causing it to expand outward.
But how long could this housing bubble last? Heres more from Next
City:
[Steve] Mullin [of Econsult Solutions] thinks Philadelphians are
natural pessimists about their long-suering economy. Its a
very Philadelphia thing to say, how can we support two water
ice stands?
Boom cycles end, he acknowledges, but do they just sort of
retreat back to some sort of manageable level or do they bust?
In this case, he thinks the strength of the citys other sectors make
it unlikely the floor would fall out of the housing market.
Jacobs writes that realty tracking firm Reis says [e]very indicator we
have seen, as well as discussions with lenders and developers, suggests
that the demand remains strong for the new units that are coming on
line.
THE MARKET
INVESTMENT
REQUIREMENT
2,080 SF
$187,308
New Construction:
$435,000
No. of Bedrooms:
No. of Bathrooms:
3.5
Finished Basement:
Yes
Yes
$645,808
Yes
$815,000
Yes
$169,192
Yes
$23,500
INVESTMENT REQUIREMENT
Equity Overview
312 Fairmount Avenue, Philadelphia, PA 19123
UNITS 1-26
CASH REQUIRED:
$11,900 = RetainerDUE NOW!
$161,000 = (25% Deposit)Parked at Land Closing
29,814 = Construction Loan PaymentsPaid over Build
TOTAL CASH-IN = $202,714
LOANS:
$611,250 = Refinance loan amount
$484,808 = Construction loan amount
CASH-OUT at REFINANCE:
$126,442 = CASH BACK TO YOU!
Net cash to own this property is ONLY = $76,272
($202,714 - $126,442 = net cash to own)
INVESTMENT REQUIREMENT
Equity Overview
312 Fairmount Avenue, Philadelphia, PA 19123
UNITS 1-26
Assumptions
Annual Growth
Property Info
Purchase Price
$187,308
Construction
$435,000
Closing Costs
$23,500
Total Purchase
$645,808
Appraised Value
$815,000
Built-in Equity
$169,192
Annual Taxes
$1,020
0.00%
Annual Insurance
$1,000
0.00%
2.00%
$50
Closing Costs
$23,500
$11,900
$0
Interest Rate
3.750%
Loan to Value %
Closing Cost as %
3.00%
75.00%
First Mort %
$611,250
Second Mort %
Second Mort Int Rate
0.000%
Other Info
Amount
Rents
$3,300.00
Equity Remaining
% Equity Remaining
Annual Growth
3.00%
$203,750
25.00%
INVESTMENT REQUIREMENT
Year 1
Year 2
Year 3
Year 4
Year 5
Total
$3,300
$3,399
$3,501
$3,606
$3,714
Monthly CD Revenue
$0
$0
$0
$0
$0
Annual CD Revenue
$0
$0
$0
$0
$0
$0
$39,600
$40,788
$42,012
$43,272
$44,570
$210,242
$39,600
$40,788
$42,012
$43,272
$44,570
$210,242
$2,830
$2,830
$2,830
$2,830
$2,830
HOA
$100
$100
$100
$100
$100
Property Taxes
$85
$85
$85
$85
$85
Property Insurance
$83
$83
$83
$83
$83
Monthly Expenses
First Mortgage Payment
$50
$50
$50
$50
$50
$3,148
$3,148
$3,148
$3,148
$3,148
$37,776
$37,776
$37,776
$37,776
$37,776
$188,880
$1,824
$3,012
$4,236
$5,496
$6,794
$21,362
$23,484
$23,484
$23,484
$23,484
$23,484
($21,660)
$20,472)
($19,248)
($17,988)
($16,690)
INVESTMENT REQUIREMENT
Year 1
Year 2
Year 3
Year 4
Year 5
Total
$1,824
$3,012
$4,236
$5,496
$6,794
$21,362
$831,300
$847,926
$864,885
$882,182
$899,826
$16,300
$16,626
$16,959
$17,298
$17,644
$84,826
$0
$0
$0
$0
$0
$0
$7,798
$7,370
$6,929
$6,476
$6,008
$34,581
Economic Impact
Net Annual Rent Income/Loss
36%
Equity Remaining
$203,750
$344,518
$344,518
2,895%
Note: Actual results will vary based upon bank margin, realty appreciation, index interest rates, and actual investment rates. Past performance is not
a guarantee of future results. See your disclosure documents reviewed and closing documents for loan details. See your tax and investment advisors
for actual tax savings and investment review. This illustration does not include tax, investment, or legal advice. For concept illustration purposes only.
INVESTMENT REQUIREMENT