HELP: Allentown vs Harrisburg vs. Reading

[David Pagan]

Hey Guys,

I'm trying to scope out places to invest in Pennsylvania. I've traveled to Harrisburg, Allentown, Scranton and It's getting a bit overwhelming. Having a hard time focusing on a specific market. I thought Harrisburg was perfect until i drove around and realized just how much the neighborhood changes from street to street. Not to mention Flood risk.

I'm looking for Landlord friendly cities and intend to self manage the property.

Any help would be really appreciated! 

Thanks

[David Ribardo]

The short version: Looks like you live in Allentown, so invest there.  

I'll define Allentown as the Lehigh / Northampton county areas. Overall this has been my favorite out of the four major areas I've invested in (Georgia, Louisiana, New Jersey, and Eastern PA). Landlord / tenant laws are very reasonable, and there is strong economic growth in the local area. There are huge numbers of jobs here that pay $25 an hour, which based off a 40 hour work week, make tenants qualified for a $1,350 a month apartment. Aside from Easton, code requirements are pretty reasonable.

I've looked at expanding to NJ, but the landlord / tenant laws and higher taxes are a killer. Most of my clients are from the NY/NJ areas and come here because of these things. I've looked at expanding into the Wilkes Barre and Scranton areas. That looked like it had great potential, since purchase prices were significantly lower. Appreciation there is low, rents are low, and assuming maintenance as a fixed cost (for example, a hot water heater costs $450 from Lowes in Allentown, $450 from Lowes in Scranton, installation takes the same time, and labor costs aren't all that different), the ROI isn't great. I'd need three times as big of a portfolio to achieve my goals up there. Yes, I could scale up quicker because of the low costs, but I'd much rather have a smaller portfolio of higher-profit units.

If you intend to self-manage the property, I'd immediately cross out everything that is more than an hour drive away. I have inherited quite a few property management clients that were formerly self-managing remotely. The belief that "no one takes better care of my own properties than myself" is commonly held, as well as thinking that the extra profits would help them scale up quicker. The reality for many is that life gets busy, the half-day trip to the property is difficult to cram in, and that property management is tough. One bad decision can kill the profitability of a unit for years.

What happens when someone needs to be there for a rental inspection, or for the utility company to inspect a meter - do you go yourself? How much time do you spend, and what is the value of that time? What happens when a tenant needs to be evicted because they are running a car in the garage and causing carbon monoxide poisoning to the tenants above it? What happens when your tenants call you and say "I think the neighbor below me died, can you do something?" Or one of my favorites... the tenant reports the roof is leaking. Three roofers all tell you that the roof needs to be replaced, but you are skeptical. Do you walk the place yourself, and realize that all the contractors are wrong, it's that the top floor tenant has four puppies that are peeing everywhere, and it is urine coming through the ceiling? That one walkthrough by my maintenance coordinator saved our client over $10,000. 

Welcome to the forums David! Keep these questions going so we can help you be successful!

[Calvin Mora]

Allentown is a great city, lots of jobs, great infrastructure, Close to many attractions, but its gotten too expensive. If you're starting off i`d suggest pushing farther out, scranton-wilkes-barre,farther out in luzerne county, or reading. These are very populated towns that are a bit more affordable, well im not sure anymore lol. prices are a bit higher but you can also get a bit more rent in the allentown/ bethlehem area.

[Dan Marriggi]

Scranton/Wilkes-Barre no longer a bargain. Market is overpriced for the median income and interest rates too high to cash flow.
That being said, there are deals - one just needs to be smart

[David Pagan]

Thank you all for the replies ! Great info 👍🏼 

[Matthew Morrow]

Navigating different markets in Pennsylvania can indeed be overwhelming, especially with varying neighborhood dynamics. (Most of our cities here vary like this, and each opportunity is evaluated on a case by case basis. Just the nature of real estate.) 

When searching for landlord-friendly areas, it's crucial to consider local regulations, tenant laws, and the overall rental market's health. Easton is by far the most hoops to jump thru in our area. But the rest are actually quite simple and straight forward if you follow their rules. 

