The Philadelphia housing market is filled with opportunities for various rental strategies. With over 43 million tourists visiting each year, Airbnb properties are one of the best real estate investments for Philadelphia real estate investors. Traditional rental properties in Philadelphia are a successful niche as well, with investing in multi family homes being the most common form. But why should you be interested in multi family homes for sale in Philadelphia? And where should you be buying multi family real estate in the city? To find out the answers to these questions, keep reading!
Related: Why You Should Be Investing in Philadelphia Real Estate
Philadelphia Multi Family Investment Properties: City-Level Data
Before we can answer the two questions, let’s take a look at the potential profitability of multi family homes for sale in Philadelphia. The most efficient and accurate way to do so is to analyze the data of the Philadelphia real estate market 2019. Where can you obtain this data? Look no further! With Mashvisor’s investment property calculator, Philadelphia real estate investors can scour the city for the best real estate investments and break down their profitability factors. Want to learn more about how Mashvisor’s calculator works? Then, click here! In the meantime, here is the data on the average multi family investment property in the Philadelphia housing market.
- Median Property Price: $388,987
- Price per Square Foot: $2,557
- Price-to-Rent Ratio: 24
- Rental Income: $1,349
- Cap Rate / Cash on Cash Return: 2.0%
Related: The Best Investment Property Calculator in 2019
Why You Should Invest in Multi Family Homes for Sale in Philadelphia
As seen from Mashvisor’s data, multi family homes for sale in Philadelphia are superb investments for a multitude of reasons. Here are the top 5:
The ultimate goal of any property, whether an Airbnb or a multi family investment property, is to generate profit. The most upfront and desirable form of profit is, without a doubt, rental income. If you’re interested in rental income, then you’ll be interested in purchasing multi family homes for sale in Philadelphia. As mentioned in Mashvisor’s data, the average rental income of multi family rentals in the city is $1,349. The average return on investment (expressed as cap rate or cash on cash return) is also impressive. However, it is important to keep in mind that these figures are merely averages. Philadelphia real estate investors can earn more through their multi family investment properties.
Real Estate Appreciation
The city’s housing market benefits from property appreciation, which is an excellent added bonus for multi family rental properties in Philadelphia. Philly’s appreciation rate was above average during the last ten years, according to NeighborhoodScout. There was, however, an uptick in recent years. During the last 12 months, for instance, the appreciation rate of properties in the Philadelphia housing market was 5.22 percent. Philadelphia real estate investors will likely be in line for more appreciation gains, as during the most recent quarter, the city’s appreciation rate was 0.37 percent. This rate is higher than the rate of 60 percent of other cities and towns within the state of Pennsylvania.
Related: What Are the Features of the Best Investment Property?
Another reason why a Philadelphia multi family real estate investment is a lucrative investment is due to the city’s economy. Philadelphia is the state’s economic powerhouse. For example, the city is the headquarters of five Fortune 1000 companies. Philly’s economic sectors are vast and varied. Examples include financial services, the largest sector in the city, healthcare, biotechnology, information technology, manufacturing, and oil refining. In terms of US rankings, Philadelphia is the eighth largest metropolitan economy. The metro area is estimated to produce a gross metropolitan product of $490 billion, which was an increase from the 2017 figure of $445 billion. With Philadelphia’s consistent economic prosperity, buying multi family homes for investment will continue to be a worthwhile investment.
Arguably the most important of the Philadelphia real estate market trends is the city’s population statistics. For starters, Philadelphia is nothing short of large. It is the second-largest city on the East Coast, the 5th most populous city in the country, 7th largest metropolitan city, and the largest city in the state. With a population of over 1.5 million, multi family homes for sale in Philadelphia PA will always find prospective tenants.
We can sum up the combination of all the previously mentioned reasons as one: Philadelphia investment properties for sale are in high demand. For instance, almost half of the city’s residents reside in a Philadelphia investment property. The average price-to-rent ratio of the Philadelphia housing market, as seen from Mashvisor’s data, is 24, which means that renting out a Philadelphia investment property is much more affordable than buying one. Multi family investment properties, in particular, are in very high demand. About 92 percent of rental properties in the city are multi family homes. Philadelphia also ranks strongly in many traditional investing categories. These include being one of the best cities to live, one of the healthiest cities, one of the best cities to retire, and one of the best cities for young professionals.
However, the downsides to the demand of the Philadelphia real estate market is that it is a very hot seller’s market, according to Zillow, and that the city’s median property price is above the state median of $275,626, according to Mashvisor. Despite these cons, investing in multi family homes for sale in Philadelphia is one of the best investment strategies in the US real estate market in 2019.
Best Philadelphia Neighborhoods for Multi Family Homes
So, what are the best Philadelphia neighborhoods for a multi family investment property? According to Mashvisor’s data, these neighborhoods are Stanton, Hartranft, Upper Kensington, North Central, and Frankford.
- Median Property Price: $284,167
- Price per Square Foot: $127
- Price-to-Rent Ratio: 17
- Rental Income: $1,425
- Cap Rate / Cash on Cash Return: 6.3%
- Median Property Price: $223,960
- Price per Square Foot: $127
- Price-to-Rent Ratio: 14
- Rental Income: $1,323
- Cap Rate / Cash on Cash Return: 5.0%
- Median Property Price: $186,900
- Price per Square Foot: $89
- Price-to-Rent Ratio: 18
- Rental Income: $886
- Cap Rate / Cash on Cash Return: 4.7%
- Median Property Price: $305,000
- Price per Square Foot: $124
- Price-to-Rent Ratio: 16
- Rental Income: $1,575
- Cap Rate / Cash on Cash Return: 4.6%
- Median Property Price: $250,950
- Price per Square Foot: $84
- Price-to-Rent Ratio: 21
- Rental Income: $994
- Cap Rate / Cash on Cash Return: 4.2%
All in all, the Philadelphia real estate market 2019 is a top-tier market for multi family homes for sale. To start searching for these properties, click here to start your FREE 14-day trial with Mashvisor!