All Forum Posts by: David Ribardo

@Syed H.- Totally underestimated the hassle that comes with rental listings. We posted one for rent, and it ended up getting over 100 inquiries in the first 24 hours. The demand is there, and the neighborhood is changing for the better.

I work with plenty of investors that are getting good rates of return, and currently live in Allentown myself. Just like any major city, there are good and bad areas. The key here is avoiding alleyway properties and locations that attract low quality tenants. In Allentown, I like the West End and south side.

Investor money continues to pour into the area and drive appreciation. I use two unit properties in Allentown to evaluate this change. Two unit properties sold for an average of $87k in 2016, $95k in 2017, $124k in 2018, and $130k in 2019. That is a 50% appreciation within that market sub-class in three years!

My advice for anyone getting started - the people you work with will make or break your success, more than any numbers you analyze. Do your due diligence in screening your team as you build them. You could be in the best market, but if you have a bad agent, contractor, inspector, or lender, any of them could keep you from being successful. Flip that around - with the right people, you can make profits in even the toughest of markets. There are always deals to be had for those that work for them.

That is correct! In PA an attorney will typically only get involved for an operating agreement for an LLC, larger commercial deals with non-standard agreement of sale documents, or if there are needs for legal interpretations for contracts. Title companies fulfil the role of processing real estate transactions with a much lower cost.

@Basit Siddiqi Thanks! 

Stefan - there are plenty of experienced professionals in the area that can help. Make sure you choose an agent that is an experienced investor themselves. I ended up learning a ton of mistakes the hard way when I got started because I used a residential agent. Now is also a great time start looking for your lender, property manager (See Chad above!), home inspector, and building up that team. I find that a good agent will bring most of these connections to the table - start there, talk with several agents, and see who is the best fit for you!

@Renil M George - there are plenty of good neighborhoods. Typically, it all depends on what your goals are. Do you factor in appreciation potential, or buy just on cash flow? What level of risk-tolerance do you have - can you buy in a rougher neighborhood and hold on to the property for five years while it improves, or do you want something that is low maintenance and headache free from day one? 

The big thing that I recommend is working with someone local to identify your level of involvement, goals, and then discussing the market to see where is the best fit for you. Here in the Lehigh Valley and Allentown there are areas that meet just about every investors criteria, from beautiful A neighborhoods to cash-flowing D areas. There are some areas that are generally more attractive to investors, but it is often on a street-by-street basis.

@Caleb Palladino, there are plenty of good areas in both towns for investing. It all depends on your risk tolerance and personality. I have some investors that will buy properties in distressed neighborhoods, fix them up decently, and hand the keys to a veteran property manager and soak up a ton of cash flow. These properties have been lower in terms of appreciation, but work out pretty well for passive income and are resilient to market corrections. The key there is avoiding alleyways and knowing which blocks and streets to stay away from. On the other side, you can pay a little bit more for a property in a gentrifying neighborhood, and get a good blend of cash flow and potential for future appreciation. I find this to be the best strategy for a new investor coming into the area.

@Zeb Lopata, it's a great meetup. Welcoming crowd, and a great place to learn about the local market, meet some professionals, and ask questions!

@Nathan Christensen The Lehigh Valley is a strong and diverse market, with plenty of opportunities to house hack 2-4 unit small multi family properties. There are neighborhoods that will fit just about any style, from the rougher but very cash flowing center city Allentown, to very upper end suburbs, and everything in between. I'd be happy to point you to the specific parts of town that are gentrifying and on the upswing. If you like things a little more rural, the Slate Belt up to the north has plenty of good opportunities as well. For an owner occupant, look at FHA and USDA for low down payment options as well.

Robin, I work running a team of investor agents in the Lehigh Valley, so I'm a little biased. However, I'm also a buy and hold investor, and most of my properties are out of state. 

Allentown has a few interesting areas. The downtown area has a ton of large commercial development going on, but no real opportunities for a newer investor. The center city area is a great cash flow neighborhood - purchase prices are cheap, vacancy rates are low, and rents are high. The standard of living there for tenants has a bit of sticker shock to a new investor to the market - think, tons of slum lord properties. However, by being a reputable landlord, you can definitely have a good experience and make them work. The Lehigh Valley has plenty of economic growth going on - Fedex and Amazon are both expanding their footprints around the airport, Air Products built a new 5,000 job headquarters, and the college communities (especially Lehigh university) are strong as ever. These jobs have led to new construction in the 4-5 bedroom, $350k+ price range. This has also led to a shortage of affordable housing, and that makes it easy to rent out any vacant units you may have.

As far as the Southeast goes, I have rental properties in Lousiana and Georgia - I'd be happy to talk about them and my experience as an out of state investor separately!

Max, welcome to the forum! 

I am a buy and hold investor, and run a team of investor agents in the Lehigh Valley / Allentown Pennsylvania. A high percentage of my clients are NY and NJ based investors that come across the river for the lower price points, higher purchase price to rent rations, and more favorable landlord / tenant laws. 

Just from your initial post here, I recommend you take a look at other ways to buy rental real estate other then a turnkey company. A turnkey will generally get you the lowest rate of return, but use the least amount of your time. Judging from the enthusiasm in your initial approach, it seems you might be more suited for investing independently. 

You'd be surprised how easy it is to start an out of state investing business with the right team. Get yourself a solid agent, home inspector, lender, property manager, and contractor, and you won't need a turnkey company. Yes- you will spend a little bit more of your time, but with a good mentor and strong professionals, you will have the ability to capture value add opportunities you otherwise would miss out on. Compared to a turnkey, raising rents, doing some cosmetic renovations, and buying properties below value can easily double or triple your overall rate of return.