Whether you live in Philly or never want to visit this question is still for you, and any feedback is greatly appreciated! Is it better to buy in an area on the up or an area predicted that in the future it will be next to boom? That's partly the story of Fishtown vs. Gray's Ferry according to this novice real estate investor.
Fishtown pros - proximity to major highway and transport lines, shopping of all sorts nearby and fair share of boutique pro chef restaurants and micro brew style bars, name already seen as hip and flippers proving buyers will pay a premium to move.
Gray's ferry pros - major hospital and university expansion started just a mile or two away, prices still mostly accessible, near major highway and transport lines. cons: doesn't carry the popularity of fishtown and still seen by most as street-by-street, there's little or no shopping and certainly no restaurant or hip bar scene.
My current strategy is buy and hold for the long term. I'm not a flipper and prefer turnkey rentals. Fishtown seems like an easy "yes" because while you pay a premium to get in where it's already heating up your certainty of appreciation and escalating rents is much greater than hoping the big university and hospital improves the neighboring areas and creates more demand for mid-market or premium quality housing. However, the lower prices of Gray's Ferry means your investment goes further without much loss of rental rate in the near term and potential for appreciation in the long term.
Is Fishtown worth the 30% +/- premium?
Should I split investment between the two areas?
What am I not taking into consideration?
Fishtown is the better choice today, but as a Buy & Hold investor, and considering the premium to get a turnkey in Fishtown, I'd go with Gray's Ferry. UPENN's development of the old Dupont site is a big deal. The extension of the Schuylkill River Walk south is also a benefit. I think long-term, it'd be easy to rent to PENN and DREXEL students and the young professionals that will be working in the area at the new development. That whole corridor along the river all the way to the Navy Yard is going to change a lot in the next 10 years.
Tough question to answer but it's largely going to depend on your tolerance for risk. My only thought is, where are you finding property in Fishtown at only a 30% premium over Gray's Ferry? I'm betting whatever property someone is trying to sell you in "Fishtown" for only a 30% premium over Gray's Ferry isn't in Fishtown. Fishtown has been hot for years and I'd bet Fishtown, at least comp-wise through solds, is going to be a 100% premium or higher. If you can find a property at a 30% premium in Fishtown, buy it!
@Jeremy T. I would say it really depends on your expectation regarding returns. If you want the safe investment with safer margins fishtown is where you want to be. However if you looking to get in on the ground floor as most investors are then grays ferry is the riskier but more lucrative choice. Every investor is diffrent I don't know your scenario, resources or threshold regarding lower quality tenants so I would say factor in all the risks associated with both areas and along with long term growth and short term rental returnsand make a decision based on your investments goals.
Based off of the information you provided, I would pick Fishtown. Even if I couldn't find anything in Fishtown that fits my investment criteria I would look along the out skirts of the neighborhood. If I'm looking at a long term investment, based on the demand and increasing prices I would buy a block or two outside of the area for a huge discount and wait for Fishtown to come to me. My guess it would be a shorter time frame then buying in Grays Ferry and waiting a decade for possible develop and value increase in that area.
@Jamal Pitts makes the exact point I would and the reason I'm buying west of Fishtown on the other side of the El (South/Old Kensington) or slightly north in Port Richmond. But hey, go with Grays Ferry and leave Fishtown/Kensington to me, I'm happy to have less competition :)
@Troy S. good point about the fishtown premium, we're definitely on the same page from what I hear being anywhere from 50-100% premium...
Thanks everyone, really good points to think about. Going out to see a few places this weekend but leaning towards fishtown (or vicinity). I have a couple places in southwest philly so gray's ferry seems like a natural migration, will have to compare both and see what's available at what cost.
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