Josh and I hadn’t chatted in a while when he called me up to ask about finding real estate deals in PA. We both grew up in central Pennsylvania, even attended Penn State together, but lost touch after he headed west to work for a tech company in San Francisco. But, after more than a decade of working long, grueling hours in a city where his six-figure salary barely bought him enough square footage to house his family of four, he said was ready to shake some California dust and come home. And, after doing some serious soul-searching he decided that he was more right for the real estate industry than the corporate world. He wanted to switch careers and start investing in property, like me. But, he was worried that, with so little experience in the local market, he’d never be able to beat out the competition. I told him not to worry. I was happy to help him put those fears to rest.
Why PA Real Estate Deals Offer Solid Returns
First and foremost, I told Josh, his decision to come home was a good one—and, not just because I was looking forward to connecting with my old friend again. In my opinion, building a real estate investing business here in the Keystone State is actually easier to do than in other regions around the country. Yes, the selling price for an investment property may be higher in places like California, but the entry point is going to be higher, too. Miscalculate your numbers there—even just a little—and you might find yourself headed home for entirely different reasons.
Contrast that with Pennsylvania, where the median home list price is less than $200,000 and, therefore, well within reach of the average homebuyer. Your entry point for investing in the market will be lower and, provided you correctly run the numbers so that you buy below market value as well, the potential returns when you sell could be even better. Plus, where would-be homeowners can afford to buy is exactly where you should want to invest.
Obviously, not every city within the state will be equal in terms of your ability to make a great living as an investor. That’s why it’s critical to target your efforts in certain locations. You don’t want to waste time or marketing dollars trying to drum up business in an area where there is little to no potential ROI. Even if you can find a couple of houses to buy, renovate, and resell, the time and money you spend acquiring these deals may still leave your bank account upside down and your business without a leg to stand on. Barely breaking even won’t exactly set you on the path to success, either—if your goal is to make a living. And, here in Pennsylvania, there are a handful of places where you can do just that.
Where to Find Real Estate Deals in PA
Some of Pennsylvania’s biggest cities are great places to find the best deals. Philadelphia is a great example. Currently considered a balanced market, median home sales prices are still up from where they were a year ago to just under $195,000, according to Realtor.com. Additionally, sellers are getting slightly more than asking and homes don’t stay on the market for long. This seems to be especially true in up-and-coming neighborhoods like Strawberry Mansion, which is my personal favorite Pennsylvania hotspot for flipping houses. With prices still on the upswing and demand staying steady, Philadelphia tops my list of good places to find great deals.
Pittsburgh and Scranton also fit this bill. Homes in Pittsburgh sell closer to asking price and sit on the market longer than they do in Philly. But, at $170,000, median home sales prices have jumped higher in Steel City in the last year than they have in its eastern counterpart. Provided you’re able to keep your purchase and rehab costs low, as well as exercise a little bit of patience when it’s time to sell, you stand the chance of realizing an enviable return—especially in hipster havens, like East Liberty, or popular suburban outposts, like Regent Square.
And, Scranton, long-avoided by some investors because of market fluctuations that could make your head spin, might be Pennsylvania’s comeback kid. Median home sales prices have risen to $112,000 from $81,000 a year ago, with the neighborhoods of North Scranton and Green Ridge leading the charge. So, if you want to take charge of your potential investment returns, buying houses to renovate and sell here could be your ticket.
How to Get Great Deals On PA Real Estate
It’s important to keep in mind, that how much money you make flipping houses in Pennsylvania will be based on a variety of factors, not just location. The quality of leads that you find and whether or not you can beat out the competition when you find them are critical to your bottom line, too. So, let’s take a look at the lead generation strategies that may help you get investment properties in the best areas.
