Markets for House Hacking in South East Pennsylvania

Hi Joe. I live and have three long term SFR in Delaware County. Bought the first one in 2017. Wish I bought a dozen back then based on the market now but who could have predicted it. Heh. Anyway, my opinion in Delaware County is the prices are too high, mortgage rates too high (if not paying cash of course), and the taxes are outrageous to make a decent monthly ROI unless your monthly rent is outrageous. However, people are paying the rent prices but for how long in this economy? That is my concern. Housing prices are pretty high so not sure how long it will take to see significant increase in values. My initial goal was to have a monthly income from rentals so I can quit my 9 to 5.

I don't know the real estate market particulars of the areas you zeroed in on but they are generally lower tax areas and lower housing prices yet still respectable rents with room for home value increase. I think you couldn't go wrong in those areas if properly evaluating the deals.

Good luck.

Percy N.

Developer · Philadelphia, PA · Member since 2015 · 2k+ posts · 905 votes

I had SFR rentals in Montgomery and Chester counties for the past 15 years or so.

The type of property you get will depend on how you plan to manage it. Are you planning to self manage a co-living space?

Like any area, some will be better than others. Think about your ideal tenant base and where they would rent. I have also had good experiences with the Montgo Housing Commission.

Ryan Legat

Real Estate Agent · Allentown, PA · Member since 2023 · 14 posts · 18 votes

Hello Joeseph,

I have house hacked myself and work as a realtor in the Allentown/Lehigh Valley area so I can offer my thoughts on the current market for investment properties.

The Lehigh Valley and Allentown in particular have experienced a ton of growth in recent years with an average population increase of 1 percent a year. Job growth in Healthcare, Warehousing, Manufacturing, and Service Sector have fueled this change. This in turn has created a demand for real estate keeping rent prices high and new construction happening almost constantly. I expect this trend to continue for coming years as new business open up shop and warehouses are being built constantly.

The downtown area of Allentown was at one time filled with old, dilapidated, abandoned buildings that have been torn down and replaced with new apartments, offices, and event centers. Some areas of the city are deemed "Neighborhood Improvement Zones" which offer tax incentives to individuals who own property there.

Due to these factors I feel there will be a lot of opportunities for decent returns in the investment property market. Especially if you are house hacking. Of course I encourage you to always do your own research and due diligence.

Good luck with your investment goals.

Clark Kirkpatrick

Contractor · Pottstown, PA · Member since 2018 · 216 posts · 160 votes

@Joseph Gringeri I'm house hacking in Pottstown. Been investing here for 5 years now, and it's an up and coming area with a solid downtown scene (better than Coatesville, not as good as Lancaster City). It's a good spot, if you can find a multifamily home here.

Alan AsriantsBusiness Member

Real Estate Agent · Philadelphia, PA · Member since 2019 · 1k+ posts · 1k+ votes

[email protected]267-767-0111

Hey Joseph! I am an agent and investor in the Phila area. I own most of my properties within the city limits but also own in Bucks County.

I believe dollar for dollar I am seeing the best value right now in Delco.

Feel free to reach out anytime and we can go into more detail about what I'm seeing!

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Ryan ThomsonBusiness Member

Real Estate Agent · Colorado Springs, CO · Member since 2018 · 1k+ posts · 1k+ votes

@Joseph Gringeri was there a question in there I missed? Here is my opinion on house hacking locations.

I imagine that specific neighborhoods/suburbs are less important than how the actual house will perform and the options it has for exit plans. When it comes to House Hacking location I usually tell me clients in Colorado Springs that the house is more important than the exact neighborhood.

Three things to consider that are more important than location (but also take location into account):

1. Are you comfortable living there for a year?

2. Does it provide an acceptable house hacking strategy while you live there?

3. Does it have a good exit plan for renting the property when you scale to the 2nd house in a year?

Remember if your goal is to scale you only have to live there for a year.

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Ryan ThomsonBusiness Member

Real Estate Agent · Colorado Springs, CO · Member since 2018 · 1k+ posts · 1k+ votes

Another thing to remember is that you are not going to cash flow! But the returns are still amazing compared to renting.

House hacking is tough to cashflow in year one (with current house price run-ups and interest rates) for a couple reasons:
1. You are living in one of the rentable units
2. You are only putting 5% down so your loan amount is much larger and therefore your mortgage payment.

