The 5 Best Places to Buy Rental Property in Pennsylvania

By Lindsay Stefan

Posted on July 1st, 2022

Philadelphia | Pittsburgh | Allentown | Reading | Erie

Photo of Philadelphia

💰 What is the best place to buy rental property in Pennsylvania? 💰
The best place to buy rental property in Pennsylvania is Philadelphia, followed by Pittsburgh and Allentown.

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If you’re looking for the best places to buy rental property, especially in the northeastern U.S., you might want to check out Pennsylvania. This state has a lot of history in its pocket—it was famously one of the original 13 colonies—but it also has a bright future.

Most promising for investors, Pennsylvania had 13 million residents as of the 2020 census, making it the fifth-most populated U.S. state — that’s a lot of people who might need a place to live.

In this guide to buying rental property in Pennsylvania, we'll look at the state's five most populous cities according to:

  • Affordability
  • Investment potential
  • Rental rates
  • Amenities and local attractions

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1. The Best Place to Buy Rental Property in Pennsylvania: Philadelphia

Philadelphia's name means “brotherly love” in Greek. It’s the city of Benjamin Franklin and Liberty Hall, and it has the highest population of any city in the state — which is why we recommend starting with Philly.

Start by looking for property in the city’s hottest neighborhoods. Filtering Square’s proximity to the University of Pennsylvania makes it a good bet for rentals, because students will always need good-quality affordable housing. But it’s also close to Center City and the Children’s Hospital, among other corporate and social hubs.

Other promising neighborhoods are Bella Vista, East Falls, Old City, Queen Village, Fairmount, and Woodland Terrace.

In 2022, the median home price in Philadelphia is $233,563, up 6.5% year-over-year. Philadelphia is also one of the best cities for Airbnb investment, because of the large number of tourist attractions. Thirty million people visited this region in 2020, down from 46 million visitors pre-pandemic in 2019- a magic number the region is sure to try to hit once again.

Those tourists might be attending large conventions at the Convention Center near Reading Terminal Market, but they’re also visiting the Liberty Bell and its famous crack. Taking photos on the steps from Rocky at the Philadelphia Museum of Art, and scarfing down authentic cheesesteaks.

2. Pittsburgh

Where the Allegheny and Monongahela rivers meet, the Steel City thrives. With a population of just over 300,000, relatively affordable cost of living, and a vibrant arts and culture scene, Pittsburgh is one of the best rental markets in Pennsylvania.

It's also relatively affordable for investors on a budget. A typical single family home in Pittsburgh costs $238,715 — nearly 57% less than the U.S. median home price.

Pittsburgh is a popular destination for millennials. Its median age is 33, with a median annual income around $29,000. The average rent is $1,378 per month for an 810 square foot apartment.

As you’re looking for investment apartments or housing, be aware: Almost half the houses in Pittsburgh were built before 1939, which could mean high maintenance costs for a landlord.

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3. Allentown

More than just the name of Billy Joel’s 1982 song off The Nylon Curtain, Allentown should be on any investor's list of possible rental property opportunities.

With a population of just over 121,000, Allentown is much smaller and less urban than the first two on our list — but it remains one of the fastest-growing cities in Pennsylvania.

Average rent in Allentown ranges from $750 for a studio apartment up to $1,459 for a four-bedroom home, but those numbers climb as you expand your search to the metro area. There are 45,824 houses in the city, but just 3.4% of the properties are vacant and unrented — suggesting a need for additional housing. Demand for rentals is steady in Allentown, thanks to the city's 11 colleges.

Many Allentown homes are newer, too; homes built after World War II are less likely to need the extensive maintenance required by historic properties.

Located just 78 miles west of New York City, Allentown boasts rich local history, German-inspired cuisine, and a vibrant arts and culture community. Don’t forget to check out the Great Allentown Fair in September, which the city has hosted annually since 1852.

4. Reading

Located just 60 miles northwest of Philly, Reading is a small city in east-central Pennsylvania. Its central location between Philadelphia and the state’s capital, Harrisburg, means it's located on a major corridor throughout the state.

Reading has an impressive comeback story that speaks to its resilience. The city is recovering after taking heavy hits in the 1970s following the collapse of its coal and textile industries and a hammering it took from Hurricane Agnes in 1972.

Today, home values are up nearly 21% from 2021, with a median home value of $216,558. The cost of rent ranges from $536 for a studio apartment up to $1,094 for a four-bedroom home — less than other cities, but keep in mind that the cost to buy a property is also lower.

5. Erie

Erie is the smallest city on our list, but the fifth largest in Pennsylvania. You might know the Flagship City because of its history as a port on the shore of Lake Erie, or because of the victory the U.S. won over Great Britain here during the War of 1812.

You might not know it’s home to the International Institute of Erie — now a branch of the U.S. Committee for Refugees and Immigrants. Since 1919, this organization has helped save the lives of people displaced by war and violence in Bhutan, Eritrea, Somalia, the Democratic Republic of Congo, Syria, Iraq, Ukraine, and Russia.

The city offers beautiful views of Lake Erie and is sometimes called the Gem City for the way the light hits the water. Plus, it's centrally located, just 75 miles from both Buffalo and Cleveland.

One thing that attracts residents to Erie is its relatively affordable cost of living: nearly 29% below the national average. With a median home price of $161,662, the cost to buy property in Erie is somewhat lower than other Pennsylvania cities. Appreciation is on the rise, and home values have increased 16% in the past year alone.

Although rental rates are a bit lower in Erie — around $589 for a studio or $1,081 for a four-bedroom home — demand is high. Nearly 44% of Erie residents are renters, but just 4% of the city's homes and apartments are available for rent.

Next Steps for Your Rental Property Investment

From Philadelphia's historic charm to Allentown's sizable student housing market, Pennsylvania offers no shortage of rental property opportunities.

Whether you're a lifelong local or an out-of-state investor, it's always a good idea to start your search by speaking with a local real estate agent. A good agent can help you surface solid rental property opportunities and figure out where your investment is most likely to pay off. Our friends at Clever Real Estate have built a network of the best real estate agents in Pennsylvania and beyond. It's free to meet agents through Clever, with zero obligation!

Best of all, real estate investors who find an agent through Clever can easily take advantage of Pennsylvania's buyer rebate opportunities. You can receive up to 0.5% cash back at closing, which you can use to offset closing costs, get your new property ready for renters, or simply enjoy as extra money in your pocket.

🙌 The Easiest Way to Get Cash Back After Closing!
Did you know 41 states and Washington D.C. allow cash rebates for home buyers? Our friends at Clever can match you with trusted local real estate agents and help you get 0.5% cash back. You can spend your money any way you'd like — no questions asked!

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FAQs

What is the best place to buy rental property in Pennsylvania?

Philadelphia is the best place to buy rental property in Pennsylvania, followed by Pittsburgh and Allentown. Learn how population growth, job opportunities, and home values impact rental property investments.

Is rental property a good investment?

In general, rental property is considered a sound investment, but a rental property's success or failure depends on both local market conditions and business strategy. Learn how to spot good investment opportunities — and save time, energy, and money — before buying a rental property in Pennsylvania.

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Posted in Buying a House, Real Estate Investing