Lead lists supply the names and addresses of homeowners who can’t make their mortgage payments, have filed for divorce, owe back taxes, and a host other distressing situations that should motivate a homeowner to sell. In theory, this makes for a great reason to buy them, which is why they’re immensely popular with real estate investors everywhere. It helps that they’re now sold through a variety of third-party vendors that allow you to customize the lists to suit your particular goals, too. So, if pursuing expired listings are your thing and you want to buy investment property in Philadelphia, you can set the search parameters for your list using this criterion.
But, in reality, these lists tend to be as outdated as they are popular. They also tend to be an ineffective, even offensive, method for finding distressed homeowners who don’t like that their private struggles have potentially been made public. So, you could end up calling on a homeowner who, despite deciding not to sell because of a family emergency, has been contacted by every other investor in town—and, isn’t happy about it. As such, the use of lead lists is one of the fastest ways to get off on the wrong foot with someone and not secure a deal.
Foreclosure auctions, like the Allegheny County Sheriff Sale in Pittsburgh, attract a lot of real estate investors for a couple of reasons. Foreclosed homes that are sent to an auction tend to be fixer-uppers. They also tend to be priced far below market value, reflecting their condition and the desire of lenders to recoup at least some of their costs. So, it can look like scooping up one of these homes almost guarantees a potentially good ROI when you sell.
The problem with auctions, however, is that starting prices are rarely, if ever, what you really pay for a property in the end. Most homes sold at an auction are in terrible shape, in part because of owner neglect and in part because they’ve been moving through the foreclosure pipeline at a snail’s pace. So, you could easily end up with a home that is too expensive to renovate. And, because home inspections are rarely, if ever, allowed before you buy a foreclosure auction home—with all cash, mind you—you won’t know what you’ve got until it’s too late. And, despite these drawbacks, auctions still attract a lot of other real estate investors. So, even if you decide to risk your potential returns by bidding on an auction property, chances are slim that you’ll actually get to buy it.
Direct marketing tactics, like postcards or flyers, internet ads, and email campaigns, localized infomercials, and even pounding the pavement are also widely used by real estate investors. The reasoning goes that if you can get your name, and face, out in front of potential future clients often enough, they will call on you when it’s time to sell. And, that’s not an unreasonable assumption to make. People like calling on those they feel they know and can trust, especially when they need help handling stressful or embarrassing situations, like selling a house they can no longer afford.
But, marketing to the degree that’s needed to build a name in the real estate investing business for yourself can take a lot of cash, time, and perseverance—all of which you may or may not have if you’re a new investor or new to a city in transition like Scranton. You’ll be hard pressed to win the hearts, and houses, of distressed homeowners from the more experienced, and better known, investors in the area. Don’t get me wrong, it could work. But, without a well-known brand already behind you, it’ll cost you. Just make sure you still have funds left to actually flip a house.
So, while targeting specific areas that hold the best potential for returns is important to succeeding as a Keystone State investor, it obviously doesn’t paint the whole picture. How you go about getting properties in the markets you’ve identified as ideal matters as well. And, to get good deals, you’ve got to generate leads on real estate investment properties that make great use of your time and money. In short, your efforts have to aim pretty high—especially if you want to beat the competition. Unfortunately, most strategies, with one exception, fall short.
How to Aim High and Hit Your PA Investing Goals
Josh was relieved to hear that even with his late start as a Pennsylvania real estate investor, with the right investment marketing tools for generating the best qualified leads, even he can compete with some of the ‘old-timers’ in this business. And, upon hearing that getting those tools was as easy as becoming an independently owned and operated HomeVestors® franchisee, like me, relief turned to action. He moved so fast, in fact, I think he must’ve called the team responsible for the nationally-known “We Buy Ugly Houses®” ad campaign that day so that he could get started on hitting his new professional investment goals as soon as possible.
If you have a passion for real estate, a strong work ethic, and want to be able to beat the competition to reach your own goals, you might want to consider contacting HomeVestors, too. My fellow franchisees and I have purchased over 95,000 homes since 1996, many of them right here in the Keystone State. So, set your aim high and let HomeVestors help you reach your investing target. Call today!
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