Ethan,
Congrats on the jumping into the game. It is great to see some young blood coming into the area to invest. I am heavily invested into the Scranton market. The rents are very solid, properties cheap, and demand is high. Overall, I feel the upside and potential appreciation in the Scranton market is good.
The negatives to the market are the high property taxes which are not so bad if you calculate going in to the deal and the other issue is the City regulations.
Scranton is their own worst enemy. Some of their rules and regulations are ridiculous. If you are buying single family or duplexes, you are always good. But be very careful with any condemnations. Any multi-family condemned for over 6 months reverts back to a single-family home. So do your DUE DILIGENCE and make sure the units are registered with the City.
The reason I like Scranton is because it has a great infrastructure. With three major hospitals, about seven colleges, and the Medical school, the pool of tenants is awesome.
The surrounding areas like Dunmore is also another solid market. Rents are not as high, but demand is good. Scranton's high property taxes and wage taxes all play into Dunmore's appeal.
The past year and a half I've been doing some flips. Getting ready to market my last one next week. As the market is starting to climb in price, you still need to keep your sale prices fairly cheap, so it is important to buy low and make sure your construction costs are not too expensive. But if you do want to flip, you should expect to be liquid with cash. Trying to use bank loans to flip properties will substantially increase your overhead and drag out the projects.
In my opinion, the BRRRR strategy works well here. Buy, rehabilitate, rent, refinance, repeat. Start reasonable with 4 units or under. Make minor cosmetic changes and slowly spend money on modernizing the plumbing, heating, electrical systems which will in turn lower your operating costs. One of my good friends runs a spray foam insulation company. It is a great "value add." to any building.
But beware of condemned and vacant properties if they are two units or more. The City of Scranton is a very difficult political environment. Unfortunately, Scranton does not work well with landlords and investors. Any property you buy that is multi-family, be sure to confirm with the City how many units the building is. Zoning issues can be costly.
I have won a class action lawsuit against the rental registration fees that Scranton has been imposing. They are high and now they City will be refunding landlords who have paid them. Lastly, the inspection portion of the rental registration is now obsolete which is good because it will keep City Inspectors from harassing the property owners.
As for the excessive garbage fees in Scranton, I have also just recently won another class action against these as well. The case is still in its infancy but at least people should know that the fees will be substantially less soon. Now, Scranton charges $300 per apartment per year for garbage. I am hoping to reduce these to $150-180 per apartment per year.
There is also some other litigation fighting going on at the moment, but it is new. We are going after business privilege, mercantile, and local services taxes that Scranton has been over-charging people for many years.
All in all, Scranton is a great market to buy in. A select few of us are fighting hard to keep overhead costs down for property owners and investors.
The City is in financial distress and the market is not stabilized yet because of the uncertainty of the future. Most likely Scranton will go into a receivership or low-level bankruptcy. It is inevitable, but once that happens, the financial recovery will boom quickly, and prices will climb quickly. So now is a great time to start getting involved. You will need to hold on for about 3 years and then the market will stabilize, and your investments will prosper.
If I can help with anything, please feel free to message me as well anytime.
