Making the Move: Why Investors are Choosing Philadelphia for Rental Properties

June 6, 2024 TCSMgmt

Making the Move: Why Investors are Choosing Philadelphia for Rental Properties

Making the Move: Why Investors are Choosing Philadelphia for Rental Properties - Article Banner

Real estate investments have always been a popular way to invest. Whether it’s to broaden and diversify an existing financial portfolio or because passive income and long-term appreciation is attractive, people love putting their money into homes. 

It’s a great investment because people always need a place to live. 

Whether you’re new to investing or an experienced real estate investor, you may be on the lookout for the ideal markets that can offer great returns on investment (ROI). Among the many cities around the United States, Philadelphia stands out as an advantageous market for rental property investment. 

A lot of investors are taking an interest in Philadelphia. Some of them are local and others are buying properties here from out of state. Why are people making the move to our city? What makes Philadelphia such an attractive place for real estate investors who want to buy rental properties? 

Let’s discuss it. 

Large Population and Growing Tenant Pool

Philadelphia is the sixth-largest city in the county, and has a population of about 1.6 million people. It’s an attractive city because it’s on the east coast, giving residents easy proximity to other dynamic cities such as New York and Boston and Washington, D.C. 

The city is attractive to a number of demographics, and there’s a solid and reliable pool of tenants. The renting population has grown in Philadelphia. In fact, the Economy League of Greater Philadelphia reports that the city had the sixth largest net increase in renters recently. That’s due to a number of factors, including the following: 

  • Younger renters are more nomadic and prefer renting to buying.
  • Would-be homeowners feel priced out of the market. Not only are prices higher, the cost of getting a mortgage is higher. Those consumers are continuing to rent rather than buy right now.
  • People moving out of more expensive cities and into more affordable cities like Philadelphia, especially with the popularity of remote work.

Investors are interested in buying rental properties in Philadelphia because they know they’ll have access to a large pool of tenants and rising rents. The average rent in Philadelphia is more than 10 percent higher in 2023 than it has been in the previous years.

Philadelphia’s Growing Economy

A lot of things make a city attractive to real estate investors. However, one of the most important factors is the strength of the local economy. You don’t want to buy in a place that clings to a single industry for its economic health. You want to see diversity and growth. Philadelphia provides that. 

As a real estate investor, you know that the larger the population of people with stable jobs and higher incomes, the more likely those residents are to afford higher rents. This drives up property values and rental rates, benefiting you and your portfolio. Conversely, slow job growth or economic downturns lead to decreased property values and lower occupancy rates for landlords.

Philadelphia is a hub for healthcare, education, research, technology, and tourism. The city has been experiencing strong economic growth with an expanding job market. The favorable economy implies higher employment rates, higher income, and higher demand for rental properties. Therefore, real estate investors can find many opportunities to invest in rental properties that can generate steady cash flow.

Affordability in Philadelphia Even as Prices Rise

Yes, rents have gone up. Yes, there’s a huge demand for more affordable housing. However, those high prices are still relatively affordable compared to other metropolitan areas such as New York City and Washington DC. Philadelphia is more affordable for buyers, renters, and investors. You’ll get more here for your investment dollars than you would in Boston or Seattle. 

The real estate prices in Philadelphia are relatively lower compared to other cities, which allows investors to secure rental properties at a reasonable price point. This affordability ensures that investors can generate a good return on investment through high rental income. This is a more accessible market than others along each coast that are too pricey for a new or average real estate investor. 

Diversified Property Types Leads to Opportunity

A diversified portfolio of property is a strong portfolio of property. This is Investing 101. Luckily, you can find a variety of property types and asset classes when you’re looking for acquisitions here. Philadelphia offers a variety of property types. Whether you’re looking for residential or commercial, you can find industrial buildings, office space, single-family new construction homes, older apartment buildings, and condos and townhomes. There are traditional row houses alongside retail commercial spaces. 

Investors have the flexibility to choose from a variety of property types that fit their investment goals. With the growing population, some investors might want to focus on developing multi-family or commercial properties to accommodate a diverse range of tenants.

Investor-Friendly Policies in Philadelphia

Tenant protections are in place everywhere, and as a rental property owner you’ll have to navigate fair housing laws, security deposit laws, and requirements around licensure and inspections. Generally, however, Philadelphia has favorable policies for real estate investors. The city offers tax incentives designed to encourage investment in rental properties. Investors can take advantage of these incentives to generate more positive cash flow.

Investors are looking for markets that offer them high returns on investment, and Philadelphia checks all the boxes with its growing population, economy, affordability, diversified property types, and favorable policies. Real estate investing success in Philadelphia starts with identifying your investment goals, building a team, conducting market research, and selecting a property that aligns with your strategy. As with all investments, there is no guarantee of success, and a little bit of risk is required to make any money. But, Philadelphia’s real estate market is a great option for investors to consider.

We love working with investors at all stages of their buying cycle. Let’s talk about your investment goals and how we can help you. Contact us.

TCS Management is a full service property management company headquartered in Philadelphia, Pennsylvania, also serving Cherry Hill, NJ, Wilmington, Delaware, Nashville, Tennessee and the surrounding areas. We focus on single-family and multifamily residential property management of homes, condos, townhomes, and apartment buildings.

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