Wondering which areas in the Leigh Valley people are interested in and have had success with - I've been looking at Bethlehem, PA which seems like a pretty good option with the surrounding amenities and lower prices. Allentown, PA seems like it's already a pretty developed, hot market. Anyone have any experience/wisdom to share with rentals in Bethlehem?
Rental Property Investor · Phoenixville, PA · Member since 2015 · 119 posts · 61 votes
7y
@Kristin Caras
Hey Kristin- I just started investing in the Lehigh Valley after a few years investing in suburban Philadelphia about an hour south, and there are definitely deals around. When I was in town, I wanted to focus my search on the developing area surrounding the PPL center in Allentown as a potential for future growth in rents and value.
I picked up a renovated but vacant triplex for $175K at 4th and and W Turner that needed $10K of work and is now listed for rent. I can recommend some people in the area as I’m pleased with the team I have in place now.
Rental Property Investor · Phoenixville, PA · Member since 2015 · 119 posts · 61 votes
6y
Alright guys- here's the final follow up.
Property purchased in August, and we have tenants April 1st meaning I had to carry the $927 mortgage and $113 insurance for 7 months (ouch). We ended up increasing our original rent total from $2,400 to $2,750 based on demand from the original posting which will help us recoup some of the losses.
In total the repairs, maintenance, and carrying costs will come in around $53,000. With a purchase price of $175,000 we are in this thing for $228,000. The good news is that a good comp only 5 blocks away sold for $310,000 in February (when most comps were in the $230-$260K range), which means our value when fully rented should come in somewhere in the $250,000-$260,000 range.
This is by no means a home run, but starting in April we will be cash flowing ~$370/mo after all expenses, vacancy, capex, etc. I certainly have learned a ton and paid for my education. The best thing you can do for yourself is find a good property manager like @Ronald Bowser and his team because they have made an intolerable situation tolerable and an impossible situation possible.
Good luck out there guys during the next few months it is certainly an interesting time!
Rental Property Investor · Phoenixville, PA · Member since 2015 · 119 posts · 61 votes
6y
@Elliot Vann
Hey Elliot working on that now- in the meantime a friend and I are making offers on multi families in the 55-65K per unit range but it is very competitive. Our last 3 full price offers have been out bid. We know we are fishing in the right pond- just a matter of making good offers and getting a little bit lucky.
I just have one property purchased in the area, and soon found out that I am not cut out for property management. Would you recommend a property manager?
I just have one property purchased in the area, and soon found out that I am not cut out for property management. Would you recommend a property manager?
Rental Property Investor · Phoenixville, PA · Member since 2015 · 119 posts · 61 votes
5y
@Christian Beyer
Alright guys- I know I said that was the final follow up but there was more to offer on this one!
So after reaching steady state cash flow as described in my previous post, I went back to my lender looking to refinance after I saw a few triplexes going for good prices once fixed up. Happy to say that our refinance was completed yesterday after the property appraised for $265K!! We were able to cash out $50K of our original investment and just made an offer on a property yesterday with that cash as the primary down payment.
In a less happy but still optimistic note- we also ended up filing the lawsuit for fraud against the original seller as the final charges for code violations that were not disclosed came out to around $38K. The lawyer charged $3,500 up front and it looks like we have a good chance at recouping some of that invested cash.... as it turns out the seller was actually a commercial broker so that looks even worse for him as he should have known to disclose those code violations. If we get some or all of that back it will be the icing on the cake of this deal which is looking more and more like a great deal.
In the past few months I’ve brought 2 other investors on board and made offers/closed on some 6 unit properties as 50/50 partners, hopefully with more good luck (and less drama).
I promise this is the last update on this one (until I hear from the lawyers)- good luck to the rest of you Lehigh Valley investors!
Rental Property Investor · Jersey City, NJ · Member since 2017 · 104 posts · 53 votes
5y
@Christian Beyer Good to hear it all turned around on this project. I can definitely feel your pain but it's often the hardest times (in life as in real estate) where we learn the most. The same grit, determination, and adaptability that allowed you to turn all it around will serve you well in years to come!
Rental Property Investor · Phoenixville, PA · Member since 2015 · 119 posts · 61 votes
5y
@Gary York
10% plus one month at turnover- industry standard.
The problem is that this is SO standard that the difference in quality of service you get for the same price is staggering. It’s akin to all agents charge 6% to sell your home but some are excellent and some are awful.
What you will see is that good Property Managers don’t see turnover as a part of their revenue. They see it as work and they charge to cover their expenses. Good PMs want long term tenants and place based on certain criteria to attain that.
You can search long and hard, but do your due diligence, get referrals, and run trials. Good luck!
Rental Property Investor · North Catasauqua, PA · Member since 2019 · 15 posts · 6 votes
5y
@Veronica Haniger
We typically see a big jump between 1BR and 2 BR, maybe $300-400 and a lesser jump with a 3 BR, closer to $100-200. An extra 1/2 bath can add $100-150 or so and laundry can as well.
Rental Property Investor · North Catasauqua, PA · Member since 2019 · 15 posts · 6 votes
5y
@Christian Beyer
Great advice, thank you.
We have 9 properties and 32 units now in the Lehigh Valley and we currently pay 12%, which is adding up to approximately $50k annually, ouch! There are no other fees, other than they do a good job with painting and rehab support and managing contractors as well and they do this ‘extra’ work at $25/hour.. not sure if this is the right set up or not...
Rental Property Investor · Phoenixville, PA · Member since 2015 · 119 posts · 61 votes
4y
@Christian Beyer
Resurrecting this thread!
Thanks for all who tuned into the drama on this last year. We actually started a lawsuit against the prior owner and had depositions in September (a new experience as a real estate investor) to put down in writing our side of the story. They say if you are in real estate long enough it’s not a matter of if you will be sued, but when. Maybe it goes both ways? I’ve never sued anyone, but this guy was either grossly negligent or just plain fraudulent.
Our court date is set for March and we will see what happens there. Hopefully we can recoup some of our lost expense and rent from the year of hell. The team at Empire Property Management gets a lot of credit for getting me to this point where the property is finally turning a profit!
Rental Property Investor · Phoenixville, PA · Member since 2015 · 119 posts · 61 votes
4y
@Christian Beyer
Ok so this will be the final message about this property on the thread.
I mentioned taking the seller to court over the open permits and items that were not disclosed. Here is what happened in a nutshell:
He brought suit against his broker, claiming he told them to update the disclosure and they didn’t do it. This meant that now I was dealing with Weichert realtors and not just joe blow attorney from down the street. At first I was concerned, but it ended up being a good thing because at some point they either shared responsibility or had to point the finger at each other.
Long story short- the brokers lawyer wanted to settle and not go to trial (more expensive lawyers) so we settled for just less than 20 grand. The seller claimed to be completely broke and said he would take his chance at trial because felt like his case was better in front of a jury and he was going to play the “my broker ate my homework” card and I couldn’t prove that he didn’t tell them to update it. I had no appetite to go to trial and pay my lawyer another 5-10K for the risk of getting an uncollectable judgement or worse, losing. I took a small settlement of a few hundred bucks.
Summary - paid my lawyer around 8-9K and walked away with about 20K.