Long Distance Buy and Hold | PA

General Landlording & Rental Properties
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Long Distance Buy and Hold | PA

Jeff LamothePro Member
Member since 2019 · 91 posts · 66 votes

Hello BP,

   Just finished reading David Greene's Long Distance Real Estate investing book, which got me motivated.  I am based out of Connecticut and looking for out of state, buy and hold properties.  I have looked into several different markets throughout the country, including the South, Mid-West, and West Coast.    Based on my preliminary analysis, the Mid-West appears to be the way to go.   

But since this will be my first out of state market, I would prefer to find something within a couple hours driving distance (2-3 hours), that has balanced landlord/tenant laws.   My search has led me to Pennsylvania, where I've read some good BP forum discussions for Allentown, Harrisburg, and Scranton.  I would've been interested in Philly, but it is my understanding that the city leans towards tenants or even hostile towards landlords.   

I would be interested in getting feedback from other investors in the Pennsylvania (non-Philly) market and let me know how they are doing with rentals.   

Below are some of my key criteria for a long distance property:

1) Total acquisition and repair cost $100K (assuming single family).   Willing to put in more for a duplex.  

2) Meets the 1% rule of rental income / purchase price.  Key target would be 1.25% to 1.5% rental income. 

3) Balanced landlord/tenant laws, but I wouldn't mind landlord friendly regions.  

4) At least 4 to 5 Property Management companies, with google ratings of 4.5 and higher.  

5) No warzones.   Will accept some moderate petty crime, but no major violent crimes.  

6) Stable job market.   (5 to 10% job growth in last 10 years).  

Thanks in advance.  

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Anthony Angotti
Real Estate Agent · Pittsburgh, PA · Member since 2015 · 1k+ posts · 846 votes
5y
Originally posted by @Jeff Lamothe:

Hello BP,

   Just finished reading David Greene's Long Distance Real Estate investing book, which got me motivated.  I am based out of Connecticut and looking for out of state, buy and hold properties.  I have looked into several different markets throughout the country, including the South, Mid-West, and West Coast.    Based on my preliminary analysis, the Mid-West appears to be the way to go.   

But since this will be my first out of state market, I would prefer to find something within a couple hours driving distance (2-3 hours), that has balanced landlord/tenant laws.   My search has led me to Pennsylvania, where I've read some good BP forum discussions for Allentown, Harrisburg, and Scranton.  I would've been interested in Philly, but it is my understanding that the city leans towards tenants or even hostile towards landlords.   

I would be interested in getting feedback from other investors in the Pennsylvania (non-Philly) market and let me know how they are doing with rentals.   

Below are some of my key criteria for a long distance property:

1) Total acquisition and repair cost $100K (assuming single family).   Willing to put in more for a duplex.  

2) Meets the 1% rule of rental income / purchase price.  Key target would be 1.25% to 1.5% rental income. 

3) Balanced landlord/tenant laws, but I wouldn't mind landlord friendly regions.  

4) At least 4 to 5 Property Management companies, with google ratings of 4.5 and higher.  

5) No warzones.   Will accept some moderate petty crime, but no major violent crimes.  

6) Stable job market.   (5 to 10% job growth in last 10 years).  

Thanks in advance.  

 I'm an investor and Realtor in Pittsburgh. 

Most of these are fine but two notes. 

4) At least 4 to 5 Property Management companies, with google ratings of 4.5 and higher.

Don't even go on google ratings. Property management companies get trashed by tenants and hardly ever get positive reviews. I would join whatever area you chooses facebook groups for investors (if they have them) and ask for recs there. Be warned, there's really no such thing as an exceptional property management company. At least not in my experience unless you find someone with a niche in a submarket in whatever larger market you invest in. I'd prioritize finding someone for a specific neighborhood vs a good city wide manager. The larger ones tend to be more quantity versus quality driven. 

5) No warzones. Will accept some moderate petty crime, but no major violent crimes.

If you're investing cities there's going to be a mix of neighborhoods . . . warzone is a harsh term and probably not fit for 95% of neighborhoods out there. Drugs are omnipresent today. Violent crime can happen anywhere. And mostly you can find good tenants anywhere. It just takes longer in lower income neighborhoods because less people meet the financial criteria. Just be wise with the streets you are on within specific neighborhoods versus the neighborhood as a whole. Just my two cents, by "warzone" is quite a rough term that I wouldn't say applies to most places. It's not like there are drive by shootings daily in even the rougher neighborhoods. . . 

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  • Paula Inacio
    Member since 2017 · 4 posts · 3 votes
    4y

    Hi @Jeff. I'm in a similar place looking to have my first OOS investments within a 2-3 hour drive from LI, NY. I was also looking into Scranton and the surrounding areas. Curious to know how things worked out for you?

