Lancaster and Reading, PA Reviews
Hello BP World,
I went to Lancaster yesterday to look at some properties (single family and duplex). My overall outlook on the area was mixed. After researching the area, I've seen that the crime rate is very high compared to other areas of PA. Does anyone have experience investing in Lancaster, and can you give advice as to whether you've found this high crime rate to be true? Is it something that has been improving over the years?
I saw lots of trendy shops (hipster-ish), large development projects underway, and commercial/retail (Park City Mall etc.).
I'm also interested in seeing Reading - would like to know if anyone has experience of the Reading area as well.
Very interested in Class B properties at the moment.
Thanks!
Roberto
My guess is Reading is generally small. Has a lot of gang activity. If it has class B areas I have not heard of anything. As for Lancaster, I believe it has more crime than an average city for its size. Since your interested in Eastern PA, try Wilkes-barre and Scranton. I heard good things. Again all off speculation because I wholesale in Pittsburgh only, currently.
Thanks @Jonathan Garrett
Appreciate the feedback - will also look at Wilkes-Barre/Scranton.
If you take a look at my old posts, I spoke on a few of them about different markets in Pennsylvania. At a macro level, Lancaster area is similar to other tertiary markets like Harrisburg, Scranton/Wilkes-Barre, York/Hanover, and Reading. They are all basically 10 cap markets and will likely remain so for the foreseeable future. Allentown used to be part of this group but it has now distanced itself from the other tertiary markets.
A helpful way to think about it is to take a look at the metropolitan statistical area in Pennsylvania. The size of the metropolitan area generally gives you some clues about what kind of market you are dealing with. You can see that all the areas I named above have about 400k to 500k people living in that area. Each area has their own quirks, but the fact that the area can sustain that number of people give you some clues about what the market is like. This isn't to say that these areas are better or worse than smaller areas like State College or larger areas like Philadelphia. It's just different.
https://en.wikipedia.org/wiki/Pennsylvania_metropo...
Note that these areas not only include the city, but also the surrounding suburbs. So even if one may think that Reading itself does not have too many "nice" areas within the City, almost all these areas have nicer suburbs where you can find rentals. Same goes for Lancaster or pretty much any other area you are going to look at.
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 as legal advice. Always consult with your attorney before you rely on the above information.
Very helpful insight. Thank you!
Being that these are tertiary markets - would you say (in your opinion of course) that Lancaster is a more recession-proof type of market?
Have you personally invested in Lancaster or Wilkes-Barre?
I don't know if any area is recession proof. If you take a look at the big picture, Philadelphia was always the Tier-1 market and Pittsburgh was always Tier 2. With Allentown basically becoming the new Tier 2 market, I would say Pittsburgh is Tier 1b.
All the other areas I mentioned to you before basically have been the next set of largest metropolitan areas in Pennsylvania for decades. Short of some calamity, I can’t see how that’s going to change.
I’ve invested in the Luzerne County (Wilkes-Barre side) and Lackawanna County areas (Scranton side). More importantly, I worked on many real-estate projects as a lawyer and many of my friends/colleagues are real-estate investors. So I have a good sense of what’s happening on the residential end and on the commercial/industrial end.
I’ve never invested in Lancaster. Not that because I have issues with the area, but I see no reason for me to go all the way down there to invest. What practical difference is there between Lancaster and say Scranton/Wilkes-Barre? Maybe I’m jaded, but I would say very little.
Note that being in a primary market doesn’t mean recession proof. I own a lot of real-estate in another country. Some of the properties is in one of the largest cities in the world. While I’m not going to argue that it hasn’t appreciated, my experience has been the primary markets get hit harder during recessions or crashes. The value of one apartment unit that we own, for example, fluctuated between $1.2 million to $3.5 million in a matter of 15 years or so. It’s now around $2.2 million (or so depending on the exchange rate at the moment).
