Philadelphia has long been an attractive market for real estate investors, offering relatively affordable property prices and stable demand from renters and homebuyers. In 2020, despite the challenges of COVID-19, Philadelphia remains one of the top places for investing in rental properties and flip opportunities. Key factors making Philly a strong market include its diversified economy, growing population of millennials, and neighborhoods with appreciation potential. For investors looking to capitalize on property deals in 2020, some of the best opportunities are in emerging neighborhoods, multi-family properties near universities, and fixer-uppers in gentrifying areas.
Affordable Home Prices and Rents Attract Investors
Compared to other major East Coast cities like New York and Washington D.C., Philadelphia real estate is very reasonably priced. The median home price in Philadelphia is around $150,000, less than half the price in those other cities. For investors, this means you can get good cash flow from properties that have lower purchase prices. Rents are also quite affordable for tenants, with the average apartment renting for approximately $1,100 per month. The low cost of living attracts both homeowners and renters to Philadelphia neighborhoods like Fishtown, Passyunk Square, and University City.
Population and Job Growth Support Real Estate Demand
Over the past decade, Philadelphia’s population has grown steadily, adding over 60,000 new residents since 2010. The city has also seen strong job growth, especially in education, healthcare, and professional services. Major employers include the University of Pennsylvania, Temple University, Jefferson Health System, Comcast Corporation, and Aramark. This combination of population and economic growth bodes well for real estate investors, as more residents and workers translate into increased demand for housing.
Universities and Hospitals Create Rental Property Potential
Major Philadelphia universities including UPenn, Temple, Drexel, La Salle, and Saint Joseph’s represent huge opportunity for investors in student housing and medical district rentals. The city’s academic institutions enroll over 135,000 students, while its hospitals employ more than 150,000 workers. Investors should look for multi-family and single-family rentals in the University City and Medical Center neighborhoods. Proximity to these major centers of education and healthcare make a property appealing to tenants.
Gentrification Opens Doors for Rehab Projects
Certain Philadelphia neighborhoods like Kensington, Point Breeze, and Grays Ferry have seen home prices rise dramatically as gentrification occurs. Investors who buy low-priced fixer-uppers in these areas and renovate them can benefit from the revitalization. Some of the most profitable flip opportunities are old row homes and industrial conversions located near downtown. Partnering with a local contractor is key to successfully renovating and renting out these rehabs.
Look for Emerging Neighborhoods Before Prices Surge
Getting into an up-and-coming Philadelphia neighborhood early allows investors to purchase properties before appreciation. Areas like Brewerytown, Strawberry Mansion, and East Kensington are still relatively undervalued but are likely to see prices climb in coming years as redevelopment continues. Buying rental properties or flips in these emerging locations in 2020 can produce excellent returns for patient investors down the road.
With steady population growth, major employment centers, and several improving neighborhoods, Philadelphia presents savvy investors with numerous rewarding opportunities in 2020. Acting quickly to buy properties before further price increases will be key.