The Philadelphia Inquirer
By Alan J. Heavens | December 27, 2015
Ken Weinstein wasn’t sure how well the idea of gathering and training a force of residential developers to recycle housing in Germantown would play to the neighborhood.
Nor was the developer certain that he could interest enough people in his idea, which included a revolving loan fund of $2 million to get Jumpstart Germantown off the ground.
Since he announced his plan in March, Weinstein has taken 108 “mentoring” applications from experienced and would-be developers around the area, and 75 of them have completed nine-plus hours of training with experts in the field.
“It appears to have captured the imagination,” Weinstein said. The opportunity continues for others to sign up here.
He said he also was pleased by the number of women and African Americans who are participating in the program, about 80 percent of the total, noting that these are “very underrepresented groups in real estate development.”
Of the $2 million available for purchasing and rehabbing properties, transactions totaling more than $1 million, representing 10 loans, have been closed this year, Weinstein said. Three more totaling $323,000 are pending.
“A couple of the early loans are ready to be refinanced and repaid,” he said, meaning that there will be funds left for others.
Tiffany Tull, one of the earliest participants in the program, received a loan to acquire and rehab a house in the 5300 block of Belfield Avenue, near the LaSalle University campus – a neighborhood that is receiving a great deal of attention from developers.
Tull, who sells real estate part time, was having a rough week – which is not unusual for newly minted developers. One of her contractors had met up with old electrical wiring, and the fire department was called in.
“I smelled smoke, and then the firemen arrived and started pulling off the roof,” she said.
Fortunately, the roof was covered by builders’ risk insurance, which is one of the things she learned about in the mentoring program, she said.
Tull has a couple of rental properties but didn’t have enough expertise or funding “to move forward as an investor,” she said.
The loan from the revolving fund equaled 85 percent of what she needed to buy and rehab the property, “and Ken required me to put up the remaining 15 percent,” Tull said.
Although she intended the property to be a rental, “when I checked out the market, I realized I could sell it” when it is completed in February, she said.
“It is all very exciting,” said Tull.
Kevin Mathisen, a veteran developer who cut his teeth in the New York City construction industry before coming to Philadelphia 10 years ago, is a program mentor.
He had spent a lot of time in Strawberry Mansion, building up a portfolio of rental properties before Weinstein invited him to be a mentor and shift his attention to the Germantown area.
There is an abundance of properties best suited to rental, Weinstein said.
“Rowhouses cost less to acquire and renovate, and operating costs for renting them are lower,” he said.
Mathisen, too, is focusing on the neighborhood around LaSalle, in which the university has been taking great interest, Weinstein said. In December, Weinstein said, he and LaSalle officials had scheduled a meeting to talk about Jumpstart Germantown.
Participants have lots of questions about the process during the nine-hour education sessions, said Mathisen, who has a focus on renovation for rental.
The sessions include lessons on which properties to buy, how to analyze a deal, and how to estimate construction costs, he said.
“We show them the general process: what needs to be done, risk insurance, title reports, and whether to sell or rent,” Mathisen said.
The influence of TV flipping shows is evident among the fledgling developers, he said.
“A lot of them think they can do a couple of flips, make $40,000, and then get into rentals,” he said.
“It is not that easy,” Mathisen said.