What Neighborhoods in Philadelphia are Best for Rental Property Investment
With very few exceptions, good investment decisions are those based on the results of a thorough research. And when it comes to buying income properties, there are plenty of things to consider. Is it the right time for investing in real estate? How to choose the right type of property? Is the neighborhood popular among renters? Will your investment pay off as fast as you expect? As you can see, the success of your buy-to-let business depends on plenty of factors.
Obviously, answering all these questions takes time and expertise. And if you made it to this article, I assume you’re running short in at least one of the two resources. Now let me give you a promise: regardless of your starting point, you’ll become well-versed in the question by the end of this article. Just make sure to read it from cover to cover.
Why choosing Philadelphia?
First and foremost, Philadelphia is awesome, and an increasing number of people start to recognize this fact. No wonder why thousands of Americans are flocking to the city every year (in fact, New Yorkers make the majority of those who come here to stay).
Secondly, Philadelphia is the fifth most populous city in the US, and its vibrant economy focused primarily on IT, services, and education makes millennials consider it a great place to jump-start their career.
Thirdly, experts assure us that housing prices in Philadelphia are getting stable after the months of being an all-time high, which means the risk of overpaying is no longer the risk.
“I believe that the city of Philadelphia provides a great opportunity for the real estate investor, especially with properties for buy and hold (rent). First, properties can be more affordable than in the nearby suburbs. Secondly, it has become quite popular for new college graduates. Be in the middle of great culture, nightlife, and public transportation! Philadelphia is always hopping all through the year. Parades, conventions, sporting and musical events. Whatever your hobby or liking may be, you will find it.”
Denise Supplee, Director of Operations from SparkRental
What neighborhoods to consider?
In case you’ve never been to Philly, there is one fact you need to know first: Philadelphia is a city of neighborhoods, and sometimes locals get mad when people fail to recognize the borders properly. To save yourself the trouble of feeling apologetic, study the map and memorize at least those neighborhoods featured in this article.
Median rental price: $1,698/mo
Median purchase price: $624,000
Chestnut Hill is ranked the 2nd best neighborhood in Philadelphia – and there are strong reasons for that. Statistics tell us that the median household income of people from Chestnut Hill is 145% higher than in any other area of Philadelphia. What’s more, the median home value is 188% higher than the city’s average. Since the majority of local residents make their living as an executive, managers, or other professionals, there is no wonder that Chestnut Hill prides itself on being the most intelligent and classy part of the city.
Median rental price : $1,830/mo
Median purchase price: $528,000
Probably one of the most vibrant parts of the city, Logan Square is home to Philadelphia’s major corporate and municipal office buildings. And although it’s one of the most expensive parts of the city in terms of rental prices, people don’t question what they pay for. The local median value of properties in Logan Square is as much as 173% higher than in other parts of Philadelphia. Nonetheless, it’s still affordable compared to similar neighborhoods in other major American Cities, including NYC, LA, and San Francisco.
Median rental price: $1,690/mo
Median purchase price: $348,000
Especially popular among students, artists, and hipsters, Fishtown is considered among the most up and coming neighborhoods of Philadelphia. The area is full of fancy restaurants, coffee shops, and gastropubs. Property appraisal in Fishtown is rapidly growing, and the average number of days on the market is only 57. Median resale price for properties in Fishtown is almost half as much as in Chestnut Hill, while the median rental prices are virtually the same for both areas. Do we need to tell you it makes Fishtown a great spot for buying-to-let?
Median rental price: $825/mo
Median purchase price: $144,000
Look at the line right above this one, and you’ll see that the value of properties in Port Richmond is growing like crazy. Just like this neighborhood is affordable for you as a rental property investor, it’s also affordable for tenants. The majority of homes in Port Richmond are single-family residences. According to local experts, most of the properties in Port Richmond were built about 60 years ago but they’re recently renovated and feature modern amenities. The place is known for being safe, calm, and family-friendly.
Median rental price : $1,400/mo
Median purchase price: $140,000
This neighborhood is believed to have the second highest rental yield in Philadelphia. Since it’s officially named the most affordable neighborhood of the city in terms of property prices, investing in the local real estate is a great fit for those with a limited budget but great desire to build a source of passive income. Need another reason to make a decision? Property value has grown by almost 100% in the last year, while the average number of days on the market is only 18 days. Sorry for a hint at an obvious, but this means you can rent out or sell local properties in less than three weeks.
Median rental price: $1,900/mo
Median purchase price: $395,000
University City gets its name from having two most prominent and massively influential universities in town: Drexel University and the University of Pennsylvania. There is a large population of college renters, which enroll each year and need to rent a place to call home. The high demand for rentals is permanent and maintain the level of rental prices in the area even when the rest of the housing market is failing. Therefore, forget about vacancies and low turnouts, the lease agreements are sold out years in advance. You also don’t need to spend plenty of time marketing the property because the location sells itself. Students always want to live close to their universities.
Median rental price: $1,460/mo
Median purchase price: $240,000
Washington West’s real estate is characterized by two, three, and four-story story townhouses mixed with condominiums. The property is characterized by mid-rise apartments with the ground-floor retail. Washington Square West is a grid of broad streets with an abundance of greenery supplemented by many adjacent one-lane and pedestrian side streets. It is not only a desirable residential community, but also a trendy neighborhood with a vast amount of restaurants, and coffee houses. Washington West is a solid investment: property prices remained stable even during the period of stagnation, while the general prestige of the neighborhood can guarantee a high yield from renting
Median rental price: $1,400/mo
Median purchase price: $450,000
The neighborhood is made up primarily of the nineteenth and twentieth-century townhouses, numerous churches and even a couple of architectural landmarks. In recent years the area has experienced renovation and influx of affluent citizens. Countless condominium and single-family homes have been built or reconstructed. Due to the neighborhood’s closeness to Center City and increasing demand for this class of property, a variety of new businesses serving to the increasingly gentrified population were established. The district has plenty of room for growth. There is still plenty of neglected property waiting to be colonized by property managers, especially in the southern part of the neighborhood.
Median rental price: $1,350/mo
Median purchase price: $160,000
Eclectic district of Fairmount, the location of the Art Museum, and many other artistic venues are of the hottest places for investment. Located in the vicinity of university campuses and easily accessible city center, Fairmont is the top spot for the young intellectuals, graduate students, and business executives. The median rental prices are slightly lower than that of the center city, which makes it more affordable for career starters. The neighborhood is very diverse and has streets with the elite property as well as a part that currently undergo gentrification. Therefore, the neighborhood has plenty of undervalued property, which is destined to rise in price and give a great return on investment.
Median rental price: $1,300/mo
Median purchase price: $433,000
Bella Vista, translated as “Beautiful Sight”, is a nice urban neighborhood composed mostly of townhouses and low-rise buildings. It was originally inhabited by Italian immigrants, and this heritage is still visible today through the numerous Italian restaurants and national inspired cafes. In recent years, the addition of Mexican and Vietnamese restaurants added the spice to the vibrant life of the neighborhood. The neighborhood is perfect for young professional thirsty for the social life, as well as families who can find their place in the family-oriented residential pockets. This perfect urban setting, as well as excellent schools, low crime rate, and effective transportation, make Bella Vista one of the best neighborhoods to live in Philadelphia. And, of course, the great place to invest.
Now you’re well-versed on the topic and ready to make an educated investment decision. Whatever rental-related challenge you face, I have already been there and will be happy to share my experience with you. Couldn’t find the answer you’re looking for? Feel free to leave your question in comments below the post, and I’ll get back to you as soon as possible.