Germantown Worth it or Not?

28 Replies | Philadelphia, Pennsylvania

Hi Everyone,

With Jump Start Germantown and all the potential commercial work on the horizon on Germantown Ave, I am trying to feel out if this is a good area to invest in. The cap rate is good and numbers make sense to use the BRRR strategy as the comps in the area show ARVs that will work. But my concern is the rental income and quality of tenant post rehab. Has anyone invested here or know anyone that has?

My goal would be to use BRRR and then hold as I would expect the value of the house to increase as more commercial spaces move into the area. What is everyone's thoughts on the neighborhood in the next 3 years? Would love to discuss. Thanks!

Hey Dave, I'm looking at Germantown as well. It seems like there's a lot of exciting businesses in the pipe and access to Wayne Junction makes it a very attractive area. The good thing with Philly nowadays is investors from NYC are buying up everything since everything is so cheap compared to Brooklyn and elsewhere.

I see nothing but good things for Germantown 3 years out from now. I use google search trends to gauge where a local market may be in the business cycle and see Fishtown similar to how Brooklyn was for NY around 2003/2004. Anywhere in Philly near the El or any major train stop will be a great buy long-term. Best of luck to you.

Hey Dave,
Germantown is a great spot to look at for a long term investment. In the past five years the average price of a home in Germantown has increased from $100k to $150k and the average rent per month has increased from $1,000 to $1,200. The neighborhood is growing and it’s attracting a whole new class of tenants and homeowners. As long as your rentals are not section 8, I wouldn’t be too worried about the type of tenants you’ll be bringing in.

@Joseph Ems & @Ryan D.

Thanks guys I really appreciate your input. How do you feel ARV evalutions out there? I have seen some comps for a 3B/1B or 3B/1.5B come at high enough to make the 70% rule work on a BRRR strategy investment but have honestly not looked into too much yet. I had been focusing on Manyunk & East Falls but there is basically no inventory at this point there.

Originally posted by @Dave Ventura :

@Joseph Ems & @Ryan Deitrich

Thanks guys I really appreciate your input. How do you feel ARV evalutions out there? I have seen some comps for a 3B/1B or 3B/1.5B come at high enough to make the 70% rule work on a BRRR strategy investment but have honestly not looked into too much yet. I had been focusing on Manyunk & East Falls but there is basically no inventory at this point there.

We've been looking mainly at Kensington for the past 4-5 months trying to make a deal happen for our first multi-family. So now that I've started to run the numbers on Germantown, it's much easier to have a property appease my financial model and the 70% rule. I run only off-market & auction comps as we're going to be using cash to buy via the auction or direct from the owner. 

Originally posted by @Ryan D. :

We've been looking mainly at Kensington for the past 4-5 months trying to make a deal happen for our first multi-family. So now that I've started to run the numbers on Germantown, it's much easier to have a property appease my financial model and the 70% rule. I run only off-market & auction comps as we're going to be using cash to buy via the auction or direct from the owner. 

Yeah I can definitly agree with that, I ran into the same situation when I swapped Manyunk properties with Germantown in my model. And I can get more cash flow post refi. I am glad to hear that you are seeing the same thing. After speaking with you and others on BP and some personal conversations I am led to believe that tenant quality and ARV won't be an issue moving forward so Germantown looks like a great option for me.

Would be great to stay in touch since we are both looking to invest in this area.  

Originally posted by @Kareem El :

Are there any agents here who work in Germantown?

 I'm an agent that works in Germantown a good amount. Personally, I think this market is great for investors as it has a ton of flip potential and also comps out pretty high for rent. Shoot me a message if you need any help!

Between looking at places to buy and my recent effort to drive almost every street and canvas the area it seems that SW of Wayne Junction is a great area. There is a huge vitalization planned there and a proposed Brewery that has already got a lease on a building. The other nice area is NR of germantown ave right where it connects with Mt. Airy as that is the main location of jump start Germantown and the new library they just put in. Plus it is close to the Germantown Friends School. 

