Questions about Philadelphia Market for LTRs

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Questions about Philadelphia Market for LTRs

Sakshum Kulshrestha
Member since 2024 · 3 posts · 1 vote

Hi everyone! I'm 23, and I'm looking to purchase my first rental property this year. I am strongly considering Philadelphia as a market to invest in OOS because I was raised in Jersey and I used to be familiar with neighborhoods in the city; I understand things have changed over time, however. I'm looking into SFHs in the 250-320k range. As I look into the market and start to build a team I had a few questions:

1)  How difficult is it to get and keep a rental license OOS? I understand I'd have to be local for some appointments, but are these visits generally infrequent/painless?

2) I'd like to target B class properties, but I've read about significant  apartments added in these areas. How do SFHs fare in competition with these rentals as supply increases?

3) What neighborhoods would you recommend in this price range if I'm targeting high quality tenants? It seems tough to find even mediocre cashflow on turnkey properties, and I'm currently looking into Fishtown/Olde Richmond, and Point Breeze, but areas like Germantown are compelling also.

4) How seriously do local investors take projects like the Bellwether project? Do you factor them into your neighborhood selections or do these projects tend to fizzle out in Philly?

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Dominic Mazzarella
Investor · Hendersonville, NC · Member since 2016 · 498 posts · 285 votes
1y

Getting a rental license as an out-of-state investor is doable, but you’ll need to manage inspections and compliance. A local property manager will make this much easier and handle the visits for you.

Single-family homes can still do well, even with more apartments popping up, as they cater to tenants who want privacy and space. Fishtown and Point Breeze are strong options but can be pricey. Germantown has better cash flow potential but may require more hands-on management. Brewerytown and East Passyunk could also be worth exploring.

Big projects like Bellwether can boost neighborhoods, but they often take time to show results, so don’t count on them as a main factor.

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  • Dominic Mazzarella
    Investor · Hendersonville, NC · Member since 2016 · 498 posts · 285 votes
    1y

    Getting a rental license as an out-of-state investor is doable, but you’ll need to manage inspections and compliance. A local property manager will make this much easier and handle the visits for you.

    Single-family homes can still do well, even with more apartments popping up, as they cater to tenants who want privacy and space. Fishtown and Point Breeze are strong options but can be pricey. Germantown has better cash flow potential but may require more hands-on management. Brewerytown and East Passyunk could also be worth exploring.

    Big projects like Bellwether can boost neighborhoods, but they often take time to show results, so don’t count on them as a main factor.

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  • Eric Greenberg
    Investor · Philadelphia, PA · Member since 2019 · 618 posts · 430 votes
    1y

    You'll need a contact who lives in Philadelphia for a rental license now to put down their contact info for the city. That could be your PM company if you plan to hire one. 

    A renter for a stand alone rowhome is usually a different profile from a large apartment complex renter in my experience. That said most folks have price targets and if large complexes are conceding 1 or 2 months on the 1st year lease, itll put downward pressure on your rent to some degree. 

    I live in and mostly invest in the Fishtown area but thats because I know my renter and know this area more than most. Happy to answer any specific questions you have. 

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  • Sakshum Kulshrestha
    OP
    Member since 2024 · 3 posts · 1 vote
    1y

    Thanks for the input, I'll be sure to connect.

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  • Stuart UdisPro Member
    Attorney · Philadelphia · Member since 2018 · 2k+ posts · 3k+ votes
    1y

    @Sakshum Kulshrestha The key to the rental license in Philadelphia is ensuring the properties zoning allows the use. If its a single family home its a far simpler analysis. Most who get tripped up are those buying the smaller multi-families that don't possess the correct use permit/historical rental license activity. 

    I am an advocate for Philadelphia, particularly for those like yourself who are local to the area with knowledge of the city. I wouldn't focus singularly on individual city initiatives/projects and would recommend focusing more on fundamentals. In Philadelphia the fundamentals are strong: leading industries/employers are in the Education and Medical fields which are known to be stable, proximity to NYC and DC, national airport, port city, affordability compared to mid-atlantic predecessors. This is where I would focus, as these are the same attributes that attracted those responsible for the larger projects like the Bellweather District you mentioned in your initial post.

    With your budget I would recommend NW Philadelphia (Germantown and Mount Airy in particular). However these aren't neighborhoods where you can use a zip code analysis like many other Philadelphia zips. You really have to learn the neighborhoods or work with a sales agent who does.

    [email protected]
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  • Sakshum Kulshrestha
    OP
    Member since 2024 · 3 posts · 1 vote
    1y
    Quote from @Stuart Udis:

    @Sakshum Kulshrestha The key to the rental license in Philadelphia is ensuring the properties zoning allows the use. If its a single family home its a far simpler analysis. Most who get tripped up are those buying the smaller multi-families that don't possess the correct use permit/historical rental license activity.

    Thanks for the insight on zoning Stuart; I hadn't considered that. As I explore the neighborhoods in NW Philly, any suggestions on reputable agents with experience in those areas?
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  • Alan AsriantsBusiness Member
    Real Estate Agent · Philadelphia, PA · Member since 2019 · 1k+ posts · 1k+ votes
    1y

    Depending on how close you are to Philadelphia you can really manage the property yourself as many Jersey neighborhoods are even closer to philly than some philly neighborhoods. As eric pointed out, someone who lives in Phila will have to be registered as a manager of the property to obtain a rental license - usually a PM

    Personally if you're looking to target SFH I would recommend: Roxborough (for 3+ bedroom - there is a large saturation for 1-2 bed apartments in area), East falls, E and W Mount airy (need to be proficient in neighborhood to know where the good and not so good blocks are, and far NE philly. Be careful of renting in Northern liberties, fishtown, brewerytown, point breeze. Some part of these neighborhoods change drastically, but the main issue is the amount of supply. Large apartment complexes flooded the market with inventory and are offering crazy incentives and amenities that crush the small landlord which can make finding a tenant challenging and often for less than market rent.

    That being said, if you're 23 and you don't own a home, I really do recommend starting with a house hack as you don't need the 25% down capital to get started and you kill 2 birds with one stone by getting a rental and having a roof over your head. 

    Reach out anytime if you want to chat about the market and investing in Phila

    [email protected]267-767-0111
    Alan Asriants - New Century Real Estate 590 Reviews
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