This post is going to contradict what it seems everyone above as commented. From your description for your goals @Justin Tyler, it seems like the best fit for you is actually going for Section 8 properties in areas that seem rough now without any high out sale values. Truly, if high rent relative to the purchase, and a patient timeline of 7-10 years is your metric for success, you are better matched for D to C- neighborhoods that are on a slow but true path of progress.
No one thought that you would EVER be able to cross Lehigh in Kensington, then Kensington Courts came along. Northern Liberties/Fishtown used to be as dangerous as they come less than 10 years ago, now it is arguably the hottest neighborhood for young professionals. Is it beneficial in invest in areas that you already see the change? Sure, confidence comes with new construction on the block and ability to throw a rock at several comps from your doorstep, but there is a reason why that is a sharp double-edged sword. If the value is so bluntly apparent, EVERYONE will invest because it seems like a sure-fire fix, driving up the initial cost. The feeling of progress attracts a larger pool of investors than the patience of the long game. If you want to flip, the Upper C/-B class (Grays Ferry)to B-B+(Point Breeze, Brewerytown is the way to go. They have low days on market and are places where you as an investor could even see yourself having to live there if push came to shove. However, in the current market, those neighborhoods are the ones where buying shells will EASILY run you over 100k up to 150k with rehabs usually in the ballpark of +70k for a rental grade to boast mid to high 200's ARV. This means high-profit margin on the flip (+40k or +22% ROI) but less than desirable LTV which is crucial for a refinance and your eventual cashflow.The issue with going for a Grays Ferry, Brewertytown, True Port Richmond, East/Olde Kensington, Point Breeze is that your debt service will be so high due to the cost to compete.
I'll shoot you straight with this strategy, these places you will not see full gut rehabs now nor will you see a baker's dozen of comps to justify full cash-out refinance. That being said, your debt service will be so low relative to your high cash flow and the amount of work you need to put into the property is SIGNIFICANTLY less than the expectations of the tenants in those neighborhoods listed above.
I am not arguing this is the one strategy to rule them all, and honestly is not my cup of tea, but it is one that pairs well with your stated goal. The reality is that there is not a "bad area" to invest in Philly. There are different strategies for different risk thresholds or capital limitations. A common response to this mentality is "well if you look hard enough you can find lower-priced properties in the nicer neighborhoods." Sure you can, I still do, but how much money and time are you willing to invest in building your pipeline and marketing to catch up to the competition to find the needles in the stack of needles?
