As a real estate investor looking for a profitable investment property in Philadelphia, you need to understand the nuances of this market, and the difference that a neighborhood can make.
Philadelphia is a city with a lot of diversity in population, industry, economy, and housing. As an investor, you’ll find neighborhoods that are walkable and close to downtown as well as those that are further out in the suburbs and surrounded by parks and walking trails. There’s a rich sense of history and culture in Philadelphia, and residents enjoy living here for its job opportunities, its proximity to other major eastern cities, and a housing market that offers a lot of options.
Where should I buy an investment property?
That depends on your investment goals. We are spending some time today identifying some of the best up-and-coming neighborhoods in this market, and sharing some thoughts on why you might want to consider them for your next acquisition.
Let’s take a look at where they are, and why location is so critical when you own a rental home.
Choosing the Right Location for Your Investment Property
Investing in real estate requires careful consideration and planning, especially around location and neighborhood. Choosing the right location can greatly affect your investment’s long-term success and profitability. Here are the things we recommend you consider when thinking about location:
- Demographics and Market Trends
Research and analyze the demographics of the area where you are planning to buy a property. Look at the age, income, and economic factors that paint a picture of the residents in the neighborhood. This information will give you a good idea of what type of tenants you can expect to attract.
Check the median rent prices and occupancy rates to help you determine the demand for rental properties in the neighborhood.
- Neighborhood Amenities and Facilities
When choosing a location, one of the most important factors to consider is accessibility to amenities and facilities.The availability of amenities and facilities can greatly impact the rental price and rental demand. The closer the property is to schools, stores, restaurants, and entertainment, the more desirable it will be for potential tenants.
- Property Taxes and Zoning Regulations
Another crucial factor to consider when selecting a location and neighborhood as a real estate investor is property taxes, zoning regulations, and potential future developments. Research property taxes in the area and assess whether they are reasonable in relation to the potential rental income. You should also be aware of any changes in zoning regulations that may impact the potential profitability of your investment. Again, your investment goals will dictate what’s possible and what’s preferable. Are you thinking about short term rentals? Make sure the local rules and regulations allow it.
Additionally, pay attention to any potential future developments in the area. These may include new commercial or residential buildings, transportation infrastructure, or other city projects that may positively or negatively affect your investment. Analyzing these factors will help you determine the long-term sustainability of your investment.
Choosing the right location and neighborhood when buying an investment property is crucial in ensuring profitability and long-term success, and we’ve done some early research for you to suggest these up-and-coming Philadelphia neighborhoods, which are attracting more demand among tenants.
Check out These Philadelphia Neighborhoods Popular with Tenants
Your best investment will be in a neighborhood that’s desirable among a large pool of well-qualified tenants. Here’s where we believe those neighborhoods can be found:
- Fishtown
Located just north of Philadelphia’s city center, Fishtown has quickly emerged as one of this region’s hottest neighborhoods. Recently named one of the coolest neighborhoods in the world by Forbes, Fishtown is known for its vibrant music scene, excellent restaurants, and craft breweries. The real estate market in Fishtown has seen significant growth in recent years, with home prices increasing by over 6% annually. Investors can find a range of properties in Fishtown, from traditional brick row homes to new condominium developments.
- Brewerytown
Another neighborhood that is rapidly gaining popularity is Brewerytown, located just northwest of Fairmount Park. This neighborhood was named after its historic breweries, many of which have now been transformed into trendy loft apartments. Brewerytown is a diverse neighborhood with a growing population and a wide range of housing options. The real estate market in Brewerytown is attractive to investors because of the relatively low prices and the potential for high appreciation.
- University City
Located in West Philadelphia, University City is an area that is home to several of the city’s top universities, including the University of Pennsylvania and Drexel University. This neighborhood has seen significant development in recent years, with new luxury apartments and high-end restaurants popping up regularly. Home prices in University City are higher than in some of the other neighborhoods on this list, but the location and amenities make it a great investment opportunity. You’ll also have an endless supply of tenants who are students, professionals, and professors at the local schools.
- Point Breeze
Point Breeze is a diverse neighborhood located just south of downtown Philadelphia, Point Breeze was once a less desirable neighborhood but has been built up into an area that’s sought after by great tenants. The real estate market in Point Breeze is still relatively affordable, but prices are rising quickly as the neighborhood continues to grow.
- East Passyunk
East Passyunk is a neighborhood that has been steadily gaining popularity for decades. Located in South Philadelphia, East Passyunk is known for its excellent restaurants, boutique shopping, and annual street festivals. The real estate market in East Passyunk is strong, with home prices increasing by over 4% annually. Investors can find a range of properties in East Passyunk, from historic row homes to new construction communities.
Philadelphia has a number of up-and-coming neighborhoods that provide great opportunities for real estate investors.
The right neighborhood and the right property will depend on your investment goals and the residents you’re hoping to attract. If you’d like some help identifying the right properties for your portfolio, please contact us at Innovate Realty. We work with investors and their properties in the greater Philadelphia metro area as well as the northeast part of the city and in local areas including Bucks, Montgomery, Delaware, Burlington, and Camden counties.
