Pennsylvania experts! Need your advice for this first timer πŸ€“

7 Replies

Hi BP family! πŸ˜„

I am new to BP, been listening to the podcast religiously since I found out about it a couple months ago. Trying to immerse myself in REI as much as I can by reading, listening and watching whatever's floating on web. I've finally decided to take a baby step into the world of REI!

Ideally I would want to start my journey in my city but I currently live in NYC (yes, paying stupid amount on rent), so I've looked few out of States, and right before I get completely paralyzed, I just decided on Pennsylvania and determined not to look back! (At least for the first time, I want to be able to experience majority of the process in person - hence picked a state that's in driving distance).

Been reading random topics very shallowly πŸ˜…, then vaguely came up with some plans. Please feel free to comment / answer any / all of questions below, and enlighten me with your expert opinions!

1) Should I register for a corporate to start? (planning on building my RE empire eventually 😎) I've read something about transfer tax, wouldn't want to be taxed twice! If so, what entity?

2) Currently looking around Allentown - Bethlehem - Easton areas (thanks to podcast ep 276, 442), are they suitable markets for multifamily units? Something like a duplex to start, maybe a B class property (I honestly don't know exact distinctions of each class, but definitely want something safe in exchange for less cashflow at least for the first time). If I am looking at the wrong areas, please suggest others!
3) Lastly, what else do I have to ask? What should I look into? any advice is welcome!

Thank you so very much for your time, I will be sure to pay back with my time once I get to the expert level of knowledge and experience. 

-Claire ✌🏻

 p.s. am i posting it on the correct forum/discussion thread? this website is a little hard to navigate through πŸ˜…

Hey there! Also looking at the Bethlehem Easton areas and wondering the same things. I've analyzed a few deals already in those areas and even on the MLS asking prices, I found my second analyzed deal fully passive has an 18% CoC return with 626 cash flow/mo. I live in Allentown, but my gut says to not invest here (could be totally wrong)

@Claire Lee  

1.imho Corporations/LLC are oversold. I think you find the property first. Most people don't recommend the corporation for rentals because of the doble Federal taxation. S corp and LLC are preferred, and LLC are less cumbersome. And YES, Pa will chrge you transfer tax if you transfer property from you to your corp/LLC or vice versa. And YES, insurance companies charge higher premiums for corp/LLC ownership than they do for individually owned property, and YES some lender will either not lend to corp/LLC, particularly new entities with no credit history. Other lenders will lend but may charge higher interest or fixed for shorter period. For example you mat be as low as 2.5% fixed for 30 years, with no balloon as an individual, but I haven't seen any commercial loans with those terms, unless you're borrowing from your grandmother.

2.  Personally I invest in the fastest growing county in PA. (Cumberland County) and don't invest in ABE (Allentown Bethlehem Easton areas).

3.  For new investors, I always say:

a.  Look for positive cash flow properties

b. appreciation is icing on the cake, don't by negative cashflow properties just becase of some speculation of appreciation in the future.  Noboy knows the future.

c.  unless you are independently wealthy, borrow as much as you can for as long as you cab with the lowest down payments you can.

d. don't buy properties that are total wrecks or in bad, crime ridden neighborhoods.

e.  I like starting with single family, duplexes and small apts up to 4 units that can be financed residentially and owner occupant.

f.  Flipping can make you rich, but buy and hold will make you wealth.

g.  Ihope you ;isten to my Bigger Pockets Podcast # 82   

There are lots of good areas in PA to invest.  I usually suggest that people start within driving distance of where they live so it doesn't add an element of risk.  The areas you listed are fine.  It just depends on your end goals.

Hi Marshall!

Even with good returns, wondering why your gut is telling you not to.. if you can, let me know where you decided on. 


Originally posted by @Marshall Bonaskiewich :

Hey there! Also looking at the Bethlehem Easton areas and wondering the same things. I've analyzed a few deals already in those areas and even on the MLS asking prices, I found my second analyzed deal fully passive has an 18% CoC return with 626 cash flow/mo. I live in Allentown, but my gut says to not invest here (could be totally wrong)

 

Hi David!

Just finished listening to your episode on my commute this morning. It was definitely an awesome one, good stories there. I must admit tho, I should revisit the episode to fully understand it after learning more about RE in general :)

Thank you very much for your generous time first of all, glad to know it's ok (it actually sounds better) without the corporation. One less headache.

Since I live in NYC, owner-occupant won't be possible :/ and would like to start somewhere within a couple hours of driving distance. But I will be sure to keep in mind Cumberland county for future projects - thanks!

Tips for beginners are greatly helpful - hopefully I find a cash-flowing property with little money down. I would like the idea of buy and hold better as well.

Follow up question I have (you may never be released from this thread 😈) - What would be the best way to compare growth of each county and crime rate, school system, neighborhood class etc? 

and how do you tag a person like you did @claire Lee?

Thank you!

Originally posted by @David Krulac :

@Claire Lee 

1.imho Corporations/LLC are oversold. I think you find the property first. Most people don't recommend the corporation for rentals because of the doble Federal taxation. S corp and LLC are preferred, and LLC are less cumbersome. And YES, Pa will chrge you transfer tax if you transfer property from you to your corp/LLC or vice versa. And YES, insurance companies charge higher premiums for corp/LLC ownership than they do for individually owned property, and YES some lender will either not lend to corp/LLC, particularly new entities with no credit history. Other lenders will lend but may charge higher interest or fixed for shorter period. For example you mat be as low as 2.5% fixed for 30 years, with no balloon as an individual, but I haven't seen any commercial loans with those terms, unless you're borrowing from your grandmother.

2.  Personally I invest in the fastest growing county in PA. (Cumberland County) and don't invest in ABE (Allentown Bethlehem Easton areas).

3.  For new investors, I always say:

a.  Look for positive cash flow properties

b. appreciation is icing on the cake, don't by negative cashflow properties just becase of some speculation of appreciation in the future.  Noboy knows the future.

c.  unless you are independently wealthy, borrow as much as you can for as long as you cab with the lowest down payments you can.

d. don't buy properties that are total wrecks or in bad, crime ridden neighborhoods.

e.  I like starting with single family, duplexes and small apts up to 4 units that can be financed residentially and owner occupant.

f.  Flipping can make you rich, but buy and hold will make you wealth.

g.  Ihope you ;isten to my Bigger Pockets Podcast # 82   

 

Hi Ian!

1-2hrs is drivable from NYC i think. I will look into A-B-E for now. Thanks for giving me green light!

Originally posted by @Ian Walsh :

There are lots of good areas in PA to invest.  I usually suggest that people start within driving distance of where they live so it doesn't add an element of risk.  The areas you listed are fine.  It just depends on your end goals.

 

The market is real tight in the Easton area and prices have really risen over the last few years. Not to mention the crazy covid market with low inventory. I am a local investor and realtor . If I can help anyone in anyway please dont hesitate to send me a pm