What extra steps are necessary if purchasing a home in Philadelphia for the primary purpose of renting it out?

Asked by Jeff, 19128 Wed Dec 31, 2008

What is required prior to settlement? This assumes the property is unoccupied and will not be subdivided or altered.

Help the community by answering this question:

+ web reference
Web reference:

Answers

8
Carol Cei, Agent, Maple Glen, PA
Fri Jan 2, 2009
Jeff, there are certain condominium projects where the association does not want any more non-owner occupants, therefore, they will require anyone who purchases to be living in the unit for a certain period of time - no renting it out.

If you purchase a home which is not a part of a condo, co-op, PUD, or other association, you have the right to do whatever you want with the property. It is a part of a real estate principle called the "bundle of rights".

Carol Cei
ReMax Millennium
215-643-9661
carolcei@remax.net
0 votes
Anthony, Home Buyer, Philadelphia, PA
Fri Jan 2, 2009
I am not a real estate agent or anything, but I friend of mine just did this kind of investment. He is actually in the rennovations part of it. He told me that a Philadelphia law requires a first time lanlord renting to tennants must live on the premises for at least one year. I don't know where he heard that from, but I think its worth investigating.l
0 votes
Carol Cei, Agent, Maple Glen, PA
Thu Jan 1, 2009
Jeff, also, it is not necessary to go to the city for the license. I have never done that. Always have been able to do it through the mail.

Carol Murray Cei
ReMax Millennium
0 votes
Carol Cei, Agent, Maple Glen, PA
Thu Jan 1, 2009
Hi, Jeff,

If you want to purchase a home for rental purposes, these are the additional steps that you need to take:

1. Make sure you get a mercantile license in the city of Philadelphia for rental purposes. You will need this for several reasons:
a. The city uses it to tax people who earn money in Philadelphia
b. You must have one if you have to go to court in Philadelphia to evict a tenant
c. If you try to skirt by without the license you will eventually be discovered and then will pay a lot of money in fines and fees for non-registration, etc.

2. Make sure you get a clear certificate of occupancy or U&O certificate. If it is more than one unit, it should say so. Sometimes people sell a 3 unit building, but only two of the units are legal. Also, you want to be sure that there are no outstanding violations or reasons why you could not rent the property out.

3. Keep all of your documents from purchase, closing, etc. When you file your taxes your accountant, or whoever helps you will need the information because you will also have to file with the city of Philadelphia. You probably will not owe any tax in the early years, however, I am not an accountant so I am only guesstimating. It will all have to do with your cash flow - expenses vs. income, etc.

If you have any other questions, please let me know. I have been a Phila. landlord for many years and have had experience with single family and multi-family rentals, as well as Section 8. I will be glad to help you all I can.

Carol Murray Cei
ReMax Millennium
215-643-9661
carolcei@remax.net
0 votes
Fred Glick, Agent, Mountain View, CA
Wed Dec 31, 2008
First, an agreement of sale and an agent who can guide you through it!

Also, get preapproved for your mortgage before you submit the agreement.

Once you buy the proeprty, you will need a license to operate a business in Philadelphia and a rental license.

Go to http://phila.gov for details
Web Reference:  http://fredglick.com
0 votes
Chris & Step…, Agent, Philadelphia, PA
Wed Dec 31, 2008
Jeff,

Great question!!

The "extra" steps needed to buy an investment property in Philadelphia for the purpose of renting are all about the professionals you surround yourself with and anticipating the future.

1) Determine if you want your property under a corporate name or your personal name. Your accountant or lawyer can possibly advise you on the benefits if any.

2) Make sure your home owner's insurance policy covers your needs as a landlord. The homeowner policy you purchase should take into consideration vacancy coverage in addition to the typical fire and flood. Consult a professional and ask about their policy on making claims due to negligence of a tenant, neighboring homes, and any scenario you can think of. Fact: Stuff happens!

3) You should get a rental license and familiarize yourself with the process at City Hall. The fee is minimal but knowing the right time to visit the licensing office can save you a lot of time. The lines can be long.

4) Make sure you register for PGW's Landlord Cooperation Program. In Philadelphia, unpaid gas bills follow the property so if you tenant does not pay, you may be stuck with the bill. PGW has a program for you at PGWworks .com.

5) Prepare for large ticket items such as HVAC systems, the roof, windows, and sewage systems. Do not forget abou Home Warranties. Those appliances that are not new will require service.

If I give it a little more thought I am sure a I can come up with 10 extra steps you need to consider. Perhaps interested and informed investors can chime in and add a few tips to my list.

Regards- Steph Somers
0 votes
, ,
Wed Dec 31, 2008
Hi Jeff,
As far as settlement goes, there is nothing extra needed for an investment property. Your mortgage rep would require some additional info however. Here is a link to tenant landlord laws for Philly:
http://www.rentlaw.com/pennsylvaniarentlaw.htm

There is some additonal work needed if you want to make the property sec 8 compliant.
Web Reference:  http://www.LeeStiber.com
0 votes
Renee Porsia, Agent, Newtown, PA
Wed Dec 31, 2008
Hi Jeff,

Happy New Year!

If you are looking for an investment property, you will just need to get pre-approved prior to starting your search.. Once you find a place that meets your needs, you can then meet with your mortgage consultant to get them everything they may need such as W-2s perhaps pay stubs. Once you have taken care of everything the bank needs, they will be ready to issue your mortgage commitment and you will be ready to settle.

If you are having inspections, they would be done of course prior to settlement.

What exactly are you looking for, what is your price range and which area are you interested in?

I'd love to help you or answer any questions you may have. Feel free to contact me if you would like.

Renee Porsia
Associate Broker
RE/MAX ACTION REALTY
(215) 669-0589 Direct
(215) 358-1100 Office Ask for Renee
http://www.reneeporsia.com Register for Free to receive every new listing that comes on the market. Try it now!
0 votes
Search Advice
Search
Ask our community a question

Email me when…

Learn more