Neighborhood Rental Demand and Rent-to-Value Ratios

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Neighborhood Rental Demand and Rent-to-Value Ratios

Ashel Fernando
Member since 2018 · 2 posts · 0 votes

Hello BP Community,

I'm new to real estate investing and have chosen Pittsburgh to purchase my first rental investment property.

I am from out-of-state so i'm too familiar with the rental demand of different neighborhoods in Pittsburgh outside from online resources. My budget is $75-90K and I am considering the following neighborhoods; McKees Rocks, Sharpsburg, and Oakland/East End. Is anyone able to shed some light on whether these are good areas in terms of rental demand and rent-to-value ratio? 

I am making my first visit to Pittsburgh next week and I'd like to have a better idea of where I should be looking. Any input would be greatly appreciated. Feel free to send me a direct message as well.

Cheers!

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  • Alex Deacon
    Investor · Pittsburgh, PA · Member since 2015 · 1k+ posts · 1k+ votes
    7y

    @Ashel Fernando at least you are focused on a few areas. I see too many investors use the shotgun approach. Get to know the areas very well first. Make a few trips here and build your knowledge base and then you will feel more confident knowing where and what you want to purchase.

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  • Thomas S.
    Member since 2016 · 13k+ posts · 12k+ votes
    7y

    With a DP of 75K - 90K you are looking at 375K to 450K homes with 20% down.  Unless your rents are extremely high that price range will not produce any positive cash flow. You will have to rely entirely on appreciation which in todays markets is very risky.

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  • Jeremy TaggartBusiness Member
    Real Estate Agent · Pittsburgh, PA · Member since 2014 · 850 posts · 646 votes
    7y

    @Ashel Fernando your budget of $75-90k is that for the purchase price or down payment?

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  • Ashel Fernando
    OP
    Member since 2018 · 2 posts · 0 votes
    7y

    @Jeremy Taggart, the budget is for the purchase price.

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  • Jeremy TaggartBusiness Member
    Real Estate Agent · Pittsburgh, PA · Member since 2014 · 850 posts · 646 votes
    7y

    @Ashel Fernando Mckees Rocks is probably your best bet for getting a quality property in that price range. You'd be on the low end of Sharpsburg but could possibly find something there as well. Mckees Rocks has great potential but is still "Gritty" right now. Great rent to value ratios though currently. Sharpsburg is on the up and up. Oakland/East end is higher priced.

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  • Phil Anderson
    Pittsburgh, PA · Member since 2017 · 16 posts · 13 votes
    7y

    Sharpsburg is the most "up and coming" of those, but be aware almost the entire town is in a FEMA flood zone. Look at the maps and pay close attention to where the property is on the flood plane as that can easily blow up your numbers with flood insurance.

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  • Brandi Baker
    Rental Property Investor · Pittsburgh, PA · Member since 2017 · 14 posts · 9 votes
    7y

    Hi Ashel,

    I would advise you reconsider McKees Rocks.  Nearby Ingram however has seen some nice appreciation lately and is an inexpensive neighborhood with a good school district.  I would say that the there would be a significant pool of renters with steady jobs.  I might consider it a B- class neighborhood.  Is the money you have available for purchase cash or finance?  If it's cash you could stretch that budget pretty far with a local wholesaler.  You may even send out some mailers to drum up a small pipeline in the neighborhood to score a good deal.  Another option  I'd consider is Homestead/Munhall.  It is slowly turning around with a number of new restaurants and café.  There are good quality homes for sale there in the $60,000-$80,000 range.  You'd want to stay between 8th ave and 14th.  Here is where you could see an immense appreciation in the next ten years.

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  • Anthony Angotti
    Real Estate Agent · Pittsburgh, PA · Member since 2015 · 1k+ posts · 846 votes
    7y

    @Ashel Fernando I'm late to the party here, but have you considered some of the areas surrounding Pittsburgh? For that price you could get a pretty quality property in some of the surrounding areas that will cash flow. 

    I agree with @Brandi Baker that Homestead and Munhall may be areas to look as well. As she mentioned pay close attention to the street/pocket you are in though. 

    You could also find some places in the Marshall-Shadeland area. 

    At that price range most areas are going to be a bit rough, but should cash flow well if you screen your tenants well. 

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