Thoughts on investing in Allentown, Bethlehem and Easton, PA in this market?
I’m trying to break into the market with my first deal but this area is really competitive right now (as is the whole housing market), especially for a Rookie. So, stick it out or are there less competitive surrounding areas that are still good areas to invest in?
We have been very active in the Lehigh Valley and have obtained 8 multi-unit properties over the past 6-7 mos. We go in with zero contingencies and often times had to pay over asking with an escalator clause. In each case the rents we obtained have exceeded our estimates that we built into our forecasts.
Thoughts on investing in Allentown, Bethlehem and Easton, PA in this market?
I’m trying to break into the market with my first deal but this area is really competitive right now (as is the whole housing market), especially for a Rookie. So, stick it out or are there less competitive surrounding areas that are still good areas to invest in?
I’m here, and haven’t found something that interests me since my last purchase in Aug 2019. Prices are to high.
We have been very active in the Lehigh Valley and have obtained 8 multi-unit properties over the past 6-7 mos. We go in with zero contingencies and often times had to pay over asking with an escalator clause. In each case the rents we obtained have exceeded our estimates that we built into our forecasts.
Hello Mary, It is a good market but yes very competitive in most cases. I would suggest joining the Lehigh Valley Investors meetup to network. This is where I met a few great people who helped me get my first deal here last year. Everyone is super helpful and I highly recommend surrounding yourself with people who do the thing you want to do. It has worked for me so far and of course you'll need to work in order for the goal to happen. Deals on the MLS are highly competitive and go for above asking, all cash and many will waive all inspections, which I don't recommend when starting out. However, there are wholesalers in the group who find deals off the MLS which can work for you. You can also use a site like Prop Stream to get a list of existing home owners to call directly to see if they are interested in selling. DM me if you'd like to connect & good luck!
Yes, the Lehigh Valley area is very competitive but which market isn't? My philosophy is if you have the cash and reserves to buy a property: Do it. Prices are going to keep increasing and if you are cash flowing each month, you will be fine.
Now, one strategy I have been looking into specifically in that area is doing Medium Term Rentals (MTR) for Travel Nurses. Lehigh Valley has A LOT of local, large hospitals and MTR can be a "new" and "unique" way to find deals, as looking for actual cash flowing properties is hard to find. The best strategy would be purchase a Small Multifamily, live in one unit (to take advantage of an FHA Loan), and rent out the others to Traveling Nurses.
@Gary York every offer I made has been over asking (sometimes $20k over) with an escalation clause and inspection only for informational purposes and we have STILL been out bid each time. Are you paying with cash or hard money lender? Curious as to what your strategy is for getting that many properties during this period when I haven’t been able to secure one deal ha (reminder I am a Rookie and this would be my first deal). But congrats on those properties! That’s awesome. You’re clearly killing it.
What I have seen is that most likely investors are not building in the proper rent estimates into their forecasts. Rents in the LV have risen significantly over the past 24 months, thereby making these properties much more viable even given the lofty increase in prices.
What I have seen is that most likely investors are not building in the proper rent estimates into their forecasts. Rents in the LV have risen significantly over the past 24 months, thereby making these properties much more viable even given the lofty increase in prices.
Yes, but to a point. I bought a 1/2 double off market in August 2019 in Wilson Boro for $60k. I’ve had it rented since May 2020. I just raised to $1500. (Crazy because I’m all in at $75k and comps are $180k), but if you follow the 1% rule, you’d pay $150k for that. No way would I pay that personally. Last summer I had just started a rehab for one of my clients. 1/2 double in SS Easton. 3/1. I gutted the kitchen and bathroom, started new drywall in LR/Dr, I did replace the windows and heating system. The rest of the house was disgusting. He decided to stop the rehab and just sell. $99,000 it sold for as a complete POS needing everything but windows, furnace, and roof. Drywall, doors, flooring, kitchen, bathroom, and all else. I can’t believe someone gave him $99k. He offered it to me first, I told him I’d give him $60k. Some of the prices people are paying is just unreal.
Matt, I agree that people are overpaying. In my area, I made an offer on a cosmetic fixer for full asking and 27 offers were made 8 over asking. From $250k my full price offer, it closed at $345k. The furnace made noise and the water was off so who knows about condition.
To me it's like 2007 all over again without all of the for sale signs around. As soon as a house hits the mls, it's under contract in a day or maybe two.
I still contend that if you can cash flow and still benefit from paying off principal each month, which is not an issue even at these elevated numbers, then move forward aggressively. The Lehigh Valley has tons of logistics centers going up, and rents are certainly at levels that we have never seen before. Even with stagnant rates and duplexes in the $300k range, you can easily achieve $1,600+ for a 2 BR, giving you well over the 1% benchmark.
Matt, I agree that people are overpaying. In my area, I made an offer on a cosmetic fixer for full asking and 27 offers were made 8 over asking. From $250k my full price offer, it closed at $345k. The furnace made noise and the water was off so who knows about condition.
