I've been looking at homes in the Poconos/East Stroudsburg area of Pennsylvania. The properties there seem to have taken a huge dive and not recovered well. I am look to capitolize on the drop and buy my first home for my immediate family. Not particularly considering this home for great cash flow or anything directly investment wise, but the deals seem too good. I am still an hour from NYC and family, better property tax (somewhat), and better property size and neighborhood compared to where Im from. What should I look for or do to assess these properties? Any resources on finding out why the market has stayed low and may continue to decrease in the area? If its just because the area is a vacation home area and far from a major city then great but I feel I may be missing something. Anyone with insight to the area or in general I would appreciate it!
I am generally most hesitant with investing in rural areas because I think its very important to understand who your target market is when it comes to your tenants. What's keeping them in the area? What industry is there that supplies jobs and how secure is that industry? It's important to understand what drives the economy and what will keep it on pace long term if you're a buy and hold investor. If there's nothing long term to keep it alive then don't invest there.
As Darren said, try to find out the why, if it seems to just be a lull, may be a perfect buying opportunity. Have family in arizona, they hunkered down during the crash, I suggested they double down and ride it back up...they just rode it out and probably are wishing they had taken my suggestion. I saw it on a much smaller scale here and went from 1 to 3 rentals, wish I had bought more but getting there just fine...
I spent the weekend there with my family. Took the aportunity to look at some properties. It's true prices had dropped dramatically make me think to purchase a property and rent it. Allentown has a house for sale just about every corner. Easton maybe better place to invest.
People I would market to would be the people who work there. Hotels, restaurant , parks, local people. They need a place to live also.
I have two properties 25 min. north of E. Stroudsburg in Pike County. I'm a buy and hold guy. The county and school taxes are 3.5 times higher in E. Stroudsburg than in the Wallenpaupack Area School District. A much better district accouding to average GPA and other numbers too.
I recenty looked at two homes in E. Stroudsburg with an ARV of about 78,000-82,000 and their annual county and school tax bill was $6,550. That's way too high for this part of PA.
This area sure did change since 9/11 when everyone decided to commute to NYC rather than live there. I think it's about 90 miles. Both RE and taxes skyrocketed. After the crash taxes stayed the same while values dropped and have not recovered at the same rate as some other areas.
Thanks for the advise guys. Now I'll explain a bit more. I'm living in a high property tax bad neighborhood of Paterson, NJ. The goal is to move my family (My aunt and two cousins who I grew up with) out of the area. This first home is one I would like to keep and once paid off we can save more for me to use for investment, ira purposes. As far as the rural factor the reason Im interested is because my aunt works for PNC bank corporate division and there is plenty of positions for here with them close by to transfer to. My cousin and I are both independent claims adjusters who work away from home on site projects throughout the country so not worried about the work in the area. Thats sort of the mindset behind the area. Again, is this better option with this additional information? @Darren Sager @Darron Stewart
@Gregory Zanolini hey Gregory Im interested in the area as a whole and will look into the areas you mentioned. Yeah property tax in jersey is just as bad if not worse. Its $10k for me in Paterson and the homes prices are still high for not much.
In case I was unclear, try to find out why the drop. If because of the area becoming more undesirable, then shy away, but if a lot of areas doing the same thing, so another dip, then may be a good buy. Even if I live or rent a house, it is an invesent and I want it to appreciate and maintain resellability!
Gregory hit the nail on the head as to the real reason behind the price adjustments......right after 9/11 anything within a 3hour drive of NYC went through the roof...especially rural tracts. This was the case with land we held in upstate NY....values went through the roof and have now crashed. Taxes in those areas remain high and local governments are reluctant to scale them back. The poconos were a favorite destination spot for many of us growing up but those family traditions aren't as strong anymore and people are more likely to find "deals" on the internet as opposed to returning to the same spots year after year. Add that in with a poor economy and you have prices where they are....it's all supply and demand.
I looked at some properties in hudson falls new york and fort edward recently that are the same price today as they were 20 years ago. You can still make money on them as welfare rentals but they will never appreciate. If you are going to live there and the payment makes sense....make yourself a deal. Patterson has always been rough. You may not make any great return on the property when & if you sell it but there is something to be said about a better quality of life. Talk with several agent/brokers in the area and get their opinions. Take a look at the 203 loan and find something that needs repairs for a better deal....the 203 will allow you to finance the repairs with the loan and you'll get a better deal on something needing some work. LUCK!
"I recently looked at two homes in E. Stroudsburg with an ARV of about 78,000-82,000 and their annual county and school tax bill was $6,550. That's way too high for this part of PA."
At 8-9% property tax! the schools better have their graduates ready for Harvard or MIT.
As far as big price drops on a particular property, it's usually because of initially being overpriced, or an increase in seller motivation.
I guess everyone has an opinion on why prices have stayed low. I am active in the area and I have found that the buy and hold market has somewhat affected prices as far as comps are concerned. The house values are very attractive for those who live in the metro area of NY/NJ and can commute. Large numbers of residents still commute to NYC as the salaries are more attractive than the local employment market. You can get real value at this time in the area; you can appeal the real estate taxes if you acquire your home for less than the appraised value. There are several services that provide the appeal procedure. The real estate market in the Poconos is attractive as you can find homes in rural areas, built up areas, recreational areas, commuter areas and residential areas at realistic prices. Good place to live. Recognize you have a lot of options at your disposal and zero in on what you are looking for and I'm sure it will be available for you and your family.
Thank you everyone. This information has been very valuable. It will help in our decision and how we can proceed forward researching the options in the area. I have been interested in a 203 loan for a fixer upper.
Great responses above, I could not agree more with @Jon Klaus explanation on price drops. To add to what @Darren Sager stated, another potential issue with rural areas is finding enough comps or finding conforming properties. While this does not affect you as much in a buy and hold, it certainly will when it is time to sell, trade up, or refi.
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