Investor · New York, NY · Member since 2017 · 20 posts · 8 votes
Hello all,
I've reached out to a few folks individually but wanted to start a thread on this as well. I'm an investor from the NYC area and recently took a trip out to Lehigh Valley, PA to get a feel for Allentown and Bethlehem (saved Easton for another trip). I really liked what I saw and from some basic research, the housing/tenant laws seem to favor the landlord (unlike NYC). I want to see if anyone else on here has invested into the Lehigh Valley (from NYC or anywhere else) whether into residential or commercial and get your take on your experience so far.
Looking forward to getting this conversation started.
Specialist · Lancaster, PA · Member since 2018 · 152 posts · 66 votes
6y
@Ray T. I am a commercial agent and investor in the lancaster, Pa area. I own property in that general vacinity, namely Reading, Pa. I also have clients from NYC that invest in the Lehigh Valley, and all have been very pleased with the results. In general rental rates are strong and property taxes tend to be very low. My only suggestion is that you research the transfer tax in those areas. Reading city for example holds the highest transfer tax in Pa, 5%. This may not seem like a big deal, but it is something that you will need to nail down and factor into your analysis. Best Wishes!
Real Estate Agent · Lehigh Valley · Member since 2020 · 11 posts · 7 votes
6y
I'm a PA licensed Realtor and investor in the Lehigh Valley, so I'm a little biased. Allentown and Bethlehem are both great places to invest, both for appreciation and LL friendliness. Easton is just a little tougher on landlords, but nothing close to the NY, NJ or Maryland. The outer municipalities are even better, like Fountain Hill.
I'm a PA licensed Realtor and investor in the Lehigh Valley, so I'm a little biased. Allentown and Bethlehem are both great places to invest, both for appreciation and LL friendliness. Easton is just a little tougher on landlords, but nothing close to the NY, NJ or Maryland. The outer municipalities are even better, like Fountain Hill.
Thanks John for responding. I had walked around 8th st and center city in Allentown and it did look a little rough but def no where as rough as some parts of NYC. I didn't get a chance to check out west and north Allentown which I heard are "nicer". I walked around south and west Bethlehem, both very appealing areas. Also spent some time in Hellertown. From some preliminary research, it looks like the avg appreciation rate has been around 2.5-2.8% annually, is that about right in your experience? I know it depends on asset type and area but I'm assuming that number is prob for SFHs.
Thanks for the tip on Fountain Hill. Will take a look.
Specialist · Lancaster, PA · Member since 2018 · 152 posts · 66 votes
6y
@Ray T. I am a commercial agent and investor in the lancaster, Pa area. I own property in that general vacinity, namely Reading, Pa. I also have clients from NYC that invest in the Lehigh Valley, and all have been very pleased with the results. In general rental rates are strong and property taxes tend to be very low. My only suggestion is that you research the transfer tax in those areas. Reading city for example holds the highest transfer tax in Pa, 5%. This may not seem like a big deal, but it is something that you will need to nail down and factor into your analysis. Best Wishes!
Investor · New York, NY · Member since 2017 · 20 posts · 8 votes
6y
Thanks, better than what I've been seeing. @John C Walton
Good call on checking the transfer tax. In the NYC there's something called the "mansion tax" which is applicable to just about most of the MFHs in the good areas. Just painful to think about. Your clients from NYC who invest in the LV area, are they mainly after SFHs or MFHs? How's your experience been in the Reading market? @Brett Peters
Specialist · Lancaster, PA · Member since 2018 · 152 posts · 66 votes
6y
@Ray T. Interesting, I didn't know about the mansion tax. That is definitely a motivator to seek a different market. My clients from NYC buy only MF properties. Our company conducts the entire purchase and closing process via email, as well as overnight any necessary physical documents needing signature. So, after they visit the property, they literally don't have to travel again unless they absolutely want to. Once they hire property management, they are completely hands off. The Reading market is a hate it or love it type of deal. Properties are very cheap, real estate taxes are insanely low. I did a 5 unit in the city and the property/school tax was only $1,800 per year! However, the inspectors are a huge pain in the neck. During one of my rehabs they made me replace a brand new window I installed because it was 2 inches short from code. They said if I left in the window I couldn't call it a bedroom! Also, city hall is very unprofessional. Everyone in building and codes knows me by my first name since I've appealed and won every violation they tried to impose on me.
Rental Property Investor · Phoenixville, PA · Member since 2015 · 119 posts · 61 votes
6y
@Ray T.
Hey Ray,
I’ve been investigating the LHV as an investment location for a few years- and dipped my toe in last August with a 3 unit near the NIZ on W. Turner. We ran into a bunch of permitting issues from the previous owner so if I can give some advice look for properties that already have a clear CO from the city if you can find it.
Tenants are typically blue collar and many of them are recently employed by the recent boom in logistics and warehousing that is going on in the area (link below to a video I saw on Twitter that actually calls out Eastern PA warehousing as a desirable investment).
There’s definitely a decent amount of investment going on and I’ve seen prices jump even in the past few years so competition is growing as people catch on.
I’ve been investigating the LHV as an investment location for a few years- and dipped my toe in last August with a 3 unit near the NIZ on W. Turner. We ran into a bunch of permitting issues from the previous owner so if I can give some advice look for properties that already have a clear CO from the city if you can find it.
Tenants are typically blue collar and many of them are recently employed by the recent boom in logistics and warehousing that is going on in the area (link below to a video I saw on Twitter that actually calls out Eastern PA warehousing as a desirable investment).
There’s definitely a decent amount of investment going on and I’ve seen prices jump even in the past few years so competition is growing as people catch on.
