Frequently Asked Questions
What draws investors to Philadelphia?
Accessible entry prices relative to other major East Coast metros, a deep renter base from universities and hospitals, and substantial two-to-four unit inventory.
What is distinctive about the housing stock?
Rowhomes dominate much of the city, including many converted to multiple units. Age and conversion history make condition and permitting verification particularly important.
Are unpermitted units common?
Common enough to warrant careful verification. Basement and attic conversions without permits appear regularly, and unpermitted units generally do not count toward qualifying income.
How do I verify permitting?
City records, the certificate of occupancy, and tax assessment records. A property assessed as fewer units than are rented is a clear warning sign.
How are Philadelphia property taxes?
Rates and assessment practices are specific to the city. Verify the actual figure for the address rather than using a regional estimate.
Does the assessment change on sale?
Assessment practices vary. Check with the city rather than assuming the seller's tax figure carries forward.
Are older properties harder to finance?
Age itself is generally not a barrier if the property is in good condition. Deferred maintenance, outdated systems, and safety issues are what cause problems.
What condition standard applies?
Rent-ready, as with any DSCR loan. Older Philadelphia stock frequently needs work, which may mean renovation financing before a DSCR loan.
Are two-to-four unit properties common?
Yes, and they are a significant part of the investor market. Combined unit income often produces stronger coverage ratios than comparable single-family.
Can I close in an LLC?
Yes. Entity vesting is standard on DSCR loans.
Are there landlord-tenant rules I should know?
Yes, and Philadelphia has city-specific requirements including licensing for rental properties. Landlord-tenant law, licensing, and property tax rules vary by state and change over time. Confirm current requirements with a local attorney or your state's regulator.
Does Philadelphia require rental licensing?
The city has requirements for rental property operation. Verify current licensing and inspection obligations before purchasing. Landlord-tenant law, licensing, and property tax rules vary by state and change over time. Confirm current requirements with a local attorney or your state's regulator.
What about lead paint requirements?
Older housing stock brings lead paint considerations, with specific disclosure and in some cases certification requirements. Verify what applies to your property.
Are short-term rentals viable?
Regulation exists and varies. Verify current municipal rules and any licensing requirements for the specific property.
What insurance should I expect?
Generally moderate compared with coastal states, though older properties can carry different considerations. Get actual quotes.
What about markets outside Philadelphia?
Pittsburgh and other Pennsylvania markets have their own dynamics, often with lower entry prices and different tenant bases.
Do out-of-state investors buy in Philadelphia?
Yes, though older housing stock and permitting complexity make local knowledge or good local management particularly valuable.
What coverage ratios are achievable?
Varies substantially by neighborhood. Philadelphia's submarkets differ considerably in both price and rent levels.
What is the most common Philadelphia mistake?
Buying a property with unpermitted units and discovering that the income does not count. Verify unit count against city records before making an offer.
What should I verify before buying?
Permitting for every unit, rental licensing requirements, actual property tax, condition and any lead paint obligations, and neighborhood-specific rent comparables.
