Investing In New Jersey or Pennsylvania

23 Replies

Hey guys! I am new to real estate investing and am looking for my first property. I want to start out with a multifamily home. I currently live in Northern New Jersey and am deciding whether to invest here or out of state (possibly in the Harrisburg PA area). I see on the forums and hear on the podcasts that most investors recommend investing in your area at least for the first property. However, I am very worried about the tenant friendly laws that New Jersey has when it comes to eviction. Also I would be able to get a lot more bang for my buck in PA. My budget is about 300K. Does anyone have any advice on this topic? Thank you!

There are tons of us in Northern NJ who have repositioned to PA this year just because of inventory, taxes, and availability. We've closed 8 in Philly in our investor group and have 6 pending and a bunch more looking. We all still look in NJ, but PA, as a whole, has better metrics and it's easily driveable.

Hi @Sarah Lindberg , welcome to the wonderful world of real estate investing. How long have you lurked around the forums before finally posting? :) Regarding tenants, have you considered a property manager? It is an expense, but I consider it well worth the money. I don't have to deal with tenants at all. If you go that route I would make sure you interview the PM in order to see how they handled previous evictions. I'm paying roughly 7% of my rental income to my PM. There's a range, of course.

@Sarah Lindberg NJ is great place to invest.   If open to being creative a bit you can really win big with equity and finding properties that cash flow.  Regarding evictions and landlord laws I am over 6 years in (as a landlord)  without a single eviction or missed payment from my tenants, the laws may be a little wacky but with the correct system and processes most of the laws that give NJ a bad name can be avoided.                

I live in NJ and own some rentals there, not a place I would recommend because of the landlord/tenant rules.  I own property in multiple states. We also have a turnkey business and own rentals in the Pittsburgh market.  Pittsburgh has good prices (Covid sped up the appreciation), is a good rental location and  has a young population looking to live there.

I have many investor friend doing flips in the Philadelphia market and doing buy and holds in the Leigh market. 

With all that said, you need to understand the market you are going into.  Build a team you can trust that understands the market.  Long distance housing for fix and flips or rentals can be a big headache without the proper team in place, it can also be the best decision with the right team.

Welcome @Sarah Lindberg . I am a Realtor in Harrisburg, PA. Just checking the MLS I see eight 3-4 unit buildings for sale within 5 miles of Harrisburg below 300k. If you'd ever like to look at property feel free to reach out!

Hi @Sarah Lindberg , I am in a similar situation as you. Personally, I believe there are deals to be found here in NJ, but I am also looking at house-hacking and buying distressed properties/adding value to properties. Without access to the full MLS, I am finding it may be difficult to find good deals at this time, but no doubt there are deals going on in my investor group that are bringing positive cash flow/profit from flips. Please keep posting as you go through your process, it will be beneficial for us fellow New Jerseyians.

@Ishaq Shah most of the deals are going down in Philly, but we have some outside the area as well. Sharon Hill, Pottstown, and looking in other areas as well. We have a weekly Philly area (PA) REI Zoom, it's just on hiatus for August. Usually get 20-40 investors on those calls.

@Sarah Lindberg The PA market at a glance is easier to make the numbers work versus the NJ market, namely due to property taxes. As a Jersey boy turned PA wholesaler and investor, I favor this market for a reason. Philly, specifically, is a great market for the detailed oriented to compete in since the property values change on a block by block basis. This is great if you know what you are looking at but terrible if you are uninformed. As a newbie, I always offer the same advice- do not get hung up on the "this is what you should do" rules of thumb.  The classic "rules" like "invest in your own area" or the "1% rule" or "70% rule" are really just catchy pieces of advice but not universal nor appropriate depending on your goals. The question really stands- what do you define as the "bang for your buck?" Invest in your area if your area matches your investing goals. If it is cashflow, the low property taxes in inner city Philly looks amazing on paper for your cashflow, but without the proper property management systems, that can result in chaos. If your goal is stability, higher property taxes can often mean more desirable school districts which attracts an easier tenant pool. If your goal is appreciation, the key identifiers you want to look into is the absorption rate of a given area (ratio of actives versus closed properties), if the area has seen a higher appreciation rate (look for numbers significantly over the national average of inflation). There are a TON of helpful people on this platform, most of which are right in their advice if your goals are similar to theirs. The best piece of advise I give new investors is to figure out what you want to achieve within the next year and start backwards planning on what areas and metrics fit those goals.

@Sarah Lindberg I do a lot of investing in Pennsylvania.  I have bought and sold over 1,000 properties for my own inventory, did Bigger Pockets Podcast #82 and wrote a 342 book on real estate.  Much of our investments are in the fastest growing county Cumberland County (of 67) in PA.  The number 1 employer is the state government and the second largest is the Federal government, plus there are transportation companies, Amazon and Chewy warehouses, hospitals and education employers.  And don't forget Hershey Park. I like this area very much and have bought property here every year for the last 20 years+

The state income tax is a flat 3.07%, lower than many other states.  The real estate taxes are around the middle with states higher and states lower.  The Pa Sales tax is 6% for most counties but exempts food, clothles, shoes and some other items.  We see people from other states buying here because of cheaper prices and cheaper taxes. 

Thank you everyone for your advice! Love how willing to help this community is. You’ve helped me clear up some of my worries and given me a lot of new areas to look into. Got to do a deep dive into market research.

If you live in north jersey the drive to Philly is going to be a bit tough.  I invest in Philly and drive about an hour when I go, but I go far less than when I was a new investor.  Therefore, Harrisburg as a location because it is somewhat close, I think for you, is no different then investing in south Carolina or the Midwest. Maybe look into Easton or Stroudsburg. Driving more than an hour is going to get really old really quick. If you have $300k in cash, maybe the best bet is to find a good operator and invest with them as a mortgaged note or find someone to LP with and get a lot of the benefits without doing the work. 

@Sarah Lindberg

Central PA sucks. Stay outta here!! ... Just kidding. It is a very hot market where rentals are up, and houses sell FAST. I just missed out on a great deal that sold in a little over a week. I've seen a lot of REOs sell every quicker. I don't need anymore competitors lol... But I won't lie. It is hot and quickly expanding.

@Sarah Lindberg we have a SFR in the Poconos and a 3 unit in Lehigh Valley. You will find that these markets are pretty hot right now but it is still possible to find deals. Rentals in Lehigh Valley are cash flowing great. I would definitely choose PA over NJ. One other reply mentioned looking at Stroudsburg, and I agree if you want proximity to northern NJ. Stroudsburg, East Stroudsburg, Tannersville, Bartonsville could be some good areas to look. Harrisburg area is great too but it is much farther than you may want.

Originally posted by @Jonathan Greene :

@Ishaq Shah most of the deals are going down in Philly, but we have some outside the area as well. Sharon Hill, Pottstown, and looking in other areas as well. We have a weekly Philly area (PA) REI Zoom, it's just on hiatus for August. Usually get 20-40 investors on those calls.

Awesome! Would love to join the zoom meetings whenever they're back up and running. Is there a link you have where I can signup?

@Steven D Martin

We just sold two properties yesterday one in Lemoyne and one in Camp Hill.  One was on market 2 days the other 11 days. Its a hot market, great for sellers, and there are still deals for buyers.

I've worked with a lot of investors who want to push their money as far away from New Jersey as possible. The rental property market in NJ seems like a real stinker given the taxation and landlord tenant policies over there.