All Forum Posts by: Cal H.

Hi, I would second what @Sean Bayliss has to say. I purchased a beautiful 2 family with 3 car parking 4 blocks from the new PPL downtown center. The house is also in the Historic District (built in 1868) and has stunning architectural charm on the outside  with a renovated interior.

Also, agree with Sean on being super prepared. I saw the MLS listing Friday morning, called my broker, drove from NYC on Saturday and put an offer in same day. My success in getting this was knowing the market, appreciating the housing stock, as well as knowing what the rent roll would be for the area. I get A+ tenants, a 12% return, as well as appreciation since the area is quickly becoming desirable. I would do it again in a heartbeat!

@Joe, thanks and I will def be in touch when I'm in the market for another deal or to buy you a drink/coffee to pick your brain about RE investing in general. ;)

@Joe Colasuonno

thanks for your take on the numbers. I truly appreciate the breakdown. I had factored in most of this (taxes, insurance, etc. although not in detail in my post ) and yes, maintenance was not factored in I admit. Also,  no explicit mention of capital reserves but understand that is part of the game. I have adequate resources. 

I understand I paid top dollar for the property (fyi it appraised for full purchase price), however I'm proud of it, it has attracted A/B+ tenants, and perhaps it's a NYC perspective but I'm confident that area will appreciate, and if not, its a good source of rental income. Either way i'm happy with the whole deal. 

sure. PM me.

ANATOMY OF AN ALLENTOWN DEAL

Hi All,

BiggerPockets.com has been a game changer in my life. It has provided me with a wealth of information, inspiration and guidance. I can without a doubt say that BP was responsible for my latest deal, so in the BP spirit I want to contribute and share with everyone.

BACKGROUND:

I currently own a property in Boston and a 2 family brownstone in Brooklyn, NY where I also live. I have a day job and I’m not an investor with a lot of extra cash lying around and considering what is going on in Boston as well as Brooklyn, I just can’t afford to buy in these markets anymore without selling something off. (Current strategy it so hold for another 10 yrs, or do a 1031 in 5, 10 years. So for the past year I have been scouring BP for areas where I could get a 2-3 family under 200K with a good return. I drove to Trenton, Albany, Poughkeepsie, Port Richmond, Burlington (NJ) over several months just to get some boots on the ground info and vibe.

My investing strategy was simple. I wanted good rental income with A/ B+ tenants. Any else was gravy. There were pluses and minuses with all these areas (high taxes, high crime, distance, declining or stagnant downtowns).

I chose Historic Allentown, PA.

It’s 1.5 hr door to door from Brooklyn on a weekend morning. I love the Victorian/Federal style architecture and character of the housing stock in the the Historic Distict, and after working out some preliminary numbers I thought it would generate decent rental income.

Historic District Allentown

THE PROPERTY

Historic 1868 2 family house, (2 BR & 1 BR) corner lot, newly renovated kitchens and bathrooms and totally modernized inside, 3 car parking, outdoor decks on N 7th St. It's also 4 blocks from the newly revitalized downtown area on Hamilton St. Low operating costs since tenants pay for everything, heat, electric. I only pay for Sewer & Water.

THE NUMBERS

Purchase price: 180, 000 ( there are many 2 F well below that range with great potential)

30 yr

25% down

4.65% interest rate

Rents in Historic Allentown would get me at least $900 for the 2 BR and hopefully at least $800 for 1 BR. Turns out the property already came with aB+ tenant paying $900 for the 2 BR (that’s on the low side, I will be able to get more next year, closer to $1000+), and I just signed a lease for the 1 BR for $895.

So, the 2 BR rental takes care of my mortgage and some of my operational expenses, leaving me essentially with the $895 from the 1 BR to put in my pocket!

OUTCOME:

I have decided not to use a property management company since the house is in great shape and the interiors were recently renovated. I have built a relationship with a local handyman to take care of minor stuff if needed. Or I will drive the 1.5 hrs on a weekend.

As mentioned, I bought this property from strictly an income generating side. I mean I did realize there was a big revitalization effort going on downtown, but it wasn’t until after I closed that I did some serious research into what is really happening there. The same week American Airlines 15 page spread on Allentown came out.

This area is very late to the Live-Work-Play dynamic that has happened in most urban areas across the country so I’m excited about the potential for appreciation on this property in the next 5-10 years. I think it will be particularly attractive to NY’ers priced out of Brooklyn and other areas based on its proximity and small town vibe.

FINAL THOUGHT

I have read many posts where people called various downtown areas war zones, etc…discouraging and disparaging comments in my opinion. Words such as war zones, “urban” are often code for where brown and black people live, not where danger necessarily lives… Most of my success in real estate has come from not listening or paying attention to thinly veiled racism or socio-economic discrimination. If you can see danger for what it truly is then you have so much more to see.

So my advice would be to get excited about a couple of properties, get yourself a great investment broker and go put your boots on the ground to truly get a sense of a neighborhood’s vibe. Otherwise you are just perpetuating prejudice and you are missing out on some fantastic investment opportunities. 

I would love to share any other insights or thoughts on Allentown if you want to contact me directly. Thanks!

@Keira Ingram

Thanks for the insight Shakeira. Can you add me to your email listings? I'll shoot you my email address in a PM. 

Thanks!

Cal

@William Higgins

Hey William,

Haven't reached out to any management companies, as I will most likely oversee this myself since I'm probably gonna head into SF territory. 

@Tanya Potter

There are still some good deals to be had in East Flatbush. And regarding bad hoods, as long as you stay away from the large projects in Brownsville (East NY) anything is game to take on as far as I am concerned. You need to release yourself from that kind of thinking if you are to be successful and diligent in finding anything in the NYC area. Good luck. If you need any more advice regarding the Lower Brookly area feel free to PM me. 

Thanks!@

Cal

Hi to all,

I currently live in Brooklyn. I've had a rental in Boston for 13 years and I was able to score a beautiful 2 Family in Brooklyn 3 years ago. Strangely enough I just considered myself a small landlord with a full time job. Not paying any attention to the fact that i could grow this as a business. Honestly, I think just being able to hold on to the Boston property through the recession and never seeing it appreciate kind of gave me PTSD about it all. However, I've realized that I now, post recession, I have two great assets I can leverage. I'm also about a month away from getting my real estate license since I think that would be a great back pocket asset to have. 

My goal is to expand into the Philly market since it will be manageable travel and scouting wise. Looking for safe areas that would attract good quality tenants. But I've always done well having a larger comfort zone than most ( I guess less risk adverse?) and being able to snag great properties on the fringes or upcoming areas so looking to do the same in Philly. Not looking for gut reno's but up for properties that that could use some elbow grease and my design background.

Areas that seem of interest to me: 

Port Richmond

Frankford

Kensington

Germantown

Brewerytown

Looking to connect and brainstorm with:

• New Yorkers who are investing in Philadelphia

• Local Philly investors who who know the

• Real estate agents

 • Anyone else who want to exchange info and ideas for future collaborations.

Looking forward to joining the vibrant and knowledgeable crowd here on BP>

Thanks all!

Cal