Neighborhoods outside Philadelpia for 1st multifamily

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Neighborhoods outside Philadelpia for 1st multifamily

Ian Andrews
Philadelphia, PA · Member since 2017 · 9 posts · 4 votes

Hi everybody,

I'm brand new on the site and to real estate.  I was hoping to tap into some of the knowledge that some of the other members on the site may have about the Philadelphia area.  A little about myself;  I've been in Philadelphia for the last three years.  My original game plan was to do as most do and save up for a while then buy as much home as I could based on my savings and salary.  It didn't take me too long to realize that buying a home just to buy a home was NOT necessarily a sound investment and was likely a huge liability.  I started reading a few books and some posts on this site.  I have been rethinking my strategy significantly and have begun to consider trying to start with an owner occupied multifamily home.  Living in center city I feel like this poses some challenges in terms of cost so I will likely have to move outside of the city (although if anyone has any experience with this in center city I would love to hear about it).  I commute out to King of Prussia for work which allows me to take public transportation (Norristown high speed line) and to not require a car (*sidenote: if anybody is looking for other ways to cut down on expenses to pocket more of their earnings for saving and investing, figuring out how to live without a car is fantastic!  I've become quite accustomed to it and it saves cash every month).  I was thinking that if I could find a place close enough to public transportation, I could cut down on my living expenses utilizing the aforementioned owner occupied multifamily home strategy, while maintaining low transportation costs.  This poses a bit of a challenge for me in terms of where to focus.  Having lived in center city my entire time in Philly, I don't know the surrounding areas particularly well.  Additionally, the Norristown high speed line is fairly long so there are lots of neighborhoods/communities.  I figure that without an area to focus on and start learning the market in I'm just spinning my gears.  Does anyone have any experience with neighborhoods that lie along the Norristown high speed line (aka route 100)?  Specifically, if there are good neighborhoods to focus on for this type of home?  Looking for something probably in the 100 - 250K range (I know the range is huge, but if the deal is right....), but that is also in a nice enough area that I would want to live.  Sorry if this is too broad a question, I know nobody can decide for me what neighborhood to focus on, but I figure with all of the experience on the site I might be able to get a lot of information rather efficiently.  Thanks in advance for any responses and advice.  I look forward to talking with some other members about this topic.   

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John Knisely
Real Estate Agent · Media, PA · Member since 2017 · 361 posts · 250 votes
9y

@Alfred Harrison, Drexel Hill is in Upper Darby school district so you can expect the same wonderful taxes with an Upper Darby address as you can for a Drexel Hill address. 0.0622429 total tax rate ($6224 per 100k of assessed value)...pretty steep.

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  • Joseph ScoreseBusiness Member
    Banker · Philadelphia · Member since 2009 · 2k+ posts · 635 votes
    9y

    Hi @Ian Andrews,

    Welcome to BP!

    Some items to consider when identifying Multi Family and House Hacking in the Greater Philadelphia Market;

    * What are you pre-qualifed for (FHA, FNMA, or Freddie Home Possible)

    * What neighborhoods tie into your pre-qualification and the gross rents of the identified multi family

    * Appreciable neighborhoods (Based on Current/Future Development, Transportation, etc)

    Let me know if you have any questions.

    Regards,

    Joe Scorese

    1Reply
  • Brendan Markle
    Bensalem, PA · Member since 2016 · 96 posts · 52 votes
    9y
    Not sure how you would feel about living in Germantown or Norristown , but those would be your best bet for finding a duplex in your range that cash flows WELL.
    1Reply
  • Sb Carson
    Investor · Philadelphia, PA · Member since 2012 · 11 posts · 4 votes
    9y

    I've seen interesting property in Bridgeport and .West Conshocken you may want to check out those areas.

    1Reply
  • Zachary Paul
    Real Estate Agent · Philadelphia, PA · Member since 2013 · 167 posts · 64 votes
    9y

    @Ian Andrews - Here are some options for you to consider in the $100 - $250k price range:

    Manayunk, East Falls, Norristown, Bridgeport. Also in Philly consider South Philly, specifically Point Breeze / Newbold, and also parts of Kensington. 

    The above areas are, for the most, part decently located and can be reached via public transportation. Each neighborhood has it's own distinctive style of home, price point, etc. 

