Allentown, PA multifamily market?

Question

Hi everyone,

I wanted to ask the forums if anyone has any thoughts about house-hacking in the Allentown area? To clarify I do NOT mean Allentown as in the area of Pittsburgh, I mean Allentown the city nearish Philly. I was looking at Minneapolis but it was far from family, a higher price point, strict landlord laws and much higher taxes.

My longtime girlfriend and I are looking to buy a small multifamily in the area for somewhere around 200k or lower. I am currently a loan officer and she is a leasing agent and our salaries combined come out to be right around 100k/year. I grew up on a farm and have done some construction myself and I am hoping to find a place that's a bit run down where I can come in and change the flooring, cabinets, paint, landscape, ect. and get myself some sweat equity. It seems like there are plenty or multi families in my price range on redfin, realtor.com, zillow ect.

I would like to know more about the neighborhoods and if my goals seem reasonable to those of you investing in the small Multifamily market in Allentown. I've heard center city is a bit rough, east and south side are more working class, West side is the nicest and I've also heard good things about Bethlehem and Lehigh Valley but that's all I've gathered so far.

My girlfriend and I are looking to move to the area sometime in mid to late 2020. I'd love to know what neighborhoods you guys think would best suit my goals and where I should start my journey on educating myself about this particular market. If anyone has any helpful tips or advice I'd greatly appreciate it!

Thanks in advance,

Nate Christensen

David Ribardo · Answer

@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.

Justin Brown · Answer

Thanks for the introduction @Brian Adzadi apologies for not getting back to you sooner @Nathan Christensen I have not been on the forms the last several weeks while I have been working to get my first house hack/live in flip on the market. I didn't even know what investing in real estate really was back then lol.

As @David Ribardo said depending on what your goals are their are definitely options that will work in the Allentown market!  It also depends on what phase of the game you are in.  A duplex for your first purchase that just breaks even might not be a home run for a longtime investor but could allow you to save your own living expense for the next deal, then by then you are able to up rents and get some equity and you have a lot of options.  House hacking a single family is not a bad idea either, get a room mate or two, to break even on the mortgage, move out after your 12 month seasoning period and you have a rental! Instead of waiting those 12 months for a home run deal, you have a start and experience being built to set you up for your next deals.

David Ribardo · Answer

@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.

Roxanna Pifer · Answer

I own four in the Slate Belt as well, 2 sfh & 1 duplex and they do pretty well. There are a ton of duplexes in that area. I want to start looking a little further south closer to Easton (east of Allentown) as they are adding tons of new warehouses in Tatamy which to me reads as good blue collar jobs.

Matt M. · Answer

@Nathan Christensen

I’d be very selective in Allentown. I’d stick more with S.Side Easton or even Slate Belt. I do tons of work in S.Side, never been scared or even lock my van. I’ve had materials stolen, and my van broken into in Allentown. Have been staying away for years now. I own a few in the Slate Belt. Good hardworking (for the most part) B/C class area, very competitive though. Lots of contractors have become flippers and realtors.

Brian Adzadi · Answer

@Nathan Christensen

Once I switched to single family, no only did my search become easier, I was able to buy a property within a week of changing my search. I was able to get 4bed 1 bath. I closed on the property in the beginning of September 2017 and rented it out close to end of September 2017. I have made my SFR my new niche. It is a little better I would say because if you find a property that has original owners selling the property, you have a small guarantee that it is well cared for and going to have a better ability to negotiate price because they want to move as soon as possible.

Renil M George · Answer

@David Ribardo please advice on which areas to look for small multis upto 4 family units?

Nathan Christensen · Answer

@David Ribardo I would love to hear more about what neighborhoods you feel are on the upswing. I think the next step for me is to get myself on an automatic mailer for properties that fit my criteria and see how accurate my goals are.

@Brian Adzadi I see what your saying, every market is so insanely competitive, especially for small multi families. I guess it's just a function of being toward the top of the market. How has your search gone since switching focus to single family?

Brian Adzadi · Answer

@Nathan Christensen

Everything you have stated about Allentown, PA so far is to the T. You will find the cap rates are higher here. The price range you are talking about will work perfectly well in the more better neighborhoods like the west side. Although I am not sure if they have too many multi-units on the west side.

The multi-unit market in Allentown is competitive, I must say. I was outbid many times when I was looking for a multifamily. Enough times where I switched from looking for multifamily to single family home. However, that may not be the case with you.

Please contact @Justin Brown. He has ample knowledge about the Lehigh valley area and definitely give you a more in depth summary about Allentown more than I can. Happy investing.

Allentown, PA multifamily market?

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