Best area to invest in Philly area with ~$50,000

Member since 2019 · 3 posts · 1 vote

I want to purchase a rental property in the Philly area and have about $50,000 in liquid funds and would ideally like a property that at the very least breaks even from all expenses. Is there an ideal area in Philly where I should be looking?

I will also be able to save around $3000 a month starting in January due to new job role so another question would be if it makes sense to try and save as much as possible for a year and then have around $85,000 to invest this time next year. Any and all recommendations would be highly appreciated.

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Neal A.

Philadelphia · Member since 2017 · 38 posts · 32 votes

Joe,

This is going to largely depend on a couple of factors.

1) what percent interest are you getting on a loan for the rest of the money?

2) are you intending to property manage yourself or pay someone to do it.

Both of these are going to heavily factor into whether or not you can break even after factoring in expenses, and estimated repairs and vacant rates.

If you held off and approached the situation with 85k that could put you in the realm of buying a SFH outright.

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Neal A.
Philadelphia · Member since 2017 · 38 posts · 32 votes
6y
Joe,
This is going to largely depend on a couple of factors.
1) what percent interest are you getting on a loan for the rest of the money?
2) are you intending to property manage yourself or pay someone to do it.
Both of these are going to heavily factor into whether or not you can break even after factoring in expenses, and estimated repairs and vacant rates.
If you held off and approached the situation with 85k that could put you in the realm of buying a SFH outright.
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Joe Ranieri
OP
Member since 2019 · 3 posts · 1 vote
6y
Hi Neal,
I believe the interest rate I will get is around 5.6%. I will also manage the property myself.
Thanks,
Joe
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Sheryl Sitman
Rental Property Investor · Philadelphia, PA · Member since 2015 · 483 posts · 362 votes
6y
@Joe Ranieri Welcome! There are many good investment opportunities in Philly. With a total of $50k there is not really anything to do. In my opinion, $85k will also not be sufficient. You need to figure out what you are trying to accomplish - there are endless strategies and ways to achieve your goals. Cash is king. Maybe you want to figure out where you want to invest, the type of property, see what the budget needs to be and go from there. And be careful. Lots of characters out there waiting for newbies.

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Joe Ranieri
OP
Member since 2019 · 3 posts · 1 vote
6y
Hi @Sheryl Sitman,

I am slightly confused on what you said.

I guess my question could be summed up to the following:

What kind of real estate investment can I make in the Philly area with $50,000? Or is there nothing worth doing with that amount and should I save up more capital before I make any type of real estate investment in the Philly market?

If that is the case what amount of capital makes sense to make a move? Ideally I would like to own a rental property and earn passive income to at least break even in the short term but I am open to other suggestions as I am not really experienced in this field.

Thanks,

Joe
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Sheryl Sitman
Rental Property Investor · Philadelphia, PA · Member since 2015 · 483 posts · 362 votes
6y
Sorry if I was not clear. Philly is a city of neighborhoods and within those neighborhoods things are different block to block. There is a lot of change that has taken place in the City and in general, prices have consistently gone up over the years. Entire neighborhoods have transitioned beyond recognition, other neighborhoods are at various stages of transition and some areas do not change but may enjoy some appreciation due to the overall upward movement in this undervalued market. Your budget will dictate where you can invest. The numbers you mention would be D neighborhoods and all the challenges that come with renting in those neighborhoods. People do it and make money. But you need to know what you are doing. You are also competing with LOTS of seasoned investors for every good investment. Without knowing you or what your resources and knowledge are, I think I would suggest figuring out FIRST what you want to buy more or less -- and then figuring out how to fund it.
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Brendan Markle
Newtown, PA · Member since 2018 · 172 posts · 81 votes
6y
You can definitely find good deals with 50k, as long as you aren't planning on buying in cash. You could easily get a duplex in Kensington that cashflows very well. If you want to invest in an area with better tenants but less return on investment , you can find places in Port Richmond and Germantown. Let me know if you have more questions, I am an investor/ agent in the city.
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Art Perkitny
Specialist · Cleveland, OH · Member since 2018 · 232 posts · 348 votes
6y
@Joe Ranieri
Where you buy will depend on how much leverage you intent on using. With 50k the max with a conventional 20% down would be 250k or 425k with 85k.
The following map shows the median home values for all the neighborhoods in Philly
If you are not interested in high cash flow, I suggest looking in one of the more expensive neighborhoods. Here you will find higher rates of appreciation and deal with a better class of tenant.
Hope this helps!
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Jimmy O'Connor
Developer · Philadelphia, PA · Member since 2018 · 428 posts · 484 votes
6y
Hey @Joe Ranieri you can absolutely use 50k here in Philly to purchase a decent property. If you are open to private/hard money lenders than you can be all in for a property upwards of 200k. Granted, the holding costs as you rehab will eat some of your profits but you can use the conventional financing to overlay the remaining loan. BE CAREFUL about what HM company you work with. Every single lender will say "We can fund easily within 2 weeks." This is highly dependent on how competent the loan officer is, the responsiveness of the legal tea, the speed of underwriting, and the Russian Roulette of appraisers. I'd gladly follow up in private messages
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