Hi BP world,
I recently went to Scranton and saw some properties with potential for buy/hold cash flow, but I noticed a few things on my trip there and I'm wondering if anyone has/is investing in the area and their outlook:
1) There are lots of commercial vacancies in the area
2) It seems there have been quite a few fires recently, all of which seem to end up being arson
3) Anyone familiar with how the landlord/tenant court waiting period in the area is for worst case scenarios (i.e. evictions)?
Born and raised in Scranton, Pa (Clarks Summit to be exact). Where in Scranton did you see these properties? There are many different areas, each of which will have their own positives/negatives.
Scranton, as a whole, is a depressed city. Unless you were born and raised in the area nobody really moves there. There aren't any jobs unless you work in a factory or want to commute to NYC every day. You have the University of Scranton, Marywood University and Johnson College (university?) all in or around Scranton. Scoop up some properties by those areas and you could get some pretty stable rentals.
As far as your #2, I wouldn't really be concerned with that. Nobody is going around the city and torching it.
There are a lot of commercial vacancies in downtown Scranton. Scranton has higher taxes than the surrounding neighborhoods. Dickson City has a lot less vacancy for that reason. The residential market is relatively strong. Half of the housing in Scranton is rentals. The average HH income runs about $30-40k. It is a depressed area. There's not a ton of arson. Biggest fire concern is all of the old wiring, cigarettes, and the occasional meth explosion. I've never had a court date here, but Scranton has several magisterial offices. They'll handle all your tenant issues. If they get backed up sometimes they'll share the load. Magistrates tend to be acting attorneys in the city (they do it for part time money) so they have incentive to keep the process moving.
1. Commercial vacancy wise, I think the downtown area is fine. There are enough restaurant, coffee shop, type businesses there. Retail is suffering but that's basically true everywhere. Most industrial businesses are outside the city limits.
2. No idea about the fire. Can't say I noticed it.
3. I never noticed it being terribly slow at the magistrate level. Court of common pleas can drag but the tenant is supposed to escrow the rent during this period so there is some protection there.
This doesn't directly relate to your question, but I always recommend that people take a look at the metropolitan statistical area to get a general sense of where they are investing. Here's a link on Wikipedia --- no idea if it is accurate based on recent estimates.
As you can see, Philadelphia and Pittsburgh area are clear 1A and 1B. Allentown area is next, followed up by the next set of areas with populations around 400k to 500k. The Scranton-Wilkes-Barre area is one of them. All of this suggests to me that the area is a tertiary market. With the risk of offending anyone, all tertiary markets are tertiary markets. If you can succeed in one tertiary market (say Lancaster), you probably could succeed in another similar market as well (say Wilkes-Barre or Scranton).
I'm not saying just go random properties in a given area since there are different levels of desirability within each area. But I also think it's hard to say that one tertiary market is clearly better than another. They are all tertiary markets because 100 of different factors places a cap on their desirability.
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 for legal advice. Always consult with your attorney before you rely on the above information.
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