lat_39.9527237 Archives | Airbtics

best places to airbnb in Pennsylvania

Key Takeaways

The cheap real estate market and steady economic growth of Philadelphia allows many property investors to earn a good passive income through Airbnb.
Discover the advantages that real estate investors have when investing in Philadelphia, Pennsylvania.
The top 10 neighborhoods and nearby cities in Philadelphia, PA are revealed along with their recommended property type and Airbnb data.

Introduction

Philadelphia owns a rich history since is one of the oldest cities in the US. In fact, this is where the Declaration of Independence was signed. It is also the former capital city of the country. Best known as the City of Brotherly Love, Philly is home to iconic landmarks such as the Independence Hall and the Liberty Bell.

Philly is a city that blends its historical and cultural legacy with modernism and technology. It offers a variety of entertainment activities, museums, top-tier restaurants, cafes and amazing parks.

Philadelphia owns an attractive housing market and a diversified economy that has drawn many investors’ attention. But you may wonder, “which is the best place to invest in real estate in Philadelphia?” – we got you!

In this article, we’ll feature the best places to do Airbnb in Philadelphia, Pennsylvania and some of the expectations for real estate investments in this city. Stoked to learn more? Then continue reading!

Advantages of buying an investment property in Philadelphia

Investing in Airbnb in Philadelphia is a great way to earn a passive income while achieving financial freedom. This is because it offers good investment opportunities to real estate investors. Philly is one of the most lively cities in the US and a treasure of culture and history. But what advantages does this location offer to property investors? Check out some of the reasons why buying an investment property in Philadephia can be profitable:

Philly’s real estate market

One of the top advantages of investing in Philadelphia is that its real estate market is quite affordable! Based on Zillow Index, the average property price is $216,524K, trending up 7.2% year over year. Overall, the median housing value is 20% lower than the national average and 12% cheaper compared to other cities in the state.

Diversified economy and great location

The city of Philadelphia is constantly growing and its economy is quite diverse! Its economy is driven by the healthcare, IT, biotechnology and financial sectors. In fact, Philly is one of the Top 10 MSA in the US and not only that, but it’s also home to renowned academic institutions. Thanks to these factors, Philly enjoys a steady economic expansion.

Aside from its diversified economy, Philadelphia also owns a prime location. The city is located near the Atlantic Ocean and is quite easy to have access to major cities like NYC and Washington D.C. So you will be a short flight away from great cities!

Popular historical destination

It’s a given fact that Philadelphia owns a significant historical and cultural legacy in the US. In fact, this place is where the “American dream” arose! Home to important architectural treasures and historical sites, Philly welcomed around 36M tourist arrivals just in 2021 as confirmed by the city’s government official website. This surely sounds interesting to property investors who want to cater to tourist accommodations.

Is Airbnb Profitable in Philadelphia, PA?

Are you worried that your real estate investment in Philly won’t be profitable? You don’t need to worry anymore. Airbtics confirms that investing in an Airbnb property in Philadelphia is lucrative. In fact, this city is one of the top Airbnb cities in the USA where you can earn a monthly revenue of $2,000+! Yet, you should have in mind that the level of profitability depends on the property type and location.

Based on Airbtics’ data, an Airbnb host can expect an average annual revenue of $50,883 and a median occupancy rate of 61% for operating a 4-bedroom property in Philadelphia.

Top 10 Areas for Airbnb Investment Properties near Philadelphia, Pennsylvania

Philadelphia is the largest city in the state of Pennsylvania and one of the most historically significant cities in the US. Philly has more than 150 defined neighborhoods, thus, it’s understandable if you’re having a hard time choosing the best place to set up your Airbnb listing in Philadelphia.