Originally posted by @Dave Ventura :
Originally posted by @Max Tanenbaum:

East and West gtown are very different...

 Hi Max, 

Could you elaborate, if you have any insight on what locations within Germantown are best I would love to hear more. Thanks!

 Hi Dave, just wanted to ask why Germantown and not other areas like Point Breeze, Brewerytown, west Philly, etc.? I am also looking to invest and have a couple of people from my office who live in Point Breeze and love the place. Rents are also good.

Originally posted by @Vinod Badami :
Originally posted by @Dave Ventura:
Originally posted by @Max Tanenbaum:

East and West gtown are very different...

 Hi Max, 

Could you elaborate, if you have any insight on what locations within Germantown are best I would love to hear more. Thanks!

 Hi Dave, just wanted to ask why Germantown and not other areas like Point Breeze, Brewerytown, west Philly, etc.? I am also looking to invest and have a couple of people from my office who live in Point Breeze and love the place. Rents are also good.

Germantown is close to me as I am in manyunk. I ended up going with Mt Airy and just closed in Friday. 

The other areas are good except point breeze, you would be too late to the game to make any money down there, shells are selling for way too much to make a flip or a BRRR worth it. And buying turnkey at 20% down will have you with a negative cash flow. Plus in my personal opinion it is way too saturated and there will be less demand for rent in the future due to the massive supply.

@Dave Ventura

Thanks for that quick reply. I am from NJ so I guess any place would be ok for me. What areas do you suggest I scout? and since I don't know these areas at all, how do you suggest I narrow down on a property? Any suggestion would be very helpful.

I am picking up a property in Germantown as we speak. Set to Close Mid December.

In my opinion Germantown has good any bad parts. My general rule is avoid east germantown even though the returns look nice the quality of people will suck the time and money out of you. With that being said, germantown is a block by block neighborhood. I would walk 2 blocks around the property and speak to neighbors.

example:

I was viewing a house in germantown with my contractor about 2 weeks ago.

The house looked nice and the neighborhood looked decent. Then I spoke with the neighbors and they let me know whats really happening. Someone got shot in front of the house a few weeks prior, the house a few doors down had a bomb blow up 3 days prior, their were 4 more shooting within the past 2 months. 

With that being said I will still keep investing in germantown due to its organic growth, which will be affected less if a recession hits. 

I have interest in Germantown as well, and though I do not have much experience with the immediate area, my investor-minded realtor has recommended staying near Germantown ave on the Mt Airy side of town due to increasing development.  Dissenting or agreeing opinions welcomed!

@Christian Paluzzi your realtor has got the right idea. I have a flip in West Mt Airy right now and was continuing to look in the area you mentioned as well. 

Another place in that neck of woods I would recommend is West Oak Lane. If you can grab a property in the right area for 60-70k the comps are around 180k, some upwards of 200k if you grab one of the all stone buildings. The more north in that area you can be, the better. Granted you are probably going to have to look off market to find a decent deal. 

Great posts guys!  I’m also looking into investing in Germantown. Drove around there last night and found that the area by queen lane station has a lot of potential.  It is very block by block but you can see a lot of development already by queen lane station.  I’m looking for long term buy and hold opportunities and specifically a triplex or quad to househavk in.  Please reach out to me if you hav any opportunities and also if you have experience investing in this area.  I want to learn the fundamentals of why Germantown is a growth area.

Hi Joseph - what kind of class of new tenants and homeowners are coming into this area?  What is driving this move?

Originally posted by @Joseph Ems :

Hey Dave,
Germantown is a great spot to look at for a long term investment. In the past five years the average price of a home in Germantown has increased from $100k to $150k and the average rent per month has increased from $1,000 to $1,200. The neighborhood is growing and it’s attracting a whole new class of tenants and homeowners. As long as your rentals are not section 8, I wouldn’t be too worried about the type of tenants you’ll be bringing in.