Does anyone who lives out of state buy and hold in Philadelphia?

Question

Hey everyone - of those who have buy and hold/rental properties in Philadephia, are any of you investing from out of state or at a distance?

I have a family member moving to Philly and buying her first residence. I was interested in looking at properties when I go visit her, but I noticed the property taxes are pretty high. She mentioned it's due to a high base tax for local schools.

I would appreciate if anyone could share their experiences in Philly if they are investing from a distance. Do your properties cash flow? Do you have a property manager? What are some challenges you've faced since you can't visit the property or meet with members of your team in person?

Lu Kang · Answer

As Kyle, mentioned it depends on locations within the city. I have properties in Manayunk (19128) which seem to have a higher property tax assessment then my property in Point Breeze (19146), even thought Point Breeze is a hotter location.

I'm actually in the suburbs (Montgomery County), and in comparison Philadelphia has lower Property taxes then surrounding areas, since they get a lot of their tax base from the wage tax. Since your family member is moving to Philadelphia, they have the advantage of house hacking and get preferred rates. In terms of cash flowing, I would say its gotten harder as the Philadelphia real estate (entry level homes) have appreciated. You can find deals where the rent is above your PITI, but once you factor in PM costs, vacanacy and repairs it won't actually make you that much.

I self manage 3 properties and 1 is managed by PM. In terms of cash flowing, they cash flow if you based it on my original purchase price / mortgage starting in 2012 - 2017. Since I've refinanced all my properties, and pulling out all my equity for other investments. It's practically a push as one major repair will wipe away the gains in a year.

If you are investing from a distance, there are def other markets in PA (Allentown Area, Pittsburgh Area, Harrisburg Area) that will give you better cash flow. But in terms of Appreciation I think Philadelphia is better and buying taking that equity I'm able to scale to other things.

Sean Watson · Answer

@Whitney Anne Kwek

I’ve owned a rental in Manayunk(19127) for 15yrs and the taxes have tripled.  Also had one in Fishtown with the same increase.  However I manage around 600 units in the Philly area and most investors prefer the city to the suburbs cause taxes are lower.  Plenty of developing areas where taxes are under $1,500 a year.  Along North Broad you can find places with low taxes and plenty of tenants looking in those areas.  Just got to be careful.  Philly can change quickly block by block.

Basit Siddiqi · Answer

Property taxes may be high or low. That is just one piece of the story.If you are a cash-flow strategy investor, your research should be will this property cash-flow enough to meet your needs.

Lu Kang · Answer

@Kyle Davidson. I'll send you a direct message with the contacts of the contractors I used when I can put the list together.

Kevin M. · Answer

I work with out-of-state buy and hold investors who rarely step foot in Philadelphia. I would say a lot are from NY, California, or other more expensive markets. It’s funny because there is about a perfect split of BP investors who think Philly is high tax versus low tax. Following to see some investors chime in...

Kyle Davidson · Answer

I live around the Philadelphia area, yes property taxes may be high in the city but if you are investing in the right areas and finding good deals your properties will definitely cash flow. Philly has some hot rental/short term rental areas, that you can take advantage of.

Whitney Anne Kwek · Answer

@Sean Watson Thanks for the heads up!

Kyle Davidson · Answer

@Lu Kang I recently just bought a house in Montgomery county that I am planning to use as a house hack. I am looking to do some minor renovations to this property including turning a half bath into a full bath. Do you happen to know any good contractors in the area?

Whitney Anne Kwek · Answer

@Lu Kang @Kyle DavidsonThank you both for your insight on Philly. I think it will be worth it for me to scope out some properties while I am visiting and see if the numbers work for me.

Carli DeAngelis · Answer

I would love to hear about the same thing! I am looking at Philadelphia from a distance to buy & hold and I am running numbers. It would be great to hear some real life stories with barriers, successes, and recommendations!

Does anyone who lives out of state buy and hold in Philadelphia?

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