I have been a real estate agent for the 25 years. I have worked with several investors, mostly flips, over the years. I have flipped properties myself with my husband and I own a STR in Ocean City, MD.
I am coming into an inheritance and plan to BRRR a few properties with some of the money. I live 90 minutes from Lancaster, PA and lately there seems to be a buzz about the city for Airbnb and day/weekend trips. The STR's look very nice on Airbnb and although the LTR monthly rent isn't as high as it is in my neck of the woods (Bucks County, PA), the prices for a duplex and triplex are reasonable $300-500k and up.
I am thinking of a duplex or triplex and holding one unit for STR and the others for LTR or MTR.
Englewood, NJ · Member since 2018 · 356 posts · 60 votes
3d
Cathy, I don't have direct Lancaster experience but I've been looking at similar secondary markets in PA as an investor up from North Jersey. The BRRR strategy on a duplex/triplex there makes sense on paper - the entry prices are reasonable enough that the numbers should work, especially if you're running one unit as STR.
One thing I'd watch carefully: Lancaster has been getting a lot of that "up and coming" buzz, which means prices have already moved. At $300-500K for a multi-family, make sure your after-repair value supports the refinance step of BRRR. If you're overpaying on the purchase because of the buzz, the appraisal might not come in where you need it to pull your capital back out. I've seen this happen in a lot of markets that get the Airbnb hype cycle - the purchase prices get ahead of the actual rental income.
The STR/LTR mix you're describing is smart from a risk perspective. If Lancaster tightens STR regulations (and a lot of secondary markets are starting to), you can convert that unit to LTR and still cash flow. Have you checked what the current STR zoning rules are in Lancaster city proper? That's the first thing I'd verify before committing to a unit being STR.
The 90-minute distance is workable for property management but far enough that you'll want a solid local team - handyman, property manager at minimum. Since you're an experienced agent you probably already have that network closer to home, but Lancaster might need its own version.
Curious what cap rates you're seeing on the properties you've been looking at?