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Ep 50: Reshuffling the Market in South Philadelphia with Gabe Plagge, PH Real Estate Group


At this time where businesses are taking strain, certain players in real estate are sticking to their guns and others are diversifying, and it will be interesting to see what it all amounts to. Today’s guest is Gabe Plagge of PH Real Estate Group, who specializes in flips and development in the Point Breeze district of Southern Philadelphia. Gabe got into real estate around 2006 at a time where the market looked similar to its state just before coronavirus caused the new reset. Prices were cheap and he started out doing single-family before the reset. He lived through that, so he’s been in the game in that area for a long time and seen many changes, thus the perspectives on how to respond to resets he brings today are really valuable. We talk to Gabe about what he is planning to do going forward, and our conversation touches on how to scale down and what types of deals to still go for. We spend a lot of time talking about what might happen now that everybody is shifting their game plan. A lot of folks are thinking about picking up unusual assets like coffee shops to be able to uplift neighborhoods and attract residents in that way, and we wonder what this process might bring. Short term rentals have also tanked in the city because everybody wants to leave it, meaning those types of deals in suburban areas are looking very strong. Other takeaways from today are whether the correction will improve the quality of contractors’ work now that they aren’t so in demand and whether technology can assist at all with deal closing processes that usually happen in real life. Tune in to hear Gabe’s great perspectives on all of the above.

Key Points From This Episode:

  • Gabe’s work: single family and flips in ghetto districts of South Philadelphia.

  • How Gabe is coping with the crisis and lenders backing out: rehabs, and scaling down.

  • The value of market corrections and what opportunities might be gained once things cool off.

  • Why short term rentals work in the suburbs but not in the cities at the moment.

  • The terrible conditions in the city and why everybody wants to move out.

  • Whether people will start moving back into the city or not once the crisis ends.

  • Virtual versus IRL closing processes between single and multifamily deals.

  • Being jaded about buying new deals because they used to be so cheap.

  • Shaking out buyers who pay too much and getting back into smaller deals with the right price.

  • Costs of rehab projects coming down due to the labor pool post-crisis and cheaper materials.

  • The idea that finding money and deals is easy but getting a good contractor is hard.

  • Why contractors have been able to deliver poor quality over the years: too much demand.

  • Learning how to weed out incompetent contractors in deals where everything goes wrong.

  • Making your own market and uplifting a neighborhood by investing in coffee shops, etc.

  • Thoughts on what redirecting capital after businesses have failed will amount to.

  • Shiny object syndrome: diversify or stick to what you know?

Tweetables:

“The house we bought from you, John, back then was like 15 grand. I mean, it’s not a nice neighborhood but now they’re 70 grand. The rent hasn’t changed so what are you going to do?” — Gabe Plagge [0:18:14]

“Long story short, we’d like to get back into smaller deals, just at the right price point.” — Gabe Plagge [0:21:12]


“We’ve talked about buying a corner building, opening up a coffee shop, just to have a staple up there, even if we are not making a dollar off it. Something that improves the neighborhood overall. It goes back to making your own market.” — Gabe Plagge [0:31:13]


“For us, we try to stay nimble, and look for the next opportunity, but at the same time, not spread ourselves too thin.” — Gabe Plagge [0:39:26]

Links Mentioned in Today’s Episode:

Gabe Plagge

Gabe Plagge Email

PH Real Estate Group


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