I'm an investor out of NYC. The NYC metro market rental market is in the twin bad places of being both priced and oversupplied with rentals currently. So I'm looking elsewhere. I had keyed in on Pittsburgh as an investment target city, and have been talking to a broker and reviewing properties. As I was doing this, I thought that I might want to see how Philly compared. I will admit that part of this is that it's a bunch easier to get to Philly from NYC than Pittsburgh.
So for those who've looked at both, how do they compare. Specifically I'm looking cost and availability of multi-family properties, and the rental prospects for completed units. I just finished a project in Jersey City that turned into a BRRRR type project, and would entertain that in either city. I would also look at bigger operating properties. I would expect Philly to be a little more expensive, but to have equal or higher return percentages. Is this correct?
Any info appreciated.
I’m not sure about Philly, but in the Pittsburgh market especially for multifamily you are looking at a 7% cap for a descent property. Higher cap rates are probably in the war zone areas.
I am a bit biased here but I love the Pittsburgh market. We can buy 10 caps off of the MLS and do 20+ in some of your less desirable neighborhoods. Our prices are vastly superior to Philly. I just spoke at a REIA club in NY City about this exact subject.
What is your investing goal? We are great for cash flow, we are also very good for flipping. Our one weakness is that we do not really have any inventor of larger multi-unit properties 20+, those almost dont exist. There are a few but you really need to know where to look.
@Josh Caldwell How would you say I could go about researching and locating larger multis to purchase in Pittsburgh?
@Rob Beardsley I'd echo @Josh Caldwell there are lots of opportunity in Pittsburgh. I too have owned property in Pittsburgh. I would enter the Pgh market as any other market, first I'd look at loopnet and costar, then I would contact some commercial real estate brokers there and see what inventory they had and whether there was a fit for you working with them.
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If you’re considering Philly you should consider Baltimore. Depending on your budget there are many rental opportunities 15%+ !!!!
@David Krulac makes a good point about costar and loopnet, that will get you in contact with the CBRE and Marcus and Millicamp types in my area. A lot of times, they hide the good stuff from public view and will only tell you about the good deals after they know you are just a tire kicker.
Once you find a deal, I can connect you with financing for anything above $5 million. I can also connect you with funds for smaller deals. Running a REIA club makes finding funders pretty easy.
To your success
@Michael Wolffs Philly is absolutely more expensive but the higher returns I would question. We get a lot of out of state investors that come to Pittsburgh and do well and some dont. You need a good team when buying Real Estate especially when its out of state. I am sure you can make a good return in either city. Look me up if you need some good contacts here like attorneys, contractors etc...
@Alex Deacon , thanks. As I move forward, I may take you up on that.
@Angie D. Why I picked up on Pittburgh, and why Baltimore didn't get on my radar, is that Pittsburgh seems to be getting past its rusty old industrial economy to one based more information age technology. Specifically Carnegie Mellon University seems to be a major center of AI research. The city could leverage that in a major way moving forward. But at the same time, it doesn't seem the the RE market has runaway with itself, as it has here in NY metro, and decent deals are still available.
The types of deals I've been looking at are small multiunit rentals (three unit at least). Most of what I've seen is BRRRR type properties. I have the ability to self finance these to the point of refi. I'd also look at bigger deals where I'd have to leave money in, if they are operating and at least minimally cash flowing at purchase.
If I have any reticence about Pittsburgh is the distance. The BRRRR project I just completed had me very hands on, and I was at the property pretty often (one or week or more mid construction), and I was essentially GCing it at the end. That simply wouldn't be viable between NYC and Pittburgh, unless I temporarily moved out there. So that would mean I'd have to get over the hump of remote management, both for construction and rental. Of course getting over that hump would probably be a good thing. Philly, OTOH, while not exactly convenient, is someplace I can get down and back in one day.
@Michael Wolffs - if your concern is the distance, ever thought about partnering with somebody locally that has the capacity / track record to perform the construction and management? I partner with a couple smaller investors in this manner and have had great success. I own and manage about 1000 units in the burgh. Feel free to reach out. Let’s discuss.
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