    1Reply
  • Jeff LamothePro Member
    OP
    Member since 2019 · 91 posts · 66 votes
    4y

    Hello @Paula Inacio.    I will post a follow up on how things worked out for me, but I had to temporarily turn away from the NEPA market based on some undesirable experiences. I am working on a different market and although it is much further away, I am getting much better responses was able to quickly assemble a team.     

    1Reply
  • John Crafton
    Investor · Amityville, NY · Member since 2016 · 2 posts · 1 vote
    4y

    @Jeff Lamothe What undesirable experiences? Please explain what happened in NEPA and how it shifted your guidance?

    1Reply
  • Zahid Ali
    Insurance Agent · Ozone Park, NY · Member since 2018 · 17 posts · 7 votes
    4y

    @Jeff Lamothe Hi bud, J am curious to know how your NEPA search turned out and if you have any feedback for new investors looking in this area.

    1Reply
  • Jeff LamothePro Member
    OP
    Member since 2019 · 91 posts · 66 votes
    4y

    Hello @John Crafton and @Zahid Ali.   Thanks for inquiring about my experience with NEPA.   Yes I did have some undesirable experiences, and I believe some of it may have to do with bad timing.    There are folks who are doing well in the NEPA market and I would encourage you to reach out to them for pitfalls to avoid.    I am now focusing on the mid-west market, but may look back at the NEPA market once I get the right team in place.    

    Below are the list of issues that I experienced:

    1) I had a difficult time finding a real estate agent that was willing to work with me.     It may have been timing, but it appeared as if many of the local agents were too busy to take on new clients.    A fellow investor introduced me to a couple agents and I made contact with them. But after a few discussions, I would not hear from the agent again.   After a month, I finally did find an agent after my friend made a formal introduction. 

    2) I had two deals fall through after offers were accepted in the Wilkes-Barre region.    The first deal fell through due to an underwriting error by my lender.   Just before my closing, my lender informed me that I didn't meet the underwriting requirements and they informed me that they couldn't close.   Two (2) months later, the lender informed me that the underwriter made an error and I met the requirements to close.   I tried to save the deal by using another lender, but the seller didn't not want to grant me an extension and pulled the property from the market.   The second deal that fell through, was borderline obnoxious.   My agent recommended a listing from someone in her brokerage and we put it under contract.    We lost the deal because the deposit reportedly came in too late.  There was a requirement for the deposit to be provided within 5 days of contract execution, and the seller's agent decided to use that provision to kill the deal.   

    3) While working with my agent throughout the summer, I would inquire about the local Property Management (PM) and I wasn't hearing great things.    I was left with the impression that the quality of service was substandard and contract terms were not great for an investor.  Even some of the local investors that I connected with did not provide favorable feedback and it was suggested that I self manage, which was a non-starter for me.   

    In summary, I had some troubles getting my first deal in NEPA and coupled with the information I was receiving about Property Management, I decided to work in a different market.    To me it was very critical to have the core team in place to ensure success with investing out of state, including the Agent, Property Manager, and Contractor.   

    3Reply
  • David Leggett
    Real Estate Broker · Cleveland, OH · Member since 2018 · 227 posts · 133 votes
    4y
    This is a great post!  I love learning more about nearby investment markets.  Living in Cleveland, I did hear that it was a good rental area, but did lean favorably towards renters.  But everyone I know that goes to Pittsburgh says it's very beautiful and up and coming.  

    I would also think Cleveland would be a similar market, I can definitely find you some properties that meet those criteria, and I have access to a really good property management company with contractors and everything.  Let me know, thanks!
    2Reply
  • Eric Drum
    Rental Property Investor · Harrisburg PA · Member since 2019 · 62 posts · 42 votes
    4y

    Know your market and spend some time there. Build a reliable and reputable team. Seek out in-person meetup and networking groups. See the units in person. I am seeing Harrisburg PA investors from out of state chasing numbers and making the mistake of not truly knowing the area and meeting the right people.

    Examples include remote wholesalers pitching $60k deals in combat zones that are worth only $10k. Supposed turnkey operators offering distance investors units that have not been rehabbed or maintained. Sellers advertising out of touch ARVs and rehab costs. While more affordable than where remote investors are coming, the deals are crappy and overpriced locally. When it comes time to escape, remote investors eat it when selling.

    I do want to say that there are honest people to help distance investors. They are realistic about condition and cost - they also have good network references.

    I have been in the Central Pa area for 6 years and am still learning the nuances of neighborhoods, unit ages, good vs bad condition, and good players. While I have lived in other parts of the country and would consider investing there, I have done ok locally with my team. I am conservative 

    For remote investors, I would guess it works out perfectly 10% of the time, good 20% of the time, bearable 20% of the time, and god awful the rest of the time. This is based on the landlord sellers that contact me.



