Looking at Multi Family properties in Lehigh Valley area as it is in close proximity to me and I cant seem to find the returns I am looking for in Philadelphia area any more. Specifically we like the area surrounding Lehigh University in South Bethlehem which seems attractive from an investment standpoint.
Any recommendations on local brokers with experience investing in the area? Also are there any local town ordinances and/or zoning rules about renting to students? There does seem to be a decent job base in this area but I have experience renting to students so I think a property that potentially rents to Lehigh University students would be ideal for us if possible.
We are looking into selling one of our properties and potentially do a 1031 exchange. What prices and returns should we be aiming for? Which areas to target or avoid? Without getting too into the weeds with numbers, in general I am seeing multi families in decent shape in the 100-150k range with estimated rents seeming to be 800-850 per unit for 2 or 3 unit properties.
Would love to connect with investors or professionals with knowledge of this area to discuss!
Thanks for the shout out @Dave Lin !
Overall, Lehigh University is a hot commodity out there. Tons of great opportunities on the south side of Bethlehem, but just like after a recent super bowl win, everyone jumps on the bandwagon. Things are getting pretty hot there and it's taking a little more hustle to get deals. The numbers change drastically when you compare a market rental to a student housing property. Student housing is renting for $500-700 per bedroom per month, depending on proximity to the university, if you have to walk up the hill, and overall renovation level. Overall the ROI depends on how much you get as a value add opportunity. Most good student housing deals are getting at least 3-4% cash on cash more than their market counterparts.
@Chris Miller Have to agree with David Ribardo. It's a very hot market and you should try to study it well before jumping in...very easy to get overpriced houses which won't perform...I own 2 houses which I plan to rent to students as well...my biggest difficulty was to find competent and reasonably priced contractors...found many which are one or the other but not both...and didn't manage to complete renovation on time as my contractor (which came highly recommended) decided to stop showing up.
Few things to keep in mind:
1. Bethlehem has a Regulated Rental ordinance that prohibits you to rent for more than 5 unrelated adults in one dwelling unit. (there are very few multi-family close to campus). You also have to get the house inspected once a year.
2. Lehigh is expanding its student body but also partnered with a developer to build more student housing. They just completed Southside Commons which is 400+ rooms for Jrs & Srs and practically eliminating the potential for about 80-90 SFH...I think they are now starting phase 2 but couldn't find much info. Seem to me they'll capture about 2/3 of the expansion.
3. The students seem to be very picky and proximity to campus is crucial. You won't find practically any student housing beyond a few blocks from campus. Different from other cities where they might be more spread around.
Feel free to DM me if you have any other questions.
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