ROI In Pittsburgh Real Estate: Investment Opportunities In Allegheny County
This blog is a modified excerpt from my Investing In Pittsburgh’s Residential Real Estate white paper. Download your copy for more information.
Between Pittsburgh’s economic renaissance and grassroots efforts to make housing more affordable and accessible, there’s never been a better time to invest in real estate in Pittsburgh.
The best part: Many of the best investment locations are relatively easy to identify.
At Second Avenue, our process of finding ideal properties is relatively streamlined:
Identify which companies are generating most of the new jobs.
Identify where those jobs are located. Are they remote, or do they have offices in a specific neighborhood?
If the jobs are in a specific location, which neighborhoods are accessible from that point within 20 minutes by foot, car, bus, or rail?
Within that 20-minute rage, which locations are closest to great schools and convenient shopping?
Within those locations, where are the blighted properties, and which ones are available for purchase?
Once we’ve identified those ideal blighted properties, we can determine which are likely to generate a healthy ROI after the necessary improvements.
Opportunities in Pittsburgh’s Rental Market
Those healthy ROIs are possible even in the rental market, which is where I and my Second Avenue team specialize.
With fierce competition in the Pittsburgh housing market, more than 50% of Pittsburgh residents are looking to rent housing instead of buy. (Source: RoofStock)
That’s true even for workers who are moving into the area for a new job. Renting is simply an easier transition into a new environment over buying a house, especially if you have limited opportunities to explore the housing market before moving to town.
Investors have also seen major opportunities from local tax credits for affordable housing. Some investors are able to realize significant tax credits by making at least 30% of their housing “affordable” based on local data.
Taking it a step further, some of these investors have decided to sell those tax credits, giving themselves another income stream on top of their existing investment!
Again, all of this goes back to identifying the best opportunities. Whether you’re a solo investor or a major company, knowing where to look is paramount in finding great residential investment opportunities in Pittsburgh.
Selling Opportunities in Pittsburgh
For those who are looking to outright sell property, Pittsburgh is a hot location. Although the market is still somewhat unpredictable in the middle of 2021 as we come out of the pandemic, recent months have shown rapidly increasing property values.
As an example, some of the properties in Second Avenue’s portfolio have increased by 30% in value in the last six months alone!
As a national company, Second Avenue is seeing this trend happen in cities all over the United States, but it’s especially volatile in Pittsburgh. And even though we’re watching these trends closely in our local market, we have not yet seen any hints of it slowing down; the market is simply promising for four reasons:
Increased vaccination rates and relaxed COVID mandates mean greater economic growth in the region, especially in comparison to 2020
Local economic investments from major businesses should spur additional growth
The retention of university graduates (As of 2016, about 50% of all graduates from Pittsburgh universities ultimately decide to call Pittsburgh home)
Grassroots efforts to provide more housing opportunities, including efforts from organizations like the Hazelwood Initiative (check out my white paper for more)
Diligent investors know that one of the latest economic outlooks for Pittsburgh expects a full economic recovery that is slightly slower than the rest of the country post-pandemic, but even that report predicts a strong recovery—and the movement we’re seeing in the current housing market is extremely promising!
Looking Ahead
Pittsburgh is in the early stages of a true renaissance. As businesses continue to grow and thrive as we recover from the pandemic, Pittsburgh will continue to attract new talent eager for high-paying jobs.
And as the local community works to create new housing opportunities, investors can find new, innovative ways to provide housing to these individuals.
Those who are smart enough and have enough capital to invest in Pittsburgh real estate are the most likely to financially benefit in 2021 and beyond.
