Locations to best invest in PA

14 Replies

I'm looking to invest in small multi-families in Pennsylvania, ideally in the $80- 120k purchase price range.If possible !

I'm live in Old bridge, NJ and due to high property taxes in New Jersey, PA seems like the best state to invest in(Tavel time ) I'm trying to identify rental markets and research, while trying to establish a team.

I've done some research and came up with a few areas in PA include Allentown, Lehigh Valley, Bethlehem, Scranton, reading and Kutztown

I'm hopping to cash flow between $100-200 per unit is possible (with property management), and can reasonably expect some appreciation in the next 10-20 years (2-4% per year would be ideal, though achieving positive cashflow on my first purchase is my #1 focus). Also important is being able to find a reliable property manager in the area.

I'd love to hear from local investors – am I looking at the right areas? Where else should I consider? Is there anything I should consider before investing in PA? Are single family’s an option ?

everyone from NY/NJ has been coming into the Lehigh Valley and driving up prices. I have seen so many people make horrible decisions on some purchases. Just make sure you make good assumptions. Do not listen to most brokers who don't tell you the whole picture. 

At most MLS prices, you will not even cashflow $100-150/door with a 20-25% down commercial loan. These buildings are VERY old and require a lot of maintenance/capex.

You can find great deals in all of the listed areas. It more depends on what you care about. Some people don't want to buy in the high crime areas, Some people want better school districts; etc etc.

@Syed H. is spot on. Everyone in NYC / NJ wants to come over here to invest, and there is a ton of uneducated, out of state money that is driving prices up rapidly here. It's hard to find a good deal these days and requires hustling. 

From my perspective, all of those aside from Scranton are the same market. One team (agent, property manager, contractor, etc.) can take care of anything in Lehigh or Northampton counties. Sell SFHs regularly go in the $80-120k range, and I just closed on a duplex yesterday in that price range, so yes that opportunity is there for you. The key thing is choosing the right people, more than the market. When I first got started, I bought some houses in great areas that should have been home-run investments. Unfortunately, because I didn't have a good contractor or property manager, I ended up losing money for the first two years before turning them into a success. Focus on building a solid team... and good luck!

I am also becoming quite disheartened in the idea of BRRRRing some PA properties. Originally I thought Philadelphia should have some up and coming areas with deals under 110k, but anything even SHELLS of homes are over 150k in many areas, even some not so great/difficult to rent ones (not that I am looking for shells). As someone looking into real estate investing (currently trying to find an affordable multifamily to house hack), it seems like its going to be difficult finding funding as most properties that aren't in complete disrepair are close to 200k, and dealing with the properties that do even fall below 110k seem like giant investments in terms of how much work, structural and big ticket fixes, where losing money on a deal seems much more possible than making money. 

I am thinking about multifamilies in other areas semi-close to Philly, but I will have to study the markets for sure. If anyone has suggestions for such areas, please feel free to advise!

Agree with Joe Chirdon - Harrisburg, New Cumberland, Lemoyne and Enola are affordable. Also, if searching for towns closer to you, I hear that Bethlehem, Allentown and Scranton are bouncing back after long declines but are still affordable.

@Kevin Salamea

Kind of a boring answer that I give all the time, but you can loosely sort Pennsylvania markets into the following categories: 

     - Philly/Pittsburgh  

     - Allentown/Lehigh Valley Area

     - Harrisburg, Scranton/Wilkes-Barre, Lancaster, York/Hanover, and Reading

     - Everything else

Not surprisingly, they match the metropolitan statistical areas in Pennsylvania (link). Not saying any of those markets are better than the other. But they tend to behave the same in each category. And they have stayed that way for a long time (although Allentown area kind of became its own category due to rapid growth). 

As a general rule, the higher categories have more chance to appreciate; the lower categories have more chance to cash flow. These are just generalities --- each market has its own unique characteristics. But it could help you narrow down where to look in PA.

Disclaimer: While I’m an attorney licensed to practice in PA, I’m not your attorney. What I wrote above does not create an attorney/client relationship between us. I wrote the above for informational purposes. Do not rely on it for legal advice. Always consult with your attorney before you rely on the above information.

@Kevin Salamea

I have friends who invest in Scranton and most of them tell me to avoid it. I actually have one friend selling a property she has there right now because the tenants never pay on time and one of the renters boyfriends got in trouble with the law and got a door busted in by the authorities.

Just keep in mind if you rent in Scranton you’ll have to screen tennants thoroughly and put good systems in place to get your rent on time. Most of the buildings are pretty old too so keep in mind there may be a lot that needs to be replaced in the first few years.

Hope that helps! Can’t say much about the other areas bc I’m still new to this too.

There are alot of great places to invest in Luzerne county as well as Lackawanna county. The rental market is great. Several Property Management companies are around the area with teams available from management to repairs. You just need to work with someone that knows these areas to purchase a property in the right location.  

Hey @Kevin Salamea  

I've been investing in the eastern side of PA (greater Philly and Lehigh Valley) for a few years and I've lived in central/western PA about 10 years ago. In my opinion what you are looking for is not only a difficult find but can be a risky investment. The good markets with population growth and stable jobs have very few (if any) multi-family units in that price range and if they are listed in that range they will likely require a lot of work to become rent ready, or even habitable. You can find multi family for 100K in rural areas but the quality of tenant and hassle of locale will likely not make the investment worthwhile. The quality of tenant for single family in that price range may increase, but cash flow will suffer.

Instead- I would up your price range to the 150K-200K range and you will find that there are still some deals out there in the major markets that don't require heavy duty marketing or a PM who has insider knowledge. These deals can be found with a little hustle and a with a good team (like you mentioned) can be done from a distance. In fact, you may want to begin vetting property management companies in the area where you are looking and then ask them what types of properties they like to manage in your price range. This can help to ensure that when you do close on a deal that you have everyone's buy in and the project has a higher likelihood of success. 

Best of luck!

@Kelsey Herbst I've looked at Lancaster county and the surrounding 'towns'. For example, Lebanon has comparable rents to places like Lititz but with fractions of home costs. It's a good way to make a start with less risk or at least it is for me. 

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