Wilkes Barre, Pa - Help me analyze this deal

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*This link comes directly from our calculators, based on information input by the member who posted.

Hey my BP friends, 

I'm hoping to get some constructive criticism on this 2 family, side by side 3 bedroom duplexes in Wilkes Barre Pa. Rental rates can be anywhere from 600-900 for each unit and we are analyzing at the low end. Our utilities will be low because we will have the tenants paying for all of their own utilities. Click on the report and tell me what you think. 

We have experience in the Poconos, Pa, Bronx, NY, Westchester, NY markets. We're looking into the Wilkes Barre and Scranton, Pa areas. Cash-flow seems great, but appreciation not so much. Anyone familiar with this area please chime in. I look forward to hearing from everyone. 

stay away from duplexes. This is a stable market so you won’t see value appreciations but it is a great rental market with consistent cash flows. I personally invest in Scranton and find it to be a safer renter pool. Being your going for cash flows and not flips I would recommend no less than 3 units to be safe to allow for expenses to not cut into your profits so nothing comes out of your pocket. 

The numbers look pretty good to me. I think you’re light on cap ex and repairs, but you may know more about that than I will. Ron is one of the major PMs out here so he would know better than I would. 

If you’re looking for more appreciation, there are areas around Wilkes Barre like Kingston and Forty-Fort that are like mini suburbs. Wilkes Barre is more of a commuter town where Scranton is primarily residential with closer higher end areas. 

If you’re looking in Scranton, you can check out Dunmore as a higher end city just outside Scranton limits. 

Like Ron said, your demographic and  varies by street around here. There’s a lot of colleges in this area to consider as well. 

@Zachary Paschke

Thank you for your input! I'd plan to renovate as soon as I buy it before putting in tenants and I'd also pass on anything minor to the tenants costs. It's worked for our single family rentals in the Poconos. 

@Ron Parasole

Thank you for your input. I will be in the area on Wednesday. It'll be great to be able to take you out to lunch and have a conversation about this. We're looking to scale up buy and holds and are trying to find a good place to get started. Poconos is ok, our area Bronx and Westchester are very competitive and low, low, low caps. We're looking for that place within reach to get a few places. 

@Ceasar Rosas

As @Ron Parasole wrote, you need to give a general location when dealing with WIlkes-Barre. The property classes range from places where multi-millionaires live to literal war zones. There are literally areas within in the city that I would not own even if someone gave it to me for free.

Wilkes-Barre ordinances are a bit annoying. I wouldn't say it's a deal breaker but it's a bit overkill for my tastes.

Political atmosphere in Scranton is way too crazy for my tastes. But rents are significantly higher compared to Wilkes. 

How did you figure your expense percentages? 60% of gross rent isn't unreasonable, but you do have to be careful with taxes, flood insurance, etc. 

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

@Ceasar Rosas , Hey buddy I am sorry I am a little late to the party. Just looked at your deal sheet. To be honest I agree with @Ron Parasole .  The deal is moderate at best at $600 per month for each side. If you have 3 bedroom units and the renovation is decent, you should be upwards of $800 per month for each side. At that point it is much more attractive. As Ron stated, with a duplex, if you lose one tenant for a month or longer you will be out of your pocket to float the building. And you should always count on a few evictions before the building is truly stabilized. 

Seems like you have some liquidity. So if that is the case, you might want to step up to a 3-4 unit. Money from banks is cheap. Spend more on the property which will generate more income. Your expenses will only go up slightly to borrow 20 year money. If you are liquid enough, buy in cash, renovate in cash, rent the property and cash out with a local bank. Then you can pull out a little extra. This will keep you rolling quick.

I'm not too familiar with WB but Scranton is a solid rental market with good rents as @Chris K. was saying. But he political environment is a disaster. If you jump in here, do your due diligence. Check with city records to make sure properties are not condemned and are registered for the amount of units you are suggesting it is. Good luck my friend!