Eastern PA Market - New Investor
Member since 2024 · 3 posts · 5 votes
Eastern PA Market - New Investor
3 Replies
- 1yAlan AsriantsBusiness MemberReal Estate Agent · Philadelphia, PA · Member since 2019 · 1k+ posts · 1k+ votes
Hey Amish, I grew up not too far from you in NE Phila and lived in Upper dublin for a few years. Suburban Philly market is a great market for rentals right now as the demand for rentals is still high but supply is fairly low. The issue in our market - especially in Suburbs of Philly is that some of the last multi family construction at larger scale occurred in the Mid 80s. That means, whatever is out there is out there. Local zoning laws have made it nearly impossible for mulit family construction and on top of that there is no viable land at a decent price for builders to build these types of units - if there were, they would likely keep all of it. So for many builders new construction stick townhomes is the most affordable, easiest approval odds, and highest return possible.
That being said, getting into one of these MF properties in the area is still a great idea as the scarcity of them will continue to make them valuable. Once owned, the rental market is very favorable to landlords right now.
If you were a new investor, and not even a homeowner, I would recommend house, hacking, and buying one of these duplex is living in one unit and renting out the other. Down payment and initial investment wise it'll be easier for you to get in and you'll have more favorable loan terms.
Also, I would really only focus my attention on built as multifamily and not single-family conversions. Single-family conversions tend to be older properties built in the early 1900s that were very likely poorly converted and as a result if they have not been fully gutted recently, they will need that large scale renovation soon which can cost you over $200,000 to complete, depending on the scale of the project. He built as multi family cosmetic rehab will be a lot cheaper. The newer it is the likelihood that electric and plumbing needing to be fully replaced becomes lower.
The Allentown market has been growing but again if you're not familiar with the area, I would stick to what you know best - that is your nieghborhood and backyard.
I have some investments in Phila, bucks, and montco. If you ever want to chat about RE investing in the area and talk about the market, I am happy to do so. Reach out anytime
Alan Asriants - New Century Real Estate 591 Reviews - 1ySimon W.Business MemberReal Estate Consultant · Lehigh Valley PA & New York City · Member since 2013 · 1k+ posts · 673 votes
Quote from @Amish J Patel:
Hello everyone,
I am a new investor looking for my first property (ideally multi-family, 2-4 units) in the Eastern PA region. Open to the greater Philadelphia region extending to the Lehigh Valley with a budget up to $500-600K.
As a new investor, would prefer something in the Class B range, ideally closer to turn-key but open to doing some minor rehab if needed.
I grew up in Montgomery County PA so am familiar with the areas. Curious on people's thoughts of the long term potential of the Lehigh Valley, and any one area in particular such as Allentown vs Bethlehem vs Emmaus.
Looking forward to any suggestion and advice going forward as I try to navigate this journey!
-Amish PatelIf you are truly interested in ABE area, I think we should connect.
Turn-Key won't give you much value since the selling price already considered the increase so you would be paying at the ARV.
- Real Estate Agent · Allentown, PA · Member since 2016 · 197 posts · 181 votes1y
Hello @Amish J Patel! I have been working the Lehigh Valley market full time since 2017.
Regarding the class B property and closer to turnkey - over the years my experience has confirmed that this is a great place for most investors to start. When I launched my business, I was looking for "value add" opportunities. I started off by buying seven low end units that had amazing projections. As I started working on them, at one point I had five units vacant and was paying bills every month for renovations. These low end properties turned out to be filled with headaches and costly work. Of the clients I've worked with who bought one property and decided real estate investing was not for them, almost all of them followed this pattern.My recommendation for new investors: Look for something that does not require extensive renovations, and does not have tenants locked in at below-market rents for an extended time. This will allow you to have it turning a profit for you quickly. It will give a consistent moderate return, and get you looking for the next purchase on a much shorter timeframe.
Alan brings up a good point on the diligence required for single-family conversions. We have had consistently good management experiences with our purpose built multifamily properties. The 1900s construction SFHs can be hit or miss, and it is important to find one that has a good structure and has been upgraded to a modern plumbing, electrical, and roofing system.
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