Where in Pennsylvania is it best to invest?

Question

Hi BP, I am looking to start REI in Pennsylvania. I have been in the learning stage for a couple of months now, reading books, researching online, and listening to podcasts. Also working on my credit and saving up money. Looking to quit the 9-5 world and eventually do it full-time. My plan is to do a couple of BRRR at first to get a good amount of capital and then transition over to rentals and passive income single families and multi. Is this a good strategy for PA? I'm thinking Allentown, Reading, Kutztown, Macungie. But I'm stuck at where to start and which city is better for BRRR or rentals. Should I start with Sheriff sales, foreclosures or what. Any advice/input on anything is greatly appreciated.

Matt Bertsch · Answer

@Franklin Urbaezj If you're looking for a good meet-up in Allentown check out @Justin Brown's. He holds 2 events per month. A happy hour event and an actual meet-up. It's a really good group with a nice mixture of experience levels.

Noah Scott · Answer

@Franklin Urbaezj I'd definitely take that next step and get yourself involved in the local REI community by way of those meetups.

The reason I mention DFD is that it is a great way to develop your own "list" of distressed properties in and around you. Mind you, just because you see physical signs of distress does not mean someone will want to sell...but it may be a good indicator there is some pain associated with that property.

As you build up that list you can start to go direct to those sellers by way of mail, talk to neighbors about any abandoned properties you may find to get more info. I'd check out DealMachine if you're interested in making it a core part of your strategy. It's owned by a fellow BP member David Lecko.

If you want to start going direct-to-seller more, I'd check out @Ryan Dossey's YT channel. He shows how to pull specific lists from ListSource step-by-step, as well as giving out great free advice.

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Worth noting, I'm sharing all of this experience as a guy in much of your same position. Hopefully, some others can jump on the thread that have done a bit more. I'm still gunning for my first deal for myself (I've helped out as an agent for clients). Just hoping my extended 2 cents helps!

Mark J. · Answer

@Franklin Urbaezj Everyone's situation, motivation, etc. is different. I can give you my opinion, but free advice can cost you the most money...haha..

Sounds like you've already taken the first steps of having a goal, saving, educating yourself, etc.  As others have mentioned, going to RE Meetups can only help, as you'll be able to meet others doing what you want to do and possibly help you get there.

For a 1st deal I'd be a little leery of going the Brrrr route because you will probably have to buy a really distressed property and do a fairly substantial rehab.  Also you will need to save up much more money to buy the property without a loan and cover rehab costs out of pocket. (disclaimer I have not done a Brrrr, though I do believe it's a powerful tool if you can figure it out.)

Personally I would look for an easier "lay up" for your first property.  Maybe something that needs a decent amount of cosmetic work that will have value add potential, rents are under market, etc.  If you don't have much capital you could start with a SFH of small multi.  In the areas you're looking in you should be able to start small, without much capital and get some experience under your belt.

From what I can see Lehigh Valley has become pretty competitive in the last 6-12 months.  Inventory is really low, whats on the market is overpriced or needs too much work.  Since you're in Kutztown you have a proximity advantage that out of state investors don't have.  If it were me I'd probably look for something close by that you can easily drive to.

Start talking to lenders to get your finances in order and know what you can afford. Then start talking to agents and let them know what your looking for. Have them add you to an MLS drip. Analyze the properties to better understand what's going to make a good deal. Start seeing properties in the areas you feel the strongest about. Get a feel for the different neighborhoods and blocks.

Sheryl Sitman · Answer

@Franklin Urbaezj  A newbie buying at a sheriff sale is kind of like a new stock market investor entering the market by choosing to buy one high risk stock and hoping it will be profitable.  Also the assumption that you will get the best deals that way is just not true. There are surely some real pros out there who have made it into more of a science than a gamble but they are buying in quantity with the knowledge that some will turn out to be losers.  I urge new investors to start with something low risk. You are also in a competitive area so put aside the notion of getting an amazing "deal". If you wait and wait for the right deal, many opportunities will pass you buy. You can not imagine how many properties I passed on a few years ago that would have been amazing to own today.  Another tip - if you are tempted to start at low entry point, keep in mind that a toilet, electrician, roof, whatever for a $50k property costs the same as it does for a $100k property. And your rent may be 1/2

Noah Scott · Answer

Hey, @Franklin Urbaezj welcome to BP!

I'm in the greater Philly area in West Chester. From the little I know, Lehigh Valley is one of the fastest-growing economies in PA. A lot of investors from NY have been parking their cash there for great returns...

My suggestion about where to start:  Start going to your local REIA meetings. Learning what LOCAL investors are doing that works around your area and networking with those people is a great horizontal step.

At a local REIA/meetups I can almost guarantee you may meet agents and lenders. If you invest in these relationships you now have people who can help you get access to the MLS and get pre-approved.

Do you know about Driving for Dollars?

Dara Thomas · Answer

Brewerytown in Philly is hot now

Franklin Urbaezj · Answer

@Noah Scott

The local meetups are definitely on my list.

The DFD approach sounds like a great start so I am going to get more aggressive with that. I actually follow Ryan Dossey on IG, will be checking out his YT. I just downloaded deal machine. Very valuable info thank you. As we grow I hope we can help each other out with more ideas/input. Much appreciated.

Franklin Urbaezj · Answer

@Marylin OShea

I like that tip on finding an upside on a property, adding that to the list. Finding an upside like the example you gave on a property would be beneficial in reselling for profit or renting? Either way?

Did you buy the duplex using cash and hard money and BRRR it or the conventional downpayment and closing costs etc? Did you keep the property and rent for cash flow or did you sell for profit?

I actually live about an hour from Lancaster. Alot of my family has visited and told me how nice it is. I havent had the chance to visit but now I am definitely going to and check it out, sounds like a good investment area. With that rental in Lancaster, when you say you're thinking of renovating to BRRR. Sorry if the question sounds dumb(bare with me I'm really trying to learn) Do you mean you're going to renovate, refinance and pull money out because it would be appraised at a higher number than before the reno?

With that rental in Lancaster, when you say you're going to BRRR it after alrdy being rented to your friend, you're going to rehab it and then refinance it to get money out of it since it will appraise for more?

Marylin OShea · Answer

Look for a property with a potential upside. For example a 3 bedroom home could be a four bedroom if the layout was altered. Find something hidden, that only you notice, and make the numbers work!

For example I bought a (distressed) duplex that wasn’t listed as a duplex but a 6-bedroom with two kitchens. I snatched it at a good price within 2 weeks of being on the market.

Regarding PA, I bought a rental in Lancaster last year. Love the town, lots going on lately and nice appreciation. I cash flow about $500 a month. I am thinking about renovating it to BRRR but it’s not an urgent need right now. Maybe in a couple of years. I have a friend living in it with roommates. He manages the tenants and the property and he gets a great deal :)

That’s another trick. Sometimes it pays to find the tenant first. All my leases are two year leases (I own three properties, technically 4 doors).

Good luck @Franklin Urbaezj!

Franklin Urbaezj · Answer

@Matt Bertsch

Thank you very much I have just added him on here, will look up the meetups.

Where in Pennsylvania is it best to invest?

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