Hi all - I am looking for guidance from investors/residents in the Philly market and surrounding suburbs. I am looking to get started with a house hack and have cash for additional investments. I'm from NJ/NY but the NJ/NY market is too expensive and seems to be inflated.
I'm starting to expand my search to Philly and surrounding suburbs. What are investors going for in these areas? Is it mostly cash flow or appreciation? Prices seem to be fair and taxes low, if rents are increasing steadily it could be an opportunity for both.
Would love any and all advice/recommendations on good areas to look!.
I work in the center city Philadelphia market and specialize in growing areas like Fishtown, Kensington, etc.. I've helped several clients house hack. Some buy small multi family but most of the time they buy single family in the $375k-$425k range (3-4bed 3-4 bathrooms). Very often these homes are new construction and have a tax abatement. This would be more of an appreciation market but you should be able to break even while living at the property and make a few hundred a month after you move out. New construction homes in certain areas that were around $375k-$400 3-4 years ago are now selling closer to $450k. These neighborhoods aren't that straight forward so feel free to ask any questions.
@Matthew F. There is a big variance in market opportunity in Philly right now. It depends what you like as an investor and what you're trying to spend. The areas @Bill Caraker mentioned are definitely some of the more expensive pockets of Philadelphia but do appreciate stupendously. House hacking is a great way to get started but the area you might want to live in may be different than what would make the most sense from an investment standpoint. My team and I are now moving about 40 properties a month all over Philadelphia and Delco, I'll send you a PM with more info on areas that could be of interest to you.
@Louise Cornell I live in Northeast Philly and looking for my first property to invest for cash flow as well as appreciation. Would you be able to share info on areas with me? Thanks for kind consideration!
@Matthew F. I personally would look for a value-add multifamily if you can. Market is pretty saturated right now, but you can still get a good deal if you move quickly enough when one pops up (if you're looking on MLS). If you're not comfortable with doing renovations, then what @Bill Caraker said is also a good strategy with the new construction in an improving area.
In terms of cash flow vs. appreciation I look for both, but ideally I get 20-25% added equity thru forced appreciation off the bat with renovations and any additional appreciation over the years is an added bonus.
Hope this helps
What's up @Matthew F., a lot of NY investors have been doing the same thing. In a general sense, Philadelphia has a much lower barrier to entry than a lot of big cities on the east coast. If you're looking to house hack, then it obviously has to be an area that you would like to live in as well. If you want a place that has both appreciation and cash flows, I would recommend both Brewerytown and Port Richmond. There are new builds popping up all over those two areas, and you can still get in at a reasonable price. The one thing you need to note is that you may need to buy a fixer-upper to really get the value you would want. Especially for a house hack, you should be looking to add in forced equity in an appreciating pocket. In my opinion, cash flows are not the #1 priority in a house hack.
For the suburbs, alot of people look to Conshohocken. Conshy is pretty inflated at this point, but for a house hack it might not be a terrible option. Alot of young professionals live there, and Fayette street is a nice little downtown area. If Conshy is too expensive, maybe look to Bridgeport or possibly West Conshohocken. In Delco, I would say Havertown is one of the better spots to do that as well. Both Conshy and Havertown may not be the best pockets for appreciation, but the areas are nice and they are pretty safe options for the long term.
@Nick Brown very helpful insight, thank you!
@Brendan McAllister thanks for the guidance, will be sure to check these areas out. Heard similar things about Coshy.
Of course my man! @Matthew F. feel free to reach out if you have any questions.
@Amar Patil I sent you a PM.
Hey @Matthew F. welcome to the market. Each area of Philadelphia has its own strategy and price point so any level of investor can find a pocket they like. It all depends on your price point and investment strategies. The majority of Philadelphia deals typically sell around 70-75% ARV.
