Thoughts on the Philadelphia Market
I’m a NYC local who got into real estate about a decade ago as an out-of-state investor in Kansas City and I think I’ve reached a point where I have enough experience and property where I should diversify my investing by entering a new market. Philadelphia is a city I feel very close to as someone who went to Temple and it’s not that far from me geographically.
In regards to investing, I have a few concerns, which I’m hoping someone can speak on. Firstly, the housing stock in Philly is very old and mostly brick which to me usually means lots of maintenance. From old sewer lines, to water coming through the masonry, to outdated electrical, it seems scary for an investor.
Other points of concern include pest control since many of the townhomes are connected.
From an outsider perspective it looks like property tax isn’t as suffocating as a city like Chicago and tons of areas are gentrifying so fast.
Has anyone considered condo investing in Philly so at least that way you’re not wholly responsible for building/exterior maintenance?
Any advice or opinions are appreciated
Hi Rob,
I would personally stay away from old condos. At the end of the day, you will still be responsible for the cost of the maintenance in the form of an HOA & potential reassessments. You also cannot control who the neighbors are in the condo building either. There are plenty of rowhome opportunities where you do not need to deal with an HOA.
I have been investing in Philadelphia for almost 10 years. The city still offers plenty of opportunity & potential for new investors.
I share your concern about older properties needing a lot of ongoing maintenance. This is why we typically buy shells, fully renovate them top to bottom, then lease them out. You can typically be all in significantly less than the market value and now you have a brand-new property with lower capex in the earlier years.
Good luck!
Hey there!
Temple business alumni, investor and agent happy to discuss the Philadelphia market. Feel free to DM so we can schedule to discuss in more detail.
Rob,
Philadephia native, Temple alum, and fellow investors here.
I agree with Jeremy about old condos here. I think that goes for every market, not just Philadelphia. Since there has been a lot of recent construction in Philly, there are plenty of investments in the market that are newer than the brick houses that you are concerned about. It just depends on the zip code that you are investing in.
Personally have not had an issue with pests and my units. They are also row homes and one even shares a wall with a bando (about to be rehabbed).
I have helped one HNW individual with condo investing in the Philadelphia area. Let me know if you want to chat further.
I think you have some legit concerns. As stated above we also do major renovations before leasing units to try and get all the mechanicals dialed in. I wouldnt buy new construction in Philly unless I knew the builder. Most are very poorly built with water intrusion issues.
Pests are a tough one and really depends on your neighbors if in a typical rowhome. One way to not worry about it is to add pest control in as a monthly cost when you run your numbers. Sometimes you may even have to pay for a pest service at your neighbors (if they’ll allow it) to get the problem resolved.
Taxes are very low but do know there was a city wise reassessment going into effect for 2023 and many of our properties went up significantly. Just something to look at when running numbers.
Happy to provide input as well. I am a Philly alumn and Real estate agent here with a background in the construction industry mostly in the exterior remodeling sector. I've dealt with investors for years and some previous homeowners don't keep up with "updating" their homes. For example, I still see homes today with wood windows. The homes here, if you invest will need a lot of work done to them. There are a lot of benefits of investing in the city when it comes to finding the right contractor cause the trend of Material/Labor costs is drastically different depending on who you work with.
Pest is another conversation. Honestly, it depends on the area where you're at. I live in Manayunk and pests are relevant compared to areas like North East where I'm sure it's very little.
Again let me know, If you have any questions I'd be happy to share my network of contractors with you!