All Forum Posts by: David Ribardo

Hi @LaJon Dantzler. What are you looking to do with an attorney? Unlike NY / NJ, we typically don't need one to close most deals, we use title companies which keeps costs down. We only commonly use them for legal advice, drafting non-standard contracts, and corporate entity formation / operating agreements.

Let me know what you are looking to do and I can give you a recommendation for the right person to talk to!

I'll second Bob, he's doing one for me right now. Him and his team have done great work for us.

Robert, price per unit could be pretty good, depends on which area of town it is in. If you are along Northampton St, it's a steal. If you are in some of the rough areas, you may be overpaying. Average rents of $850 make me assume it is all one bedroom units, is that correct? Your financing terms sound pretty good, most people are using 25% down. 

Your operating costs are the big question here - how do you break those down? What are the numbers you are using for taxes, insurance, maintenance and CAPEX, utilities, administrative fees, and other miscellaneous expenses such as snow removal, rental registration fees and inspections, and CPA / LLC filing fees?

As far as the management fees, I assume a typical 10% plus one months rent structure, with an average tenant stay of two years. This can be calculated by taking the gross rents, subtracting your vacancy rate, and multiplying by 10%. Then, add in your tenant placement fees by adding half of one months rent. That will be your annual cost of property management. As far as PM fees go, once you are at 5+ units, typically you will be able to negotiate for a bit of a discount - 7% is not unreasonable for your situation.

I'll jump in as a third recommendation for Bob Rust. He's very investor friendly, and has delivered an immense value the several times we worked together.

Nope, no one has purchased any properties in Allentown PA... there are no deals to be had here, move along...

@David Saget, it's a market that has been flooded with investors from NY and NJ over the recent years. Money has been coming from out of state since we have much nicer purchase price to rent ratios and more favorable landlord / tenants laws. I do mostly out of state investing myself, and the biggest challenge I've faced when building my business has been choosing the right people to work with. If you have one team member that does not get the job done - whether it is your agent, inspector, lender, contractor, or property manager, the whole deal comes to a grinding halt. You have to have reliable people to work with.

@Syed H. is spot on. Everyone in NYC / NJ wants to come over here to invest, and there is a ton of uneducated, out of state money that is driving prices up rapidly here. It's hard to find a good deal these days and requires hustling. 

From my perspective, all of those aside from Scranton are the same market. One team (agent, property manager, contractor, etc.) can take care of anything in Lehigh or Northampton counties. Sell SFHs regularly go in the $80-120k range, and I just closed on a duplex yesterday in that price range, so yes that opportunity is there for you. The key thing is choosing the right people, more than the market. When I first got started, I bought some houses in great areas that should have been home-run investments. Unfortunately, because I didn't have a good contractor or property manager, I ended up losing money for the first two years before turning them into a success. Focus on building a solid team... and good luck!

Carolina, welcome to the community. Dave, thanks for the shout out!

The biggest recommendation I have for a new investor is to choose the right people to work with. When I got started, I spent a few years learning lessons the hard way. If you choose to work with people who have investing experience, they should be able to help you avoid common pitfalls. Every agent will tell you that they work with investors, but make sure they actually do. Any agent can open a door, show you a property, and write your offers, but an agent should be able to discuss market demographics, help you run the numbers on properties, and connect you with people through the industry. Your contractor should be the right blend of skill and pricing, often the cheapest one is not the best deal. You need a good lender who will ensure no buyers side issues. Finally, a property manager who is responsible, reliable, and professional.

Overall, the decision of who you work with is much more important compared to the township you choose to buy in. Good luck, and feel free to reach out if you have any questions!

Vincent, the MLS supports your approach. Over the past six months, Allentown school district has an average of 36 days on market for a residential rental listing, with a sample size of 136. Parkland by comparison has an average days on market of 32, with 96 properties rented out. You won't have any issues renting out properties. As always, the biggest variable is going to be who is marketing your listing, and how responsive they are to inquiries and showings. That's the key to filling vacancies quickly.

@Randy Gutierrez Thank you for the shout out! 

Cole - good on you for looking for the right agent to work with. Most home buyers, including investors, will start working with the first agent they come in contact with. I did this for my first three deals and missed some really big red flags. Though my agents gave me good recommendations for purchase price and rental amounts, they were clueless when it came to rehab estimates, and totally underestimated the vacancy rate I would experience. They just didn't know, what they didn't know. Being an agent and an investor are two completely different skill sets.

Overall, it's important to find an agent that has first-hand experience as an investor. There really isn't any substitute. 

@Stephen Kunen this is definitely something that I would recommend you get a proper contractor for. My teams contractor handles all permits and inspections for us, and the peace of mind and good relationship with the city have been well worth the additional cost of using a professional. Yes, you can save a bit of money by doing it yourself, but this can easily open up a great deal of liability. I had one client that ended up coming to me after losing $70k on a flip deal. They had permitting issues that caused them to have to tear open the walls and re-do much of the work.