Check out the best neighborhoods and nearby cities in Philadelphia that are highly recommended for starting an Airbnb business:

1. Kensington, Philadelphia

Total Number of Airbnb Listings: 99
Best bedroom size: 4 bedrooms
Median property price (4 bedrooms): $259,900
Airbnb Annual revenue: $81,676
Gross rental yield: 31.43%

2. Fishtown, Philadelphia

Total Number of Airbnb Listings: 92
Best bedroom size: 4 bedrooms
Median property price (4 bedrooms): $339,900
Airbnb Annual revenue: $81,676
Gross rental yield: 24.02%

3. Philadelphia Center City

Total Number of Airbnb Listings: 1,027
Best bedroom size: 4 bedrooms
Median property price (4 bedrooms): $529,900
Airbnb Annual revenue: $113,402
Gross rental yield: 21.40%

4. Grays Ferry, Philadelphia

Total Number of Airbnb Listings: 37
Best bedroom size: 3 bedrooms
Median property price (3 bedrooms): $215,000
Airbnb Annual revenue: $41,662
Gross rental yield: 19.38%

5. Brewerytown, Philadelphia

Total Number of Airbnb Listings: 63
Best bedroom size: 2 bedrooms
Median property price (2 bedrooms): $269,000
Airbnb Annual revenue: $39,056
Gross rental yield: 14.52%

6. Wilmington, DE

Distance from Philadelphia: 33 miles
Total Number of Airbnb Listings: 93
Best bedroom size: 1 bedroom
Median property price (1 bedroom): $164,500
Airbnb Annual revenue: $33,793
Gross rental yield: 20.54%

7. Atlantic City, NJ

Distance from Philadelphia: 55 miles
Total Number of Airbnb Listings: 283
Best bedroom size: 3 bedrooms
Median property price (3 bedrooms): $165,000
Airbnb Annual revenue: $50,498
Gross rental yield: 30.60%

8. Allentown, PA

Distance from Philadelphia: 64 miles
Total Number of Airbnb Listings: 54
Best bedroom size: 2 bedrooms
Median property price (2 bedrooms): $159,900
Airbnb Annual revenue: $34,756
Gross rental yield: 21.74%

9. Wildwood, NJ

Distance from Philadelphia: 69 miles
Total Number of Airbnb Listings: 339
Best bedroom size: 3 bedrooms
Median property price (3 bedrooms): $525,000
Airbnb Annual revenue: $61,108
Gross rental yield: 11.64%

10. Baltimore, MD

Distance from Philadelphia: 89 miles
Total Number of Airbnb Listings: 1,044
Best bedroom size: 3 bedrooms
Median property price (3 bedrooms): $189,000
Airbnb Annual revenue: $52,518
Gross rental yield: 27.78%

Summary

Philadelphia has a variety of property options as well as profitable areas that offer a nice cash-on-cash return to real estate investors. While there are plenty of neighborhoods and nearby cities in Philly with great rental yields and annual revenue, it is worth noting that you should still analyze your options thoroughly.

Now that we revealed the best places to Airbnb in Philadelphia, Pennsylvania, we encourage you to go further and check Airbtics’ short-term rental calculator. Maximize your profitability and stand out among your competitors now!

Explore The Most Profitable Airbnb Locations Near Philadelphia

Table of Contents

Add a header to begin generating the table of contents

What is Rental Arbitrage?

Rental Arbitrage is a method similar to house hacking. But unlike house hacking in Rental Arbitrage, you don’t own the house. Instead, you convince a landlord to lease you a property which you then furnish and sublease on Airbnb and VRBO.

Rental Arbitrage is a really good method to do in multifamily houses, duplexes, or triplexes. You can easily use the money from your short-term rental to pay off your lease and also profit some more. If done right this can be a full-fledged business in itself. If you own a duplex or triplex then it is pretty straightforward. You can live in one section and rent out the other. This is known as house hacking. People use this after taking a loan on a property and use the rent to pay off the mortgage. The short-term rent helps you pay for the long-term lease that you have on the house. This helps you keep the difference at the month-end after paying for the long-term lease. Let’s take an example to help you understand Rental Arbitrage better.

Assume you are renting a duplex in Philadelphia for $1,800/month. You are living by yourself on one of the sides and you decide to sublease the other on Airbnb. Let’s say you listed it for $100/day and got 80% occupancy. This will bring in approximately $2,600/month in revenue. Not only will it help you pay off your complete rent, but give you a profit of $800. This, in a nutshell, is called Rental Arbitrage.

There’s so much to learn from Airbnb rental arbitrage business!

Things to do before getting started?

