As an agent on the PhillyLiving team, Derek Fulforth has experience with all kinds of clients ranging from first time home buyers to investment clients. Derek brings a wealth of understanding to his clients and is always happy to help educate them along the way. Below are three ways Derek can help his investment clients make wise decisions – but rest assured, Derek’s passionate about helping all of his clients to think of real estate as a smart investment.
- For his investment buyers, Derek’s very interested in the process of identifying the highest and best use for a property or building. For example, should an abandoned warehouse become condos or apartments? Should a buyer tear down the building and sell the land? Should the buyer tear down the warehouse and rebuild? There are many factors that go into this kind of decision making and Derek analyzes investment deals to help his clients make the most of their bottom line.
- Derek can also help his multi-unit investors evaluate their current properties. There are many different evaluation metrics that can be used but the cap rate is a commonly used one as it helps investors to understand their property value. Derek works with sellers to set good cap rates and assists buyers with identifying them. Here are a few facts to know about cap rates:
- The cap rate is the net operating income (Gross income minus operating expenses divided by the value of the property or the asking price).
- In neighborhoods that are more established (such as Rittenhouse, Fitler Square, Queen Village, Society Hill, or Graduate Hospital), there is a lower investment risk and a buyer might be open to accepting a lower cap rate.
- In neighborhoods in emerging markets, where the investment is riskier, buyers typically want to see a higher cap rate.
- It’s important for investors to have knowledge of Commercial Mixed-Use Zoning (CMX classifications) as it informs buyers of the allowable uses (types of businesses permitted) of a certain unit. Some areas of course have limitations in terms of what can be built there and zoning is an important factor to consider when investing in real estate. It’s even important to make note of how businesses are zoned in your own neighborhood.
Obtaining a variance (a change in zoning codes) must occur through zoning meetings with approvals at the city level. It’s valuable to work with an agent who has an understanding of various development projects occurring throughout an area so they can inform an investor of what changes they might be able to expect if they purchase a particular unit.
In summary, if you’re a first time home buyer or someone just considering real estate, at PhillyLiving, we want you to work with a realtor who will help you identify the potential of a property, will analyze it from a financial standpoint with you, and will inform you of what you might be able to expect for the area you are purchasing in.
Working with an agent like Derek Fulforth will help ensure you make smart financial decisions. Contact him at Derek@phillyliving.com or 215-407-1080.