1. Allentown

Located in the heart of Lehigh Valley, Allentown is a great area to be a landlord and investor. The third most populated city in Pennsylvania proves to be popular among investors because of the growth in its rental market, increasing rent prices and single-family home values, and its newly revitalized downtown.

Rental properties in the Greater Lehigh Valley don’t last long. These properties are usually on the market for an average of nine days, with the average number of leads reaching 119. Rent is slightly higher in Allentown compared to its neighboring cities, at $1,628 for a two-bedroom, which is positive for SFR investors given that the median home sale price is $145,000.

Allentown, PA has focused on redeveloping and transforming its downtown area to boost the local economy, and revitalization efforts are clearly paying off because the city’s housing market is hot. Home values in the area are continuing to grow, with home values increasing by 18% YOY.

Despite Allentown’s unemployment rate of 12.3%, its job market continues to grow. Between 2018 and 2019, the city saw a 2.29% increase in employees. Allentown’s future job growth is expected to increase by 24% over the next decade.

The most common job groups in Allentown, PA, are:

• Material Moving Occupations (6,591 people)
• Office & Administrative Support Occupations (6,281 people)
• Production Occupations (5,795 people)

2. Bethlehem

Also located in Lehigh Valley, Bethlehem, Pennsylvania is located just east of Allentown and shares a lot of economic similarities with its neighbor.

In 1995 Bethlehem Steel, the nation’s second-largest steel producer, closed permanently, creating a vacuum in the Lehigh Valley economy from which many did not believe the area could recover. At its height, the facility employed 30,000 people. But since that closure, Bethlehem has undergone major revitalization efforts that have improved the city’s economy and helped boost the overall population. The city’s revitalization efforts have extended to blight removal in the city as a way to make the area attractive to its residents and outside investors.

Bethlehem also offers several types of real estate incentives for investors looking to purchase property in the city. As part of the city’s revitalization efforts, city officials have made it easier for real estate developers and investors to operate in Bethlehem, making it a great place for investors looking to invest in rental property.

The overall Lehigh Valley rental market is hot and has gained attention for its growth. Home values in Bethlehem have increased by 19% since June 2020, averaging $261,279. The average price of rent is slightly higher in Bethlehem than in other neighboring towns, with the median rent on a two-bedroom apartment costing $1,703 – a 17% increase YOY.

3. Philadelphia

Philadelphia is one of the best cities for real estate investors because of the market opportunities. Although many popular real estate markets have seen some slow-down in the last couple of months, the Philadelphia area has continued its trend as a seller’s market with mostly “more of the same” trending. Median home prices in Philadelphia have increased 20%, from $270,000 to $325,000 YOY. New property listings have increased 11% in the past year, a strong sign for inventory levels in a tight market. Sold listings leave the market in 10 days, and home sales transactions have hit 10-year highs, proving that this real estate market is operating at maximum speed.

With statistics like these, it’s easy to see why investors should consider Philadelphia real estate investment opportunities when looking for their next city to invest in.

Kiplinger Personal Finance ranks the city as one of the most affordable places in the U.S. to buy a house, even while the percentage of renters keeps growing. Over the past 3 years, rent prices for homes in Philadelphia have grown nearly 16%, from an average of $1,326 in 2018 to $1,532 in 2022. More renters plus higher rent equal great news for SFR investors.

But right now, the fix and flip may be the most profitable place to invest in real estate in Philadelphia. The ROI on Philly fix and flip investments is almost triple the national average – currently 104% as compared to 38% nationally. That’s right: fix and flip investors are currently doubling their investments in Philadelphia, PA. So whether investors fix to sell or fix to hold, investors have incredible opportunities in the City of Brotherly Love.

4. West Chester

West Chester is another top Pennsylvania city for investors to consider. This borough has been a popular place to live for decades because of its location proximity to Philadelphia and high home values.

Home value in Chester County has risen 12% in the past year. In the past, an average of 2,000 houses per month are offered up for sale in Chester County. The total house inventory in March of this year was just 565.

In March 2021, the median sale price for a Chester County home was $416,280 – a 17% increase from 2020. As of August, the median sale price increased again to $491,190. Chester County houses are staying on the market an average of just 14 days – a 65% decrease from 2020.

Investors may pay more for a rental property in West Chester, PA, but the high rent averages should compensate for above-average ROI.

 5. Pittsburgh

Known as Steel City, Pittsburgh, Pennsylvania is a former manufacturing headquarters that has quickly become one of the hottest places in Pennsylvania to live. But there’s a lot more to Pittsburgh than its strong/steady real estate market. From plentiful shopping areas, amazing restaurants, and outstanding views of the Allegheny, Monongahela, and Ohio Rivers, many people find Pittsburgh the perfect place to call home.

Pittsburgh’s real estate market has been ranked nationally based on several different factors.

• Pittsburgh ranks as one of the most affordable and desirable real estate markets in the Northeast
• Pittsburgh ranks 3rd as one of the top 10 U.S. markets where investors can invest in a rental property for less than $100,000
• Pittsburgh ranks as one of the 30 places to consider when buying rental property

Investors looking for cash-flowing housing to hold for the long term may find that Pittsburgh, Pennsylvania is the perfect place to buy and hold rental property.

Median home values are currently $219,571 (an increase of nearly 20% from last year) and have risen by more than 55% over the past five years. The average rent for an apartment in Pittsburgh is $1,337, a 6% increase compared to the previous year. As home values increase, rent prices are also expected to rise, making this a great city to invest in rental property.