How to convince the landlord

Let’s say you want to get into Rental Arbitrage. Now comes the big question, how to find a good property and how to convince the landlord. Later in the blog, we’ll be explaining how to find a good property by doing proper research using Airbnb analytics. In this section, we will be focusing more on how to convince landlords. As you’ll begin your Rental Arbitrage journey, you’ll come to know that this is the hardest part of the whole process.

You need to be prepared and well researched, good communication skills come in handy here. Also, one thing to always keep in mind: never sublease without informing the landlord, there will be a huge number of people coming in and going out when you’re sub renting, it will not be hard for the landlord to figure out that you are subletting and you might end up getting in trouble.

For the convincing, rule number one is always talking about the upsides. If you can rent the property on Airbnb, so can the landlord himself. You need to make a deal with the landlord that is beneficial to them. So they lease the property to you instead of renting it by themselves.

Points to tell an indecisive landlord.

Doing Rental Arbitrage is a full-time business. It doesn’t generate passive income like long-term leasing. You should try approaching older people who are looking for some sort of passive income. They are more likely to agree to a fixed long-term lease. You can also reach out to full-time working professionals or business owners. They will also be happy with a source of passive income till their property is well maintained. This brings us to our next point.
You are more likely to take care of the house than a normal renter. As you are using the property to do business you will take good care of it to make sure you get better reviews. Having a beat-up property isn’t good for business and you are more likely to monitor it often. Not monitoring it will affect your revenue a lot. You may end up paying a huge sum of money for damages done by someone else. So telling this to the landlord might instill some confidence in them.
You can ensure timely monthly rent. You can tell the landlord that doing Rental Arbitrage is a full-time business with ups and downs. It doesn’t guarantee fixed income at all like long-term leasing. But if they lease it to you, you’ll make sure to pay the lease no matter what. Either from the money made after rental arbitrage or from your savings. You need to ensure timely monthly lease payments to gain the trust of a landlord.

In conclusion, you need to take care of the property like your own. Make sure to timely pay the monthly lease and keep the situation beneficial for both parties.

Ensure the Property and Gain landlords’ trust

Being on the safe side is always a good idea. From trouble guests to bothering landlords. You need to make sure you are using the right tools to ensure the property is safe and neighbors are happy. Many landlords will have this concern when renting out their property to you. They will be worried about neighbors raising noise complaints. It is a legitimate concern. To help you with all these problems, here are some suggestions that you can implement and have peace of mind.

Simply Safe – These are home monitoring tools that you can install in the house to make sure no suspicious activity is happening there. Make sure to let the guests know about them and have their consent.
Auto host – Automatically screens problematic tenants.
Alexa Guard: If you already own an Alexa, you can use its Alexa guard feature to detect parties. It is an inbuilt feature that monitors changes in sound and sends you an alert in case the guests are having a party and making too much noise.
InsuraGuest – This insurance and tech company helps you with risk analysis and gives protection beyond Airbnb and VRBO policies.
Airbnb Income Calculator – Give your landlord ease of mind by providing income estimates backed by Airbnb data.

You can integrate the majority of these tools with a PMS of your choice.

Pro’s and Con’s

The initial cost of starting Rental Arbitrage Philadelphia?

You can expect to spend anywhere between $3,000 to $5,000. This cost consists of everything including deposit, furnishing, amenities, legal paperwork, and LLC Incorporation.

But doesn’t this contradict the low upfront cost of Rental Arbitrage? Well, these estimates vary from city to city. There is a possibility to do Rental Arbitrage for even less than this depending upon your situation and the type of property you lease.

Still, the amount is much less than investing in a new property and getting a mortgage of thousands of dollars. Plus you won’t be on the hook for property maintenance expenses and being stuck for years with debt.

But this doesn’t mean Rental Arbitrage can be done with no or very tight budget. There will be some upfront costs that you would have to bear. Having some extra cash is also a good thing to have. It will help pay off the lease in not-so-profitable months in case bookings don’t happen right away.

Expense 1: Rental Deposits

A rental Deposit is going to be one of the first and major expenses. You would need money to be able to sign a long-term lease with the landlord. For that, you will need a Security deposit, First and Last month’s rent. Sometimes you can negotiate with the landlord and use the first month’s rent as a security deposit.