    I live in KOP and work between KOP and Center City as a Realtor. Let me know if you have any specific questions or concerns, would be happy to help. 

    Best of Luck!

    1Reply
  • Ian Andrews
    OP
    Philadelphia, PA · Member since 2017 · 9 posts · 4 votes
    9y

    Thank you to everyone who has provided some suggestions thus far.  I apologize for the tardiness of my reply, but I was traveling out of the country for a bit and had limited internet access.  Anyone have any experience in the Drexel Hill area?  I was curious about this neighborhood, but some of the crime statistics I found online caused me a bit of concern.  I think the Manayunk/Roxborough area makes sense in terms of an area I would be happy to move to.  Only downside is moving out of center city, yet still getting hit with the Philadelphia wage tax.  

    0Reply
  • Richard Jahnle
    Health Care Administration · Philadelphia, PA · Member since 2015 · 65 posts · 65 votes
    9y

    @Ian Andrews I work about 10 min from the Drexel Hill area and looked there to possibly buy (had same plan as you, buy an owner-occupied multifamily). There were a few downsides to buying there. Yes, duplexes and triplexes are relatively inexpensive there but for whatever reason, I found property taxes are very high. I bet you would end up paying more in property taxes in D.Hill then wage tax in Philly. Also having grown up in the Delco area, Drexel Hill is one of the surrounding suburbs of Philadelphia/Delco that is not very desirable to live in. It's sort of in that Upper Darby area, a place with a below average school system, especially compared to the other surrounding delco schools. I have friends living in Drexel Hill now who are having a baby, and they are trying to get out of Drexel Hill ASAP to an area with a better school system. Also like you said, not great crime statistics. 

    I ended up buying in Manayunk/Roxborough. If you have any questions about the Manayunk/Roxborough or any other surrounding area, let me know. 

    2Reply
  • Alfred Harrison
    West Philadelphia · Member since 2017 · 35 posts · 11 votes
    9y

    @Richard Jahnle Yes, property taxes in DelCo are pretty outrageous in general, especially when compared to Philly. I also tend to agree that in general, the combination of city wage tax and property taxes are outweighed by property taxes in DelCo. I haven't heard really negative things about Drexel Hill's schools though. Additionally, Springfield and Media seem to have pretty good schools, but the higher home values combined with the property taxes makes it tough. I hear a lot of complaining about Lansdowne's H.S. (William Penn H.S.) and Upper Darby's H.S., but the elementary school in Lansdowne seems to be okay.

    1Reply
  • John Knisely
    Real Estate Agent · Media, PA · Member since 2017 · 361 posts · 250 votes
    9y

    @Alfred Harrison, Drexel Hill is in Upper Darby school district so you can expect the same wonderful taxes with an Upper Darby address as you can for a Drexel Hill address. 0.0622429 total tax rate ($6224 per 100k of assessed value)...pretty steep.

    3Reply
  • Ian Andrews
    OP
    Philadelphia, PA · Member since 2017 · 9 posts · 4 votes
    9y

    Hi there Richard, Alfred, and John.  Thanks for chiming in.  Some great discussion here.  I was really surprised to see the over 6% figure for the Upper Darby/Drexel Hill tax rate.  That would obviously make a huge difference!  I'm going to throw out a real novice level follow up question and ask how you typically determine your tax rate estimates.  I had been using a website with an estimator tool that was obviously way off!!  With the taxes offset that really would change my initial aversions to  Manayunk.  My job will be moving from king of Prussia to phoenixville next summer which won't be great in terms of a commute, but it wouldn't be impossible I suppose.  Any experience with neighborhoods a little further outside the city, Anywhere between Philadelphia and phoenixville?  Thanks again for all the responses.  Really helpful.

    0Reply
  • Alfred Harrison
    West Philadelphia · Member since 2017 · 35 posts · 11 votes
    9y

    @John KniselyYikes! Exactly.

    @Ian AndrewsI receive updates on properties within a specific search criteria through agents that set me up on the TrendMLS portal. So, I can see basically what I can expect to pay in property taxes on a real basis for a given property.

