Rising rent in the US isn’t exactly a shocking revelation. In fact, we’ve been seeing a year-on-year increase since 1980. And now, with prices again hitting record levels, real estate investors are faced with the challenge of finding locations that can offer the right short and long-term returns.
Rental prices will vary not only from state to state but from city to city and even from one neighbourhood to the next. In many areas, investors are faced with a trade-off. Where rental prices are already high, often in affluent areas, returns are likely to be steady but lower than in less developed areas. In less developed areas where property prices are lower, it´s possible to get better rental returns compared to more developed areas. On the other hand, more developed areas usually attract more owner-occupiers, placing upwards pressure on prices and thus increasing the potential for higher capital appreciation compared to less developed areas.
In order to hedge against inflation and protect their wealth, investors should analyse and decide their own combination of properties with higher rental yield and those with better potential for capital appreciation
By embarking on a more detailed analysis of the US rental market, investors will be able to find the sweet spot where potential growth can bring higher rental returns in the short term, while also capitalizing on capital appreciation in the medium or long term.
One such area that may offer that balance is Philadelphia. As a metro area experiencing strong population growth and a robust job market, it may prove to be a winner for real estate investors seeking attractive rental returns and potential for yield growth. It’s for this reason that Bricksave is adding a range of Philadelphia properties to its investment options.
So why is Philadelphia looking like such a strong real estate investment? It’s down to a combination of factors; its strong and diversified job market, paired with a fast-growing population, means demand for residential accommodation is increasing at an impressive rate. Added to this is the enormous student population, which is returning to former levels as students become more confident moving into rented accommodation post-pandemic. According to Bloomberg, Philadelphia is the fifth largest college metro in the US, with students numbering around 342,994 across institutions including the University of Pennsylvania, Drexel, Temple, and Villanova.
These colleges offer a major source of highly skilled workers to the local economy, while the University of Pennsylvania is a big source of city funding. Plus, the biggest sectors in the area are also an indication of its expanding job market. Healthcare, education, manufacturing, finance, and tech have all seen significant growth in recent years. Because of the strong and growing local economy, Philadelphia has also become a regional hub for capital investment. The region welcomed $1.5 billion in venture capital investment during the first quarter of 2022 – the largest quarter-on-quarter growth in the US.
In this growing market, Bricksave will look to offer real estate investors the opportunity to put their capital into a multitude of property types.
While a bustling urban metro in its own right, Philadelphia’s appeal extends further than its city limits. Its proximity to both New York and Washington means the property market is further fueled by commuters that are heading to both cities. New York is accessible in less than 1 hour 30 minutes via public transport, while Washington is a little over 2 hours. Philadelphia’s broad commuter reach makes it a hub for professionals, and a winner for investors in residential property.
Offering a more affordable housing market, alongside a lower cost of doing business, than these neighbouring cities, Philadelphia is a fundamentally attractive proposition on both a commercial and residential level. What’s more, it has high indicators for its diversity, outdoor space, and popularity for young professionals. According to Niche, it is 28th out of 228 cities as ‘Best Cities for Young Professionals in America’, and 6th out of 1,515 for ‘Most Diverse Places to Live in Pennsylvania’.
The US housing market has hit record highs, meaning there are ample opportunities for investors to capitalize given the right guidance. Everyone has different ambitions for their investments, which is why Bricksave’s vast range of properties offers something for everyone. With a finger on the pulse of the housing market, we’re moving in on Philadelphia due to its strong economic indicators, future/current rental returns, and future yield growth. The market here is highly likely to grow which is why now is the right time to consider adding Philadelphia to your property portfolio.
We’re also proud of our relationship with our investors. You speak, and we listen. Our clients have made it clear that there is a desire for diversification in our real estate options. In Philadelphia, investors will have more ownership than ever when it comes to deciding where their hard-earned capital goes; not only in the type of property but in the type of demographic. Whether residential, family properties or student homes will be more of an exciting investment opportunity is in the hands of investors.
Whatever you’re looking for from a property, from high value to high yield, Bricksave can offer you the right investment opportunity that can help you get into the highly profitable housing market within your means. Find out more about investing with Bricksave today.
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