Expense 2: Furnishing

Most of the time you should always aim to lease a place that is semi-furnished. As someone with a fully furnished home might be doing short-term rentals themselves. Also furnishing a place from scratch can add anywhere from $3,000 to $5,000 to your initial capital. Not choosing the right property can make Rental Arbitrage not so low cost, so choose wisely.

If the place is semi-furnished, then your best bet is to shop cheap for the rest of the stuff. You can go and find cheap supplies from places like Home Depot and IKEA. Sometimes even Walmart can have a hidden gem if you look closely.

Expense 3: Photography

Do it yourself!!! iPhones have good cameras. Will save you some money.

Expense 4: Cleaning Services

This is not a starting cost, but you will end up spending on cleaning eventually. The best way to save money is to do it yourself initially if you have the skills and experience.

If you have no experience or you don’t want to invest time in cleaning a place. Then your best bet will be to hire a professional cleaner. This can cost you anywhere from $50 to $250 depending upon the size and location.

Expense 5: Legal Consultation

Maintaining a professional relationship with a Real Estate lawyer can be very helpful in the Airbnb business. Airbnb regulations keep updating and you would need some legal guidance on the way to adjust your business accordingly.

They can also come in handy if you face any legal issues with the landlord or guests. They can help in damage claims and insurance as well in case of any mishappening.

Legality and Regulations in Philadelphia

License for Commercial Activity

To rent your house as restricted lodging, you’ll need a Commercial Activity License. A Rental License is not necessary.

Permits

To rent your house for up to 30 days to one individual or group, you’ll need a Zoning Permit for Limited Lodging.

For Visitor Accommodation, you’ll need a Zoning Permit:

To rent out your house for 30 days or less.
If you are not living in the property as your primary house.

Demands for housing

– Smoke alarms are a must:

One in each of the bedrooms.
In the hallway, near the bedrooms.
On every level of the house, including the basement.

Install carbon monoxide alarms

Within 15 feet of every bedroom’s entrance, or within 15 feet of every bed in sleeping areas if there isn’t an enclosed bedroom.
In the center of the room, but not in front of a restroom door or within 5 feet of a cooking appliance.
You are not allowed to put up signs for lodging on your property.

More than three people (including the owner and tenants) cannot live in the home if they are not related by blood, marriage, life partnership, adoption, or foster-child status.

What you must tell your tenants

– Provide residents with information on trash and recycling collection days, as well as restrictions on disposal, between the hours of 8AM and midnight.

Renters need adequate garbage bins, which you must provide.
Excessive noise is unlawful, with fines and penalties imposed on violators.
The owner or their designee must provide the renters with contact information. The contact person must deal with complaints from tenants.

Record-keeping

– Residents who rent their homes for a short period of time must keep records for at least a year that show:

that the home was their principal house;
the dates the home was on rent; and
the number of tenants.

Hotel Tax in the City

– Hotel operators pay the City of Philadelphia Hotel Tax monthly. There is an 8,5% tax on rental income.

Reference| Phila.gov

Best areas for Rental Arbitrage Philadelphia

Some obvious places come to mind when thinking of Philadelphia like Bella Vista, Center City and Fairmount. But two of the best choices for rental arbitrage top our list. The first one is:

1. Old City

According to our Airbtics Dashboard, Old City is the top market to start your Rental Arbitrage business. There are more than 1,923 Airbnb listings with 431 private rooms properties and 611 one-bedroom properties. Monthly revenue for most properties is more than $1,717/month with occupancy being more than 35%.

2. Fish Town

According to our Airbtics Dashboard, Fish Town is the second-best market to start your Rental Arbitrage business. There are more than 3,309 Airbnb listings with 900 private rooms properties and 880 one-bedroom properties. Monthly revenue for most properties is more than $1,686/month with occupancy being more than 36%.

To see full data of Philadelphia – Click Here

FIND STATS FOR YOUR CITY – CLICK HERE

🎉 FREE WEBINAR - July 24th, 11am / 8pm CET - Learn Airbtics in 7 Minutes - Revenue and Market Analysis Tips and Best Practices!