Out of state Investing in PA?

Question

Hi BP Forums,

I live in a highly competitive and high cost of living area in the north east (Boston area) and I own my own condo which I hope to rent out in the future.  The plan was to move into a house hacking situation, but multi's are few and far between.  I just graduated college in 2018 so I am barely getting started.

As an alternative, I have been looking to increase my cash flow and grow a portfolio in other states.  PA is one of the states that have come across my radar.  Some properties out there boast 7-9% cap rates, which are unheard of in my market.  I also read that PA is one of the most landlord friendly states.  Barrier's to entry seem to be low, it's not too far for me to be able to drive down on a weekend, and returns seem healthy.

Do we have any lehigh valley investors or agents on here who can provide some on the ground perspective?  I can look at the data until I am blue in the face, nothing beats first-hand experience.  Are cap rates really that good?  Does the state penalize out of state landlords via higher taxes?  Stats say that the area population has grown faster than the state avg, and median income has grown but not as much as the avg. The stats are a mixed bag, so I am looking for some perspective here.

Thanks!

Lei

Ryan Chatman · Answer

@Lei Marte Lehigh Valley is a great place to invest but it is highly competitive right now for all of the reasons you mentioned in your post.

The stats you mention are not unheard of. My property here gets 9.5% cap rate. I've seen many scenarios with opportunities for even more. Many of the cities here have strong rental markets so it is great for investors.

The area is also getting more transplants from NYC and Philly areas because it's lest costly and there are tons of jobs available. Plus there are more jobs coming (there's literally warehouses popping up everywhere and signing bonuses being advertised by everyone on billboards).

Just make sure you have some good people on your team that know the areas. And I've been telling everyone in this market, make sure you move quickly when you have the right deal.