 While you've already explored Harrisburg, Allentown, and Scranton, consider expanding your search to include other rural towns around metro areas that might offer a more stable and landlord-friendly environment. Additionally, if flood risk is a concern, prioritize areas with lower risk profiles. 

Self-managing properties also means you'll want a market that's not too demanding in terms of tenant turnover or maintenance issues. Networking with local landlords and real estate groups can provide valuable insights into different markets. Keep researching and visiting potential areas; finding the right fit might take some time, but it's key to a successful investment. 

If you need help with it, or just want to brainstorm- feel free to reach out! We invest here, and our team helps many investors find their deals in all of the Allentown, Reading, Pocono areas. 

Good luck!

[Kate Daye Ruane]

I strongly disagree with the insight above about Scranton / Wilkes Barre market being overpriced for investors. I have dozens of investors still getting high cash flows and cap rates even in the current interest rate environment. I DO agree with the above comment regarding considering the surrounding neighborhoods. In Lackawanna county (Scranton area) for example, I always recomend looking in the surrounding neighborhoods of Scranton in addtion, as the rental rates are the same or higher, the turnover seems to be less, the taxes, trash fees, transfer tax etc are lower, and the neighborhoods seem more stable for appreciation. There's a lot of great stuff around here both in and outside of the city limits. The prices of the homes can also be higher. Every purchse needs to be made on a case by case basis, looking at everything from the area, current value (not to be confused with list price), future market value, income, expenses, et al. Don't give up. If you're looking to invest in my market, reach out anytime. 

[Dan Marriggi]

If you are looking to invest in the Scranton/Wilkes-Barre area please do you own DD as suggested above. Information is power and there is a lot available for anyone willing to look deep enough.

In December 2023, Scranton home prices were up 16.7% compared to last year, selling for a median price of $175K. On average, homes in Scranton sell after 28 days on the market compared to 20 days last year. There were 54 homes sold in December this year, down from 67 last year.
Multiple offers are rare.
Currently, The average homes sell for about 2% below list price and go pending in around 29 days.

Really nice homes can sell for about 3% above list price and go pending in around 9 days

To get the best deal - buy off market not retail overpriced MLS properties listed by Realtors who receive their listings only because they gave the seller an overinflated, unrealistic price - These properties languish on the market and then get reduced to a price that's more in line with reality -and above all DO NOT use a Realtor !

Make your offer directly to the seller. If you happen to see a property listed on MLS - go directly to the listing agent - Do Not use a buyers agent.

Good luck and make sure you are checking the median incomes of the areas you are prospecting.

[Kate Daye Ruane]

Dan, who hurt you? 

[Adekunle J Popoola]

Quote from @David Pagan:

Hey Guys,

I'm trying to scope out places to invest in Pennsylvania. I've traveled to Harrisburg, Allentown, Scranton and It's getting a bit overwhelming. Having a hard time focusing on a specific market. I thought Harrisburg was perfect until i drove around and realized just how much the neighborhood changes from street to street. Not to mention Flood risk.

I'm looking for Landlord friendly cities and intend to self manage the property.

Any help would be really appreciated! 

Thanks

[Adekunle J Popoola]

     The Lehigh valley area has had enormous growth --the largest area in the US for warehousing and transportation--largest growth in Jobs from all the warehouse which makes this a great are for rentals. 

  I have many properties and very happy with performance. If I know I am getting a vacancy it does not stay vacant for more than a week   

[Jeffrey Miller]

    Hey there, I seen your post and I have lived and worked construction in this area my whole life. I no longer work construction and now invest in Reading full time. Ive looked at Allentown and Harrisburg even Lancaster however when it came to cash flow and market consistency Reading wins hands down. I now own several small multi family buildings there. I feel like Harrisburg and Allentown preform more like Philly very street to street but Reading is much more consistent in that respect while Lancaster is the appreciation play

[Robert B.]

Still looking for my first deal in Allentown area. If its not other investor/flippers, its NY folks buying stuff. Prefer Northampton, Catasaqua area with offstreet parking.

[Neil Stark]

Quote from @Kate Daye Ruane:

Dan, who hurt you? 

 I actually had a good laugh on that one, Kate! I was on Dan's side until he wrote that.....lol!

[Kate Daye Ruane]

@Neil Stark Glad I could make you laugh!