It’s no secret that the Lehigh Valley real estate market has been downright hot these last couple of years. If you haven't bought or sold yourself, you likely know a few people who have in recent months. And you won’t find a shortage of ongoing predictions and advice for real estate investors to consider during these competitive market times.
The dynamics shift almost daily regarding home values, listing pricing, unemployment, regional economics, and rental property management NOI. For anyone who’s ready to embark on the rental property investment journey for the first time and those who are interested in growing their portfolios of properties, these are the market trend details you’ll want to know. We’ll share relevant Lehigh Valley data, valuable best practices, and trending real estate investment strategies that will help you achieve your investment goals.
The Current Snapshot of Rental-Related Data
Redfin shared some of the latest stats regarding the Lehigh Valley back in May 2022. Compared to the previous year, home prices surged up 17.7%. On average, listed homes remain on the market for seven days, which is the same as this time in 2021. And comparing the number of homes sold from May 2021 to May 2022, the figures are nearly identical, indicating the market today is just as competitive as it was and is still holding.
The Lehigh Valley Planning Commission also shared recent data related to residential development and the local housing market. Housing sales are up, as are median prices. The diversity of properties is also shifting, with a slight reduction in the former dominance of single-family dwellings. There has been urban growth in apartment development, however, leading to higher percentages of renters in the Lehigh Valley region.
According to the Lehigh Valley Economic Development data, more people are moving to the region. Based on U.S. Census Bureau data alone, the number of individuals living in and working in the Lehigh Valley grew by 6% through 2019. The trends continue, as do the local populations, where 66% of workers employed by regional employers also live in the Lehigh Valley. That represents a larger share of those who live and work in the same area, more than any other southeastern Pennsylvania workforce investment area. With more people flocking to the area to both live and work, it only represents a greater demand on the housing market, rental properties included.
Single-Family & Multi-Family Opportunities
Right now, throughout the Lehigh Valley, there are a host of properties for sale. And you’ll find both single-family and multi-family units available. When you’re looking to begin your journey as a rental property investor, there are benefits and disadvantages for both types of properties to consider. For example, a single-family dwelling can be far easier to manage and maintain, especially if you’re new to investing. They’re often more affordable to purchase than apartment complexes or multi-family properties. However, the multi-family unit could be purchased as a turnkey property with existing residents and revenue. Some rental property owners choose to live in their multi-family units for even more added savings, too.
Alternatively, the single-family home can be more challenging to keep occupied. Because you’re only managing one resident or family at a time, there will be risks of lengthy vacancies to consider. With multi-family units, especially those with inherited residents could be problematic with poor residents you didn’t get to vet yourself. Inheriting residents who are damaging to the property or are late with their rent payments every month won’t be very lucrative at all. Living on-site has downfalls, too, since residents have immediate access to you whenever they want.
The key to finding the right property type involves understanding your financial positioning and balancing these risks and rewards. With so many new real estate properties on the market right now, you might be enthusiastic about jumping in immediately. Just don’t forget to weigh your options, along with the pros and cons, to ensure you’re purchasing the best property for your situation. Understanding what you’re prepared to do with your newly purchased property and what expectations you have from it will help guide you to the best decision.
Calculating Investment Strategies
Market trends and industry expert suggestions change all the time. But right now, everyone can agree that the best strategies for investment are those rooted in data and analytics. That doesn’t automatically mean you have to be an accounting major or have direct investment portfolio experience. But it does mean that before you begin buying or selling real estate, you should sit down with your numbers. Begin by outlining specific goals you have for your investment, your cash flow, and your time. From there, you can leverage these analytics to evaluate each property you intend to buy.
ROI: (Investment Income – Investment Cost) / Cost of the Investment = Return on Investment
NOI: Rental Income – Operating Expenses = Net Operating Income
Cap Rate: NOI / Purchase Price x 100%
CoC: (Annual Cash Flow / Total Cash Investment) x 100% = Cash on Cash Return
Net Operating Income will be a key factor as it measures your cash flow without taking the mortgage payment into consideration. It’s an extremely useful dataset when comparing multiple properties at once without diving into the nuances with your loan or financing.
When you’re looking to invest in real estate with long-term objectives, there are other metrics to consider, as well. These factors can change daily, impacting the value of the real estate, demand, and market conditions. Before you buy a Lehigh Valley rental property, explore the very latest stats and projections regarding:
County, city, or township population growth year-over-year
Job growth and economic development enhancements
Improving occupancy rates
Lifestyle and community amenities
Transportation and commuting trends
Working with a Rental Property Management Partner
Another market trend that is taking hold is the widespread adoption of rental property management partners. Today’s real estate investors are recognizing there are some risks and pitfalls they can’t predict. And having a rental management professional in your corner who knows the local market, the latest strategies for NOI growth, and the best practices for resident management is the most proven way to be successful.
You might be able to handle all of the day-to-day tasks and operational steps associated with managing a rental property. But it won’t be long before you likely become overwhelmed with scheduling contractors, running online ads, sending resident reminders, meeting with applicants, and balancing your books. Working with a rental property manager allows you to delegate those responsibilities with your objectives and goals in mind. And when those nights and weekends calls come in because someone has locked themselves out or has a leaking toilet, you’ll have a professional ready to field those calls, so you don’t have to yourself.
Whether you’re a veteran property investor or are just starting out, it can be challenging to keep up with the very latest market trends and investment strategies. Get the professional guidance you need to alleviate unnecessary headaches, streamline operational efficiencies, and grow those portfolios with Axel Property Management! Our teams are experts at everything from creating walkthrough videos for social media and collecting rent to evaluating cost-saving investment trends and improving NOI. Let’s connect and talk about your Lehigh Valley property investment goals today!