I would say the hottest areas for appreciation and cashflow currently are the fishtown, northern liberties, and olde kensington. There is an endless supply of new construction on every block that will certainly increase in value for the years to come. Due to the high demand though inventory is limited and anything that you do find there you should certainly jump on as it will get scooped up quickly by the big sharks.
Areas like south philly are greater for flips then rentals due to the higher entry price but higher ARVs. You can see a 2 story go for 400-425k while a 3 story roof deck will get 500k+. West philly is an area where the entry price is far less then fishtown/south philly, but you have the option of either flipping or renting. Philadelphia as a whole is very block by block and that is most evident in wets philly. Some blocks are amazing (no trash, trees, etc.) and the next block over is significantly worse.
Northwest Philly (west oak lane, germantown, mt airy,) is an area thats nicer then west philly but still cheaper than south. This pocket is also great for the multitude of strategies that can be played out here.
If your looking for multi units, Delaware county is the way to go. Finding a nice multi in the city is like finding a unicorn, but the inventory in Delco for multis is plentiful. The entry price is significantly lower and the cashflow is sufficient.
One thing to watch out for in the city is the transfer tax. Everyone talks about how the taxes are cheap and yes that is true, but sometimes that can be offset by the 4% transfer tax that occurs on each transaction.
Always looking to expand my network and knowledge, reach out if you have any more questions.
@Matthew F. Good question! I’d definitely say Cash Flow man. If you were coming here 5 years ago then I could’ve said appreciation. But now as you’ll see there’s a lot of new construction developments going on in the city. And when developers like myself get too happy and start building everywhere, the only that comes after that is the Hyper Supply Phase... With cash flow, you almost don’t have to worry about which phase the local market is in.
I’m very interested in investing in suburban Philly to start my first. Could you share some info with me? Very appreciate for you help!
Where are people investing in Delco for cashflow? I've got one SFH in Montco, but Delco seems to have better options.
@Robert Gonzalez I would take a look at multis in Drexel Hill, Lansdowne Collingdale and as well as SFRs in Upper Darby. Plenty of great areas to cashflow all over Delco!
@Robert Gonzalez For straight cashflow, Darby is a fantastic area. Some people have stigmas about the area, but with the price of entry so low, and the rents similar to those of the surrounding areas its the best poker for cashflow. Other areas in Delco where cashflow is very good are, Collindale, Upperdarby, and Aldan.
Delco as a whole is a great pocket to invest because the majority of the areas are appreciating as well. Areas such as Drexel Hill, clifton heights, lansdowne, springfield, Morton, Wyndom, will continue to grow in value.
If you have any more questions certainly reach out.
Dan Powers - Real Estate Agent
Hi, I am a full time investor from Brooklyn and have some properties in Pocono mountain, I'd like to extend my rental portfolio in the suburbs of Phily area and I am going to go down to Lansdowne tomorrow to check out some properties.
I am an investor and agent in Delco. The areas below are where I find most investors buying rentals in Delco. It depends on your strategy. You can definitely find a MF or Brrrr deal that will give you solid cash flow and some appreciation. Don't expect anything crazy like in Philly. Those areas are being gentrified and are mostly new construction/flips. There are a lot of MF in Drexel Hill but the high taxes hurt the deals. Areas like Havertown and Media are the hot areas and are probably safer places to put your money but I don't see you cash flowing much there. Feel free to reach out if you have any questions or need help with your search.
Brookhaven, Essington, Glenolden, Clifton Heights, Aldan, Folcroft
Ridley Park, Woodlyn, Folsom, Rutledge, Secane, Holmes
A lot of you are mentioning Delco, but does anyone have any opinions on Montgomery county? I know Conshy was mentioned, but anywhere else? I want to start with a house hack and have to be in Montco to commute to work. After this though, I could look into Delco!
@Nick Scullin Hi Nick, Pottstown is on the western edge of Montco. We invest there and I know people who have house hacked in Pottstown. Values in Pottstown are still reasonable compared to other boroughs in the county.
@Steve Uhlig Thanks for the reply. I will check it out!