    You can also go to the county website and look it up borough by borough. Just make sure when you're doing your estimate on a property, that you multiply the mill rate by the property's assessed value (i.e. not the asking price on zillow or some site like that). As an example, for Lansdowne, the mill rate is 63.253. So, a property assessed at say, $80,000 (again, disregard asking price or prior sales figures as those are not particularly important for this calculation) would have an annual tax bill of $5,566.26. You can usually get the assessed value on the home's listing. Steep indeed.

    You also want to be careful about assessed values. Most of the time, the county will only re-assess once every few decades. So, you can generally expect that the assessed value will not change year to year. BUT, if you are unlucky and the county decides to re-assess, the value could change dramatically, which would have a significant impact on your property taxes.

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  • Alfred Harrison
    West Philadelphia · Member since 2017 · 35 posts · 11 votes
    9y

    Also, I hear that Phoenixville is super hot right now. It was still 'up and coming' just a few years ago. Manayunk prices are pretty crazy, I believe. Traffic and parking can be a nightmare as well as general driving conditions in the winter due to the narrow streets and hills.

    0Reply
  • John Knisely
    Real Estate Agent · Media, PA · Member since 2017 · 361 posts · 250 votes
    9y

    @Ian Andrews is your commute public transit only? The areas you are mentioning are right off the Schuylkill River Trail and that really opens up a ton of options for car-free commuting. My team has a listing in West Norriton that backs directly up to the trail. That area would be about a 10 mile ride to Phoenixville, which is an hour bike commute if you are slow. Would be a great setup to live right near the bike path (generally good for future property value too). I bike commute all the time to work and it is really a great way to start and end the day, especially if most of the ride is not on public roads.

     Could also consider house-hacking with roommates in a modest single family house in that general area? If you do it right you could absolutely live for free or pull in some profits depending on how much you wanted to rent out.

    0Reply
  • Ian Andrews
    OP
    Philadelphia, PA · Member since 2017 · 9 posts · 4 votes
    9y

    @John Knisely  I'm glad you mentioned the transportation options.  That is a big consideration for me at the moment.  My goal for this first real estate purchase is really to reduce my housing/living expenses as much as I can.  Currently I live in center city and am able to commute to work via public transportation.  I hop on the subway two blocks from my apartment and take it all the way to 69th street.  From there I get on the norristown high speed line which drops me off about a half mile from work where my employer runs a shuttle to the site.  It's fantastic, my total transportation expenses  in any given month is $96 (Septa trans pass).  The first $30 is subsidized by my employer bringing the cost down to $66, which I can then pay with pre-tax dollars.  Compared to owning and operating a car it's ridiculously cheap.  This is why I would ideally like to stay very close to something like the norristown high speed line so that I could continue this.  I believe I will be able to do something similar when my job moves to phoenixville as I think my employer is going to run a shuttle from one of the stops out to the site.  This is tough because it limits my options significantly.  I am open to getting a car again, but then the added cost will dig into the saving I am making with the house hack and if I'm not saving a significant amount of money compared to my living/commuting expenses I pay now then I would just stay in the city.   Just an additional consideration for me.  To address your other comment I have definitely considered a single family home and renting the rooms.  I' not closed to this idea at all, but the multi unit approach has the added benefit of privacy so I've been thinking about taking that approach.

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  • John Knisely
    Real Estate Agent · Media, PA · Member since 2017 · 361 posts · 250 votes
    9y

    I admire the devotion to a car free lifestyle. I try to get as close as possible to that but very tough as a Realtor to not have a car. Also, as a self-managing investor, those 10 trips a day to Home Depot when starting out may get very frustrating without a car haha! Not saying it can't be done, you can hire out all maintenance if you buy at the right price for sure.

    0Reply
  • Max T.
    Investor · Philadelphia, PA · Member since 2015 · 3k+ posts · 3k+ votes
    9y
    Germantown has some nice multi fams on the market right now.
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  • Steve Babiak
    Real Estate Investor · Audubon, PA · Member since 2009 · 13k+ posts · 8k+ votes
    9y

    Well, Phoenixville can be rather small or rather large, depending on whether you are talking about being inside the borough itself or just being inside the 19460 zip code for Phoenixville. That zip code starts rather close to King of Prussia, just beyond Valley Forge Park, and it covers sections of Montgomery County even, near Collegeville. So maybe you can pin down the location with a bit more precision. The route 99 Septa bus does pass through parts of Phoenixville (as well as King of Prussia); you might want to look at the transit map for that route to see how close that bus gets to your planned destination.