If you average it out, you can still see that it is naturally appreciating. And that's a benefit that is hard to find in tertiary markets. But I would argue that primary markets are more volatile when it comes to prices --- especially on the residential side.
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 as legal advice. Always consult with your attorney before you rely on the above information.
Thanks. I agree primary markets are going to appreciate more, but like you said, it comes with the opportunity cost of being more volatile. While I have invested in NY, I am looking to branch out into PA into tertiary and secondary markets. I see it the same as I would with a portfolio of ETFs (with both risky and risk-averse assets).
Anyone else have experience in Lancaster or the surrounding areas?
Regards,
Roberto
I've invested in Pittsburgh market as well as central PA, Harrisburg area. I also go to REIA meetings in Camp Hill, Harrisburg, Lebanon, Lancaster and York.
I have done a lot of investing the the fastest growing county in PA. (there are 67 counties), which is Cumberland. The number 1 employer is the state government and the number 2 employer is the Federal government, both of which are not cyclical like markets with factory or commodity driven economies. The area does not have the big run ups of CA, TX, or NY. Other than Philly and Pgh, most of PA is small to medium towns and lots or rural areas. The number 1 industry in the state is Agriculture. While there are not the great run ups, there are also not the deep recessions here. Rents are relatively good, real estate taxes are cheaper than neighbors, NY, NJ, and MD, and state taxes are cheaper also. Along the southern border of PA with MD, many people work in MD with high paying jobs but live in PA for lower costs of living. One tenant I had drove 70 miles one way to their job in Baltimore and another drove 100 miles to their job in Washington DC. Those are long commutes but some people are willing to make those sacrifices for lower taxes, lower cost of living, lower housing costs and lower crime.
Given that you seem to have experience in PA, what has been your experience with credit unions in the area?
On my trip to Lancaster, I don't believe I saw one large bank (aside from Wells Fargo). In NY, a good resource is credit unions. I'm wondering if the same applies in PA.
While I'm not currently looking at Pittsburgh areas, I'd like to know what your investing experience has been in Harrisburg. Also - are you familiar with any individuals who've invested in Lancaster or Scranton?
I did Bigger Pockets Podcast #82 in which I talked about Credit Unions. I've bought and sold over 900 properties, and the first 11 were 100% financed. The last 100 were all 0% financed. One of the Credit Unions that I deal with has a "Signature Loan" product which is an unsecured line of credit. Once set up, you go to the teller to make a withdrawal just like from your own account. I've used for down payments, rehabs, etc, paying it back and re-borrowing.
Since i go to the Lancaster REIA, I do know some people there, but I don't really know many people in Scranton.
Of the 10 biggest banks in the country only Wells and PNC have offices in the area. But there are some larger regional banks and there are some small local banks, some only have a few offices. I tend to deal with the smaller banks where I can walk into the office and deal face to face; I think the personal contact is important. One of the largest credit unions in the area and state only has 3 offices and most people deal with them on line or on the phone.
I do a variety of investing including buy and hold, rehab, flips, property management, group homes, land subdivision and development. I have about 20 different acquisition methods, and am always both a buyer and a seller, no matter what the market conditions are. I've written here on BP before about having tenants stay for more than 30 years.
I think Central PA is a great area to invest and offers reasonable prices, good rents and economic stability. Both Pittsburgh and Harrisburg have applied for new Amazon headquarters HQ2, which will bring with it 50,000 new jobs. There are many other applicants, but Amazon already has a presence here with 3 local facilities and plans to hire 5,000 more people in the next year.
As you know people in NYC do much on line shopping for items as mundane as toilet paper and diapers, so that they are delivered and don't need to be lugged on the Subway. Where do you thing much of that comes from? Right here in PA. PA is the Keystone State and is within 1 days transportation from half of the population of the country
Roberto, the best way to meet and know people from the areas you are interested in is to go to the local REIA meetings or through other meet up groups. I know that you live in NY and it may be hard for you, but nothing replaces the face to face interactions.