Are you thinking about purchasing an investment property in Philly? Being a landlord can afford you amazing opportunities to leverage your investment income while learning invaluable skills about property management. Before you take the big plunge, however, there are certain things you need to think about.
Here are three of the top considerations you should research before you become an investor in Philadelphia-area rental properties:
1. Know Your Neighborhoods
Philadelphia has an eclectic mix of investment opportunities. Some neighborhoods have seen slow and steady growth over the past few years. This is great for investors because it means the market isn’t so trendy that it could immediately plummet at any moment, nor is it in a state of flux that already has people trying to get out of the game. Stability is a huge plus for investors, but if you’re looking to put your mark on up-and-coming neighborhoods, Philadelphia’s got plenty of those, too.
Your rental property investment will make you the most money if you choose an area with:
- Low crime rates
- Steady or increasing populations
- Lots of amenities nearby
- Increased economic investment
If you’re planning to target an area with increased population and/or economic growth, be sure to school yourself on the academic institutions in the area as these tend to be a driving force in growth. It’s imperative to know the characteristics of Philly’s neighborhoods before you lay your money on the table.
2. The State of the Property
If you’re looking to flip a fixer-upper into an income-generating gem, Philadelphia’s got quite an assortment of options to choose from. But buyer beware: affordable aesthetic renovations won’t be enough to pass inspection, particularly in the city’s older structures that need a lot of love. Even if a place looks great on the surface, it could have plenty of problems you can’t see, which could impede your ability to make a profit.
Always have a professional inspector or two investigate the property fully prior to placing a contract of sale. If you’re up for the challenge of a renovation, speak with contractors and city zoning professionals so you have an idea of the true amount of work (and money) necessary to make your investment property livable.
3. Set Expectations, Rental Properties are Long Term Investments
Be patient! There is a lot of excitement when looking and purchasing rental properties but don’t get ahead of yourself as the real return may take longer than expected. It’s important to be patient and understand that some years your profit may not be as great as projected due to unforeseen expenses. This is particularly true if you have a mortgage on the property where the real profit doesn’t come until the mortgage is paid off.
There’s a lot more to owning investment properties in Philadelphia than meets the eye. Luckily, you have access to the seasoned pros at Bay Property Management Group to guide you through the process. Whether you’re simply looking for an agency that will help ensure you’re not holding onto vacant properties, or you need assistance with rent collections, our full-service team is here to help. We invite you to learn more about our Philadelphia property management services today!