I still contend that if you can cash flow and still benefit from paying off principal each month, which is not an issue even at these elevated numbers, then move forward aggressively. The Lehigh Valley has tons of logistics centers going up, and rents are certainly at levels that we have never seen before. Even with stagnant rates and duplexes in the $300k range, you can easily achieve $1,600+ for a 2 BR, giving you well over the 1% benchmark.
Agreed, but now that $300k duplex will cost you $60-75k just as a DP. That alone is more than I paid for a duplex in Bangor. As much as I don’t want to sit around not buying, I have to keep pushing and along and having these off market deals fall into my lap. Even stuff I see from wholesalers is way overpriced. Got an email today from a guy with a “deal” in Nazareth/Bushkill Twp.. his price was $126,000 meanwhile the house is on the mls for $75,000
I still contend that if you can cash flow and still benefit from paying off principal each month, which is not an issue even at these elevated numbers, then move forward aggressively. The Lehigh Valley has tons of logistics centers going up, and rents are certainly at levels that we have never seen before. Even with stagnant rates and duplexes in the $300k range, you can easily achieve $1,600+ for a 2 BR, giving you well over the 1% benchmark.
Agreed wholeheartedly. I have talked to the original poster before too, and it is just a tough market sometimes to get your offer accepted, not for lack of looking at properties that made sense. Put in enough offers at numbers that make sense for you and you'll eventually get one. As others have mentioned, off-market may be the best way to go, so it might just be targeting an area and type of property you are looking for and start a text/mail campaign.
@Frank Del Corso thanks for the advice. I actually did just go to the Lehigh Valley Investor Club meetup for the first time last week! Hoping to be able to go to the next meeting and hopefully something comes from networking there.
@Mary Ciccarelli I have an active investment property in South Side Bethlehem that I picked up last year. Family is mid-closing on another rental in Allentown at this moment. There are still some good cash flowing properties in the LV if you look hard enough and are willing to put in some sweat equity.
The rents have risen enough that the Lehigh Valley can still make sense unless your expectations are unrealistic. I just try to cash flow $300-400 per door on SFH in good school districts. It was my criteria 4 years ago and is still my criteria today, buying off the MLS. Sometimes that means BRRRR and sometimes it's just buying move-in ready and only painting. I don't really care as long as the cash flow is there and it is a house/neighborhood I would be willing to live in myself. The numbers are solid but not super sexy like they would have been downtown 4 years ago... but just let appreciation and debt paydown do the rest. Like someone else said, the rents end up being higher than expected by the time they're ready to list. I do whatever renovations are needed to get good tenants, then screen aggressively. I almost never hear from my tenants, so I like to think of my rentals as more of a lifestyle business...lol. I would say the #1 trick to snagging your first deal is to use an agent with a good reputation locally. And one that can help you take a thorough enough look at the property that you feel comfortable dropping the inspections. The other agents want to work with agents they trust, so when there's 10 offers who your agent is can be critical to you ending up in the final batch. Anyway, things are slowing down a little from what I've been seeing as rates go up, and a lot of people have given up, so now might be your chance. Happy to chat further privately if you want
The rents have risen enough that the Lehigh Valley can still make sense unless your expectations are unrealistic. I just try to cash flow $300-400 per door on SFH in good school districts. It was my criteria 4 years ago and is still my criteria today, buying off the MLS. Sometimes that means BRRRR and sometimes it's just buying move-in ready and only painting. I don't really care as long as the cash flow is there and it is a house/neighborhood I would be willing to live in myself. The numbers are solid but not super sexy like they would have been downtown 4 years ago... but just let appreciation and debt paydown do the rest. Like someone else said, the rents end up being higher than expected by the time they're ready to list. I do whatever renovations are needed to get good tenants, then screen aggressively. I almost never hear from my tenants, so I like to think of my rentals as more of a lifestyle business...lol. I would say the #1 trick to snagging your first deal is to use an agent with a good reputation locally. And one that can help you take a thorough enough look at the property that you feel comfortable dropping the inspections. The other agents want to work with agents they trust, so when there's 10 offers who your agent is can be critical to you ending up in the final batch. Anyway, things are slowing down a little from what I've been seeing as rates go up, and a lot of people have given up, so now might be your chance. Happy to chat further privately if you want
HI Kathleen, In working with a good agent in this market, do you stick with one agent or did you sign an Exclusive Buyer Agency agreement? In my experience, some markets these are very common while other markets, no agent use them.
I stick with one agent. They're with Remax and have been doing it a long time. For some deals I swear our offer gets picked because of the relationships they have with the other agents. I have never been asked to sign an exclusive buyer agency agreement
Yes, I'm trying to determine if worthwhile signing one. I'm trying to reconcile the benefits. I understand the agent is trying to protect themselves from wasting time. Though, I feel like a rapport needs to be established while offering on a few properties before being locked into a contract. I'm just asking around to see what's common...Thank You.
If you willing to come west a bit on your investments Schuylkill County still has some deals to be found.
We just fired up a REI group that's meeting once a month and all are welcome to join. Our FB group is Schuylkill County Real Estate Investors Group and jsut topped 500 members in less than 2 months. Id be happy to talk to anyone interested in investing or possible partnering in the area on what there is to offer.
I am a realtor/investor in Schuylkill County myself and open to all kind of investment platforms.