New member from Pennsylvania

[Matthew Brown]

I am looking to start putting my savings to work and want buy my first investment property. I am currently looking in Reading, PA. Anyone have any first-hand knowledge of the area?

[Shawn Ginder]

Matthew,

Welcome to BP! I am from Lancaster county just south of Reading, currently live in Europe, but this year made my first purchase in real estate in June. I spent about a 1 1/2 years studying the markets before I jumped in and was able to close on our first deal. 

When it comes to Reading PA beware!!! 

I was under contract to purchase an 8 home portfolio package deal from an investor in the Reading market. During the due diligence period I ended up talking to a Reading investor who has been in that market for over 20 years. Here is what he had to share. He said your best to stay out of the city rentals and here's the reason's.

First you will pay a 4% transfer tax on city homes, normally for most other areas in PA it is 2% transfer tax.

Second he claimed 70% of the cities population are Hispanic who for this city have a reputation of drug use, and have a track record of not treating property well and often will get behind on rents.

Third he claimed 80% of the city is on welfare, all the big companies have move out of the area making it a poor city economically to invest in

From our conversation I said where the 8 homes were located and they were all in bad neighbourhood's or blocks. In fact he owns a rental unit on one of the same streets and he said to me he would give the property to me for free if I'd take it. He has had difficulty renting it and when it sits vacant for any period of time it gets vandalised. He challenged me to ask the seller if the 8 rental units were current on the rent and low and behold only 3 of the 8 were actually current on the rent, yet all units were tenant occupied. After getting a run down of the condition of the city, I backed out of the deal.

He said 20-30 years ago when businesses where there the market was an entirely different situation, but it has turned over the years and not in a good way.

He did however recommend looking in the surrounding suburbs and this is where you can do much better. Just stay out of the Reading city he said.

I see you are from State College area. Why not check out that area? Or check out the Harrisburg suburb markets, again with Harrisburg city there are few areas that are good in the city, but the outer areas have a lot of great potential when you get into more of the residential suburbs of Harrisburg. 

Take some time to read some articles on investing in the cheeper rentals, it will give you some perspective. No need to rush into something, but again once you do your first deal it will be a learning experience all the way through. My best advice find people you can ask questions of that can give you advice like a mentor. Like I did with the Reading investor, his advice was freely given when asked, and it very likely saved me years of mistakes and losses. 

Let me know if can help in any other way.