I would consider your net worth ROI. What I mean by this is considering how much your down payment returns to your net worth (appreciation, loan paydown, tax benefits, AND rent avoidance).

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Sheryl Sitman

Rental Property Investor · Philadelphia, PA · Member since 2015 · 480 posts · 362 votes

My tip as a long term investor in Philly, Bucks County, Lehigh Valley (but not Allentown) -- work with local people who know the areas you are looking at really well and work on defining what you want to accomplish. For example, I do not see the optimism in Allentown that you are mentioning. It's been talked about as up and coming for years and it is not taking off. Lots of investors go there because it is cheap. We got into Bethlehem and Easton years ago because we did see the real signs of change -- and now only wishing I had bought more . . .

When you choose right today, the bonus in 5-10 years can be incredible.

Brayden Hrycko

Lender · Allentown, PA · Member since 2023 · 207 posts · 38 votes

Hey @Joseph Gringeri,

Happy to see you considering the house-hack option. It is a great way to get into real estate. I am also in the Lehigh Valley so I figured I'd reach out to connect. Happy to be a resource as well! Good luck to you on your search!

Joseph Gringeri

OP

Member since 2022 · 7 posts · 7 votes

Quote from @Scott Fisher:

Hi Joe. I live and have three long term SFR in Delaware County. Bought the first one in 2017. Wish I bought a dozen back then based on the market now but who could have predicted it. Heh. Anyway, my opinion in Delaware County is the prices are too high, mortgage rates too high (if not paying cash of course), and the taxes are outrageous to make a decent monthly ROI unless your monthly rent is outrageous. However, people are paying the rent prices but for how long in this economy? That is my concern. Housing prices are pretty high so not sure how long it will take to see significant increase in values. My initial goal was to have a monthly income from rentals so I can quit my 9 to 5.

I don't know the real estate market particulars of the areas you zeroed in on but they are generally lower tax areas and lower housing prices yet still respectable rents with room for home value increase. I think you couldn't go wrong in those areas if properly evaluating the deals.

Good luck.

Hi Scott, thank you so much for your insight, and congratulations on your previous deals. I also noticed the high prices and taxes in parts of Delaware County; some neighborhoods had lower home prices, but relative to their other aspects, such as crime, population growth, etc., I do not see them as markets to invest in long term at the moment.

Best of luck on your journey, and if you are free to connect in the near future, it' be great to hear more about your experiences in RE.

Joseph Gringeri

OP

Member since 2022 · 7 posts · 7 votes

Quote from @Percy N.:

I had SFR rentals in Montgomery and Chester counties for the past 15 years or so.

The type of property you get will depend on how you plan to manage it. Are you planning to self manage a co-living space?

Like any area, some will be better than others. Think about your ideal tenant base and where they would rent. I have also had good experiences with the Montgo Housing Commission.

Hi Percy, thank you for your insight. Ideally I would like a multi-family home (duplex, triplex, quadplex), but since they are more hard to come by I am prepared to manage a co-living space myself if the numbers work.

I will definitely keep my ideal tenant base in mind, and this is what has deterred me from some areas in the above counties, even if the cash flow may still be there.

Thank you again for your help.

Joseph Gringeri

OP

Member since 2022 · 7 posts · 7 votes

Quote from @Sheryl Sitman:

My tip as a long term investor in Philly, Bucks County, Lehigh Valley (but not Allentown) -- work with local people who know the areas you are looking at really well and work on defining what you want to accomplish. For example, I do not see the optimism in Allentown that you are mentioning. It's been talked about as up and coming for years and it is not taking off. Lots of investors go there because it is cheap. We got into Bethlehem and Easton years ago because we did see the real signs of change -- and now only wishing I had bought more . . .

When you choose right today, the bonus in 5-10 years can be incredible.

Hi Sheryl, thank you so much for your advice. Hearing the opinions from those in the area is something I am continuing to try and seek, versus only relying on online research. That's really great that you found an amazing opportunity in those markets. I would love to hear more about your experiences in Bethlehem in Easton and how you measured the signs of change in those areas years ago. If you are free in the near future, it'd be great to set up a time to connect for whenever is best for you.