All Forum Posts by: David Ribardo

@Michelle Maldonado Yes, I'd be happy to add you to the list so you have our latest and greatest information. More importantly, awesome work transitioning out of your condo. That's a fantastic and lower stress way to get started with investing!

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!

Hi Nina! What kind of a property management company are you looking for? 

Overall, there are a variety of options here that can fit just about any investing style. I run the Allentown office of Neo Management Group. I've built around the way I want my own personal rental properties managed. I have personally had good experiences with KPMM and Empire, which are large companies with consistent performance. Whenever one of their management clients sells a property, it's always been an easy addition to our portfolio. There are plenty of others, ranging from huge portfolios with digital systems to one person, yellow notepad based operations.

Some things to think about: 

How involved do you want to be? If you want to be active in managing your properties, a smaller, more flexible company will probably be adaptable to your requests. A bigger company may not be as willing to customize systems based on your preferences.

Do they have in-house maintenance? This can be great, in terms of responsive service and not competing against other sources of business. It can also lead to higher overall costs due to a lack of competition.

How are they structured financially? Most of the companies around Allentown are between 7-10% for management fees, and a one-month rent tenant placement fee. The odds and ends are important here and add up to a huge difference. Do they charge you for evictions? For management of full renovations? If they collect late fees, do they go to the company, to you, or get split? 

I encourage you to interview several property managers. That will let you move ahead confidently, knowing you have the one who is the best fit for you!

@Ryan Kelley Welcome to the forum and good for getting your first post out there! 

The Lehigh Valley and Bucks county are pretty well developed investor markets. Over the past years I've watched it go from a small group of familiar faces at the Sheriff Sales to standing room only, and had the pleasure of mentoring some amazing folks on their journeys. One of the bits of advice I always give -don't try to reinvent the wheel! 

There are more than a dozen investor groups that are already giving a fantastic value to their attendees. I co-host the Multifamily Mastery Meetup, Matt Morrow (hello!) has a good group, Justin Brown runs the BP meetup, and there are well over a dozen every month across the community. Each of them has their own unique audience. Some are tailored to new investors, with a focus on education and plenty of industry professionals that would be happy to take you on as a client. Others are a bit higher level, with more advanced topics and excellent networking opportunities. Pop in and check out a few of them - if you need any recommendations, let me know!

There is a solid demand for long-term rentals in the North Bethlehem area. Typically the higher purchase price and taxes will yield a slightly lower cap rate. This will also attract a higher quality tenant and have lower turnover. 

Yes, just about all the investment properties trading in the area were built in the 1890-1920 range. Each one needs to be taken individually. What I typically look for is something with good bones - structure is sturdy, roof is in good condition with many years remaining life, there are modernized plumbing and electrical systems. I've also seen some "landlord specials" which are falling apart. One of my favorites recently is a roof with three layers deep of asphalt shingles that was still leaking. My personal one I recently purchased had fourteen thermostats and three different heating sources (electric baseboard, kerosene, and propane) for a single unit!

If you buy a well maintained property, the age will not be an issue. 

Hello Dominick - I found myself in a similar situation when I got out of the Army and decided to become a full time investor. I quickly connected with two other folks who had similar goals and we partnered together. My investing knowledge plus their stable jobs made for a quick and easy time qualifying for financing. Years later this turned out to be the best option possible. We split the work up and have a good time doing it. I'm quite happy with our team.

Another thing to take note of - if you have two years of tax returns showing your self-employment income, you are probably good to work with a community bank! They will look at the income you claimed on your tax returns and qualify you based on this. This becomes a delicate balancing act between maximizing write offs and leaving enough income to qualify for a loan, but you may be closer than you think. Our community lenders here that hold the notes in their banks tend to have a bit more leeway in who they work with than you would imagine.

Hello! Happy to connect. I've been an investor in the Lehigh Valley for many years, and currently run a sales team, property management company, and general contracting business. Happy to connect and answer any questions you may have about the area or getting started!

Hey Ryan! Overall Allentown has a little bit of everything, and best / worst places are inherently tied to your goals. Are you a cash flow investor? Great, you might like center city row homes that cash flow like crazy. Are you looking for something to self manage? The west end comes with a higher price point, but overall nicer experience that might be a better fit.

Some general rules of thumb - stay away from Alleyway properties, they are hard to place good tenants into. Proximity to the downtown is nice, but hasn't really increased property values. I wouldn't imagine the waterfront project to impact things any differently as it is completed. Look for places with off-street parking, or even better, a garage that can generate additional income. 

Other than Allentown specifically, take a look at the surrounding areas. Bethlehem, Easton, and some of the surrounding townships have equally good deals. The nuances of each township vary, but overall all of them have enjoyed strong rental demand, good deal flow, and above average appreciation.

@Yiyi Zhang Thanks for the shout out! I appreciate it. @Johnnie Schneider I'd be happy to help out in any way. Let's connect!

Hi James, our team has a general contractor on staff. We may be a good fit for working together - let's connect!