Just watched that interview with the Blackstone COO. Some good stuff there so I appreciate it. I did see a predominantly blue-collar population outside the Lehigh area when I went to visit a few weeks ago. The CO check is something my partners and I do as a pre-req on NYC properties and for sure will be something I'll be doing for anything outside of NYC. Are you still investing in the Phoenixville area? How do you manage the LHV investment from afar? (I'm assuming you're local to Phoenixville) I'm always hesitant to use a property manager especially on a smaller multi-fams. I just get the impression that it isn't really worth their time and they wont manage nearly as well as you would but I could be wrong and I'm sure there's a 1/1000 pms who treat the management professionally regardless of the number of units.
Personally I dislike the location of Allentown area. Overpriced. Try philly area or many other much better locations in PA.
Is Philly in general not overpriced? If a smaller city like Allentown is overpriced....I'd imagine Philly (a much bigger city) would also be overpriced, at least in the desirable areas.
@Ray T. Interesting, I didn't know about the mansion tax. That is definitely a motivator to seek a different market. My clients from NYC buy only MF properties. Our company conducts the entire purchase and closing process via email, as well as overnight any necessary physical documents needing signature. So, after they visit the property, they literally don't have to travel again unless they absolutely want to. Once they hire property management, they are completely hands off. The Reading market is a hate it or love it type of deal. Properties are very cheap, real estate taxes are insanely low. I did a 5 unit in the city and the property/school tax was only $1,800 per year! However, the inspectors are a huge pain in the neck. During one of my rehabs they made me replace a brand new window I installed because it was 2 inches short from code. They said if I left in the window I couldn't call it a bedroom! Also, city hall is very unprofessional. Everyone in building and codes knows me by my first name since I've appealed and won every violation they tried to impose on me.
Yikes, sorry to hear about that experience with the inspector...hopefully not all your experiences have been like that. Permitting can be pretty painful in NYC so I hear you. Are you predominantly focused only on the Reading market? What has the "avg" annual appreciation been in that market for non commercial MFHs?
Rental Property Investor · Valley cottage NY · Member since 2017 · 35 posts · 37 votes
6y
@Ray T. I am from Yonkers NY but just moved to rockland county and I invest in the Lehigh valley. I bought a 3 unit on park street in between 6th and 7th street in Allentown last year. I’m closing on a 2 unit in Bethlehem in August if all goes well. I am investing for the cash flow now and future appreciation is a plus. If you want to chat more PM me.
Rental Property Investor · Phoenixville, PA · Member since 2015 · 119 posts · 61 votes
6y
@Ray T.
I’m actually on an overseas assignment now in London, but my long term residence is in Phoenixville. The reason I made the move to invest outside of my town was because it would force me to treat it like a business and find a proper PM instead of dealing with handymen and call outs etc. I chose something that was still driveable and had growing population and employment.
The PM debate will happen forever because there are so many bad ones out there. I found one through BP, interviewed them, and worked out the first deal. They have all their title, management, and construction in house. They are worth their weight in gold.
They actually specialize in smaller multi family in the Lehigh Valley so their business is built around the model. Find a good one and they make life much easier!
@Christian Beyer London is amazing man..brixton, shoreditch...what a good time.. hope you're enjoying it. Thanks for sharing your story on having the right pm, def shed some positive light. Have you been remote the full lifecycle of the deal from closing (Aug '19) until now?
Rental Property Investor · Phoenixville, PA · Member since 2015 · 119 posts · 61 votes
6y
@Ray T.
Yes! Still haven’t seen the property.... finally broke the habit of needing to go see it. Even if the deal wasn’t smooth it was a proof of concept and I paid for my education.
We are closing on our second deal on Monday, a good value add 6 unit a few blocks away. Another one site unseen, just signed power of attorney over for the closing at a notary off of Baker St!
I’m moving back next summer so I’ll probably be doing more neighborhood and street by street analysis to maximize the deal potential but going to try to avoid visiting actual potential properties (treat it like a business).
Investor · New York, NY · Member since 2017 · 263 posts · 118 votes
6y
@Ray T. I posted some of this info on another thread. Allentown, Bethlehem have been sluggish in price terms (6% and 2% respectively above their 2009 'fair value' levels). Look great for cash flow and flips, though long term price appreciation definitely hasn't been strong. Just something to keep in mind!
Investor · Bethlehem, PA · Member since 2018 · 75 posts · 12 votes
6y
I have a 2 unit in Fountain Hill Pa. Which is next to south Bethlehem. I am currently owner occupying with a section 8 tenant who had been here 5 years. Never missed a payment in my one year of ownership.
I am moving out next month and renting the 2nd unit.
Contractor · Belleville, NJ · Member since 2020 · 90 posts · 60 votes
5y
I am from NJ and can't deal with the property taxes. It kills the upside potential. I have been to Easton 6 times in the past few months looking at several properties. I like the area and have read a lot about the area. I have made several offers on different properties but nothing has stuck yet. Its a very hot market. You definitely have to walk the streets in Easton, but I honestly don't think its as bad as some people say. Phillipsburg is also of interest to me.
Rental Property Investor · Redondo Beach, CA · Member since 2019 · 14 posts · 3 votes
5y
@Raymond Temprano you’re right about those NJ property taxes. I am also interested in Easton, planning to buy in 2021.
The weird thing about Easton is that they sell Twin homes, which is just one half of the building. I would like to be able to purchase both halves at once if the opportunity presents itself.
Hello, I'm new to real estate but was born and raised in Easton (west ward). Feel free to ask any questions you may have about the area. I'm looking to do my first 'house hack' here in 2021.