Philadelphia Delivers On Cash Flow For Real Estate Investors
Real estate investors take note, Philadelphia is on our hot list for cash flow real estate investing. Something I am always impressed with is when a city has an economic development plan. Over the past 20+ years I repeatedly watch cities that have a well thought out vision for growth of their cities economic future. Cities that have these plans and also have good people in place to execute the strategies tend to have a thriving city.
Great Investment Markets
Cities with thriving economies translate into great investment markets. Take a look at Philadelphia (the city of Brotherly love and home of the best cheesesteaks around). In 2010 Philly implemented an ambitious 25 year development plan which will boost the area’s economy as well as their housing market.
Philadelphia: Growth Market
Philadelphia scores a 2nd place position on Zillow for the highest percentage of increase to property values over the past decade with a 121% increase. Home values here in Philly peaked in May of 2007 where it remained flat for a fairly extended period of time. The growth values are now running strong again, giving Philly a strong annual growth rate.
So What Is Exciting About Philadelphia?
- Philly has a great economy: an impressive 8th largest regional economy in the world. A highly sought after location with 46 million people within a 200 mile radius around Philly.
- Philly population explosion: Philly had a whopping 8% population growth from 1999 to 2010 alone then went on to increase another 1.4% in the next 2 years.
- Rental increase: over the past 4 years market rents have increased more than 10%.
- Job growth: the number 1 tool that propels a market forward is job growth, Philly added 33,000 new jobs in 2013 alone and still growing.
- Industry: Philly is home to one of the nation’s largest pharmaceutical and medical industries and is a major import and export hub.
- History: home of brotherly love and some of the nation’s top historical places.
Why Real Estate Investors Love Philadelphia
In 2013 property values climbed by 3% all while remaining 16 percent below peak market. This suggests a safe margin for continued growth. Some of the nation’s best cash flow margins will be found here with low acquisition costs and strong rental increases totaling 10% in the last 4 years while maintaining low vacancy rates of less than 5%.
The low acquisition cost of properties and strong rental demand is making Philly a highly sought after market for both the cash flow investor while also appealing to the equity building investor. Philly is one of the few remaining markets where you can get true 10% cap rates and double digit cash on cash returns with total ROI in the 30% to 40% range all on properties that are freshly renovated from the studs out.
If you have interest in learning more about the investment opportunities and wish to compare Philadelphia to other markets you can see some of what Philly has to offer on our Philadelphia PA Investment Property Income Properties page.