    2Reply
  • David Krulac
    Mechanicsburg, PA · Member since 2013 · 3k+ posts · 2k+ votes
    4y

    I have been a big promoter of investing in Central PA., Harrisburg is the state capital and the number one employer is the state government; while the #2 employer is the Federal government.  Harrisburg is getting a brand new state of the art Federal courthouse.  The old courthouse was just sold for $10Million to be converted into luxury apartments.  Since the economy is not tied to factories, industry, or business cycles, the economy is good in central PA.  Amazon has built several facilities, as well as others such as Chewy's.  The north-south and east-west interstate highways intersect in the Harrisburg area, so transportation and warehousing are big fators here, as well as the location being within a day drive from 50% of the US population.  Prices have gone up in the last few years, like most other places around the country, but Cumberland County, PA, across the river from Harrisburg City is the fastest growing county in the state.  I think that you can make money in real estate most anywhere, but being in the fastest growing area just gives you more of an edge. I've bought and sold over 1,000 properties or my own inventory and will continue buying property in Central Pa., because I think and have demonstrated that it is a place where real estate investment has and can prosper. 

    4Reply
  • Juan Lopez Salazar
    Investor · Harrisburg · Member since 2019 · 9 posts · 3 votes
    4y
    Quote from @David Krulac:

    I have been a big promoter of investing in Central PA., Harrisburg is the state capital and the number one employer is the state government; while the #2 employer is the Federal government.  Harrisburg is getting a brand new state of the art Federal courthouse.  The old courthouse was just sold for $10Million to be converted into luxury apartments.  Since the economy is not tied to factories, industry, or business cycles, the economy is good in central PA.  Amazon has built several facilities, as well as others such as Chewy's.  The north-south and east-west interstate highways intersect in the Harrisburg area, so transportation and warehousing are big fators here, as well as the location being within a day drive from 50% of the US population.  Prices have gone up in the last few years, like most other places around the country, but Cumberland County, PA, across the river from Harrisburg City is the fastest growing county in the state.  I think that you can make money in real estate most anywhere, but being in the fastest growing area just gives you more of an edge. I've bought and sold over 1,000 properties or my own inventory and will continue buying property in Central Pa., because I think and have demonstrated that it is a place where real estate investment has and can prosper. 


     Hey David, 

    Just out of curiously, where did you hear about the old court house being converted to to luxury apartments? I live here in Harrisburg and just heard about this myself! 

    1Reply
  • David Krulac
    Mechanicsburg, PA · Member since 2013 · 3k+ posts · 2k+ votes
    4y

    @Juan Lopez Salazar the GSA is the governement agency that controls Federal buildings.  The news was also in the Harrisburg nespapaer and websites  

    • On Jan. 27, GSA completed the sale of the Ronald Reagan Federal Building and U.S. Courthouse located at 228 Walnut Street in Harrisburg , Pennsylvania, for $10.1 million to R.R.F. Building LLC in Bronx, New York. This is the first GSA Mid-Atlantic Region facility sold in support of the Federal Assets Sale and Transfer Act (FASTA) of 2016.

    David Krulac

    Bigger Podcast Guest #82

    4Reply
  • Juan Lopez Salazar
    Investor · Harrisburg · Member since 2019 · 9 posts · 3 votes
    4y

    @David Krulac This is the exact information I was looking for. I don't know much about that. Always looking to expand my knowledge. Especially to get an understanding of my market. I truly appreciate it David!  

    1Reply
  • Chris GoodBusiness Member
    Real Estate Broker · New Holland, PA · Member since 2016 · 51 posts · 38 votes
    4y

    I personally own property in the Harrisburg PA area and would recommend it, its been getting attention recently as an affordable market. 

    2Reply
  • Jomo P.
    Member since 2021 · 1 post · 0 votes
    4y

    @Jeff Lamothe

    Thanks for the input. I’ve been having the same exact experience and May have to turn to another market. I’ve been outbid on every single property and it’s getting frustrating.

    0Reply
  • Bishwash Aryal
    Rental Property Investor · Member since 2018 · 45 posts · 13 votes
    4y
    Quote from @Jeff Lamothe:

    How's it going @Lawrence Ratliff.   Some the midwest markets that appears to meet my criteria includes Columbus Ohio, and Milwaukee, WI.   The only exception for Milwaukee is that it didn't have that 5 to 10% job growth based on Bureau of Labor Statistics.   I can imagine Cleveland would be a good ideal as well, but I have to dig into it and find the desirable working class neighborhoods.   


     How did u find the Job growth rate?

    0Reply
  • Jeff LamothePro Member
    OP
    Member since 2019 · 91 posts · 66 votes
    4y
    0Reply
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