    0Reply
  • Kevin H.
    Rental Property Investor · Greer, SC · Member since 2017 · 51 posts · 33 votes
    9y
    As the one poster stated, with your price range; your options of finding a duplex are limited. Germantown, temple area, possibly east falls. Manayunk and roxborough would be great for you. Since you don't own a car and are right next to the norristown line. I just don't believe you can find a duplex under 250k. Norristown is also quite affordable from what I have heard. It all depends on if you would be comfortable living in areas with higher crime. Good luck on your search.
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  • Ian Andrews
    OP
    Philadelphia, PA · Member since 2017 · 9 posts · 4 votes
    9y

    @Kevin H.  I think you have a pretty good point.  It has been fairly challenging to find something that is fitting all of the criteria I laid out.  I am flexible though.  If I find a great deal, but it will require me to get a car, that's fine, I can do that.  The numbers just have to be good enough to make up for the additional monthly expenses.  I'm also in a position to spend more if it still makes financial sense.  I put an upper limit on the price range more because it's my first home and wanted to make sure that if I made any mistakes that they weren't huge mistakes (maybe the property needs more work than anticipated, stays vacant for a while, etc. etc.).  But 300-350 would still be doable, just had to be a no brained great deal for me to jump in that deep.  Thanks for the input Kevin.  Ugh appreciated.

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  • Ian Andrews
    OP
    Philadelphia, PA · Member since 2017 · 9 posts · 4 votes
    9y

    Thanks again to everyone who has taken the time to post responses to my questions.  I'm really impressed with how helpful and supportive a community exists on this site from the Philly area.  I've been looking around in some of the neighborhoods suggested by several of you and I had a follow up question regarding how to do so.  I've been looking at properties through websites like zillow, realtor.com, trulia, etc.  My skills are not very refined at this point so the search typically involves something along the lines of typing "duplex name of town" into google and checking out what comes up. I have seen some posts where people describe having MLS feeds set up to provide them with notifications. I know some of the aformentiones sites (trulia for example) have notifications available, but I was wondering it there is something else I should be doing. Do the big sites like zillow etc. offer a good enough representation of what is available or will a lot of potential properties get missed when relying on these? Is there some other, more thorough service available that I should be using? Thanks everyone!

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  • Sandra B.
    Orange County, CA · Member since 2017 · 36 posts · 24 votes
    9y
    Is there a reason you're not working with a realtor? I understand you might be at the "research" phase, but it still makes sense to let someone set up the search for you and to provide insight into these different neighborhoods. You have thrown out a lot of things: access to specific transportation, city wage tax, property taxes, proximity to center city, budget. Prioritize those and then set your search based on your priority. I haven't lived in the area for a few years, but have lived in west Philadelphia, royersford, and tredyffrin and still own businesses in manayunk and queen village. There are some options. But do you actually want to live in these places, especially without a car (Norristown without a car, no thanks) and what type of tenants would you attract? There are not a lot of legal duplex properties in many of these areas. House hacking is probably a more realistic expectation than purchasing a legal duplex in your budget, in a neighborhood that you would want (without a car) that would attract high quality tenants, and doesn't require a ton of rehab (read cash). If you're committed to staying urban and car free, as others have said, Germantown, east falls, manayunk, roxborough, and brewerytown could be options. Think you're priced out of conshocken/west conshy, unless you're willing to take on a serious fixer. I personally would not buy in Germantown without having intimate knowledge of that neighborhood. There are micro neighborhoods, desirable and less desirable streets. If you make the wrong decision, you could have trouble renting and limit future appreciation. Try looking for a recent rehab that has runway left on a tax abatement, that could help offset the wage tax. If you're open to being suburban and taking on a car (which, if you combine the 3.93% wage tax with what you're paying for public transportation, that might just cover your car expense), phoenixville actually has a pretty cool little downtown area they've been working for years to develop and still have affordable options. Tredyffrin, while housing prices are higher there, has extremely low property taxes, no local tax, and there are some deals to be found near Paoli hospital and in Berwyn by the high school. Norristown is actually quite large and diverse. This is another instance where knowing the neighborhoods matters a lot. You might also be able to find something in Blue Bell. Set your priorities about your budget and lifestyle, find a realtor (or two, maybe one in the city and one in the burbs), and start spending time in your target neighborhoods to really get a feel if that's a place you want to live.
    1Reply
  • John Knisely
    Real Estate Agent · Media, PA · Member since 2017 · 361 posts · 250 votes
    9y
    Originally posted by @Ian Andrews:

    Thanks again to everyone who has taken the time to post responses to my questions.  I'm really impressed with how helpful and supportive a community exists on this site from the Philly area.  I've been looking around in some of the neighborhoods suggested by several of you and I had a follow up question regarding how to do so.  I've been looking at properties through websites like zillow, realtor.com, trulia, etc.  My skills are not very refined at this point so the search typically involves something along the lines of typing "duplex name of town" into google and checking out what comes up. I have seen some posts where people describe having MLS feeds set up to provide them with notifications. I know some of the aformentiones sites (trulia for example) have notifications available, but I was wondering it there is something else I should be doing. Do the big sites like zillow etc. offer a good enough representation of what is available or will a lot of potential properties get missed when relying on these? Is there some other, more thorough service available that I should be using? Thanks everyone!

    Ian, these sites are a good start, Zillow can be a bit challenging (but also good in certain regards) because it allows unlicensed folks to post FSBOs and rentals. Personally I used Redfin the most when I am not logged into the MLS, I like the interface the best.

    For on market properties and really searching for specific criteria, I definitely suggest talking to an agent and having them set up an MLS search for you. You can get into some VERY specific criteria which will help you identify when something meeting your exact criteria is listed, and you can couple that with hand drawn map boundaries to include and exclude specific areas (would be good to do this to search for areas that support a car free lifestyle). I have set up some pretty specific searches for clients based on areas they want to buy/invest, age and type of homes, features, price, days on market, even types of utility service and such (gas, oil, electric), etc. Endless search fields that can't all be accessed on the public sites. This can be setup to email you immediately when listed, daily, certain days and times so you can control what and when you are being emailed. Any real estate agent has the ability to do this on our MLS , some are better than others setting it up and at understanding what criteria is worth searching for. I'd be happy to show you what I mean, shoot me a message if you want to.

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  • Ian Andrews
    OP
    Philadelphia, PA · Member since 2017 · 9 posts · 4 votes
    9y

    @Sandra B. @John Knisely thank you Sandra for the detailed advice.  To answer your initial question as to why I wasn't working with a realtor; there are two main reasons.  The first was that I didn't really know that I should be doing this, I kind of assumed it was a bit of a DIY situation at the outset.  But judging from both your and John's replies it sounds as if I would benefit greatly from working with one.  The second is that I just don't know any, but with all the helpful folks that pop up on the site here I feel like that will be an easily solved problem.  On an unrelated note I hope you are loving Southern California.  I loved there for about 11 years, San Diego (la jolla area) and Los Angeles (Westwood).  I loved every minute of it.  

    John, thank you for the info regarding what an agent could do for me.  Didn't know I was missing out on that level of detail.

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  • Account Closed
    Philadelphia, PA · Member since 2017 · 140 posts · 37 votes
    9y

    Just stumbled across the article called "Philadelphia City announced wage tax reduction starting July 1, 2017" 

    It says new wage tax for Philadelphia residence is 3.89%

    Surprisingly enough I didn't hear about that sooner. Maybe because I don't watch TV, which I consider waste of time, don't want to be manipulated by mass media. 

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  • Ian Andrews
    OP
    Philadelphia, PA · Member since 2017 · 9 posts · 4 votes
    9y

    @Account Closed I saw this article too a little while ago.  I don't recall what it was prior to July 1st, but even at 3.89% it costs me a pretty decent chunk of cash each month.  I actually do think it could be possible, depending on the taxes in the area I move, that, like @Sandra B stated, a car might be cheaper than the tax, haha.

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  • Account Closed
    Philadelphia, PA · Member since 2017 · 140 posts · 37 votes
    9y

    We live in NE Philadelphia and bought 2 duplexes here. We mainly look for the good school area and reasonable property taxes, when considering purchasing.

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