Are you intrigued by the prospect of a Pennsylvania fix-and-flip investment?
This Northeastern state is more affordable than neighboring states like New York and New Jersey, drawing in many buyers to the state’s history, culture, and natural beauty.
In this guide, we’ll explore the ins and outs of the Pennsylvania fix-and-flip market, including how to find properties, the best areas for flips, and tips for a successful investment.
Start your application with Park Place Finance.What is the Pennsylvania housing market like right now?
Pennsylvania’s median home sale price is $316,300, up 6.2% year-over-year, and the median rent is $1,492.
According to ATTOM’s first-quarter 2024 U.S. Home Flipping Report, four Pennsylvania cities had some of the biggest ROIs for typical home flips:
- Reading (124.9%)
- Pittsburgh (120.6%)
- Scranton (115.7%)
- Harrisburg (113.6%)
Market conditions vary across the state, with some areas experiencing higher median home prices while others are in much lower ranges.
Overall, demand remains strong while supply is tight in many areas.
This provides ample opportunities for investors to come into the state and work their magic in up-and-coming neighborhoods, tech hubs, areas with universities and healthcare hubs, and more.
What are the legal considerations for house flipping in Pennsylvania?
Every state has its own legal considerations for fix-and-flip investments, including some specific to the state and others that are fairly standard no matter where you’re investing.
This includes:
- Building permits
- Zoning laws
- State and local building codes
- Environmental regulations
- Pennsylvania’s seller disclosure law requires you to disclose known material defects to potential buyers
- Transfer taxes
- Fair housing laws
House flippers should consult with a Pennsylvania real estate attorney to ensure compliance.
Best areas for house flipping in Pennsylvania
The best areas for house flipping in Pennsylvania will vary depending on your investment goals.
Here are our top picks for house flips based on demand and investment potential.
1. Philadelphia
Housing demand in Philadelphia is strong, with many up-and-coming neighborhoods drawing in young families and professionals.
The entry point is a bit higher than in other areas of the state, but consistent demand and the right deals can result in strong profits.
Median sale price: $280,000
2. Pittsburgh
Pittsburgh is a fix-and-flip hotspot, with slightly lower prices than Philadelphia and demand fueled by the technology and healthcare industries.
There are numerous neighborhoods in the city undergoing new development and revitalization efforts.
Median sale price: $265,000
3. Harrisburg
Harrisburg is the most affordable city on the list, offering a lower entry point for house flippers than the state’s larger cities.
The city, rich in government and healthcare jobs, has become popular for flipping due to the sustained demand for affordable housing in good condition.
Median sale price: $155,000
4. Allentown
Allentown’s downtown area has plenty of opportunities for house flippers.
The city’s proximity to Philadelphia and New York City has made it an attractive option for people who want more affordable living spaces within commuting distance of larger metros.
Median sale price: $268,000
5. Scranton
Scranton is a smaller market with huge potential for the right investor.
Thanks to the increasing number of remote workers, its proximity to New York and New Jersey, and the demand for suburban and rural living with more space, this city’s demand has flourished in recent years.
Median sale price: $195,000
How to find profitable flips in Pennsylvania
The key to profitable flips is a combination of market research and the support of a strong network.
Let’s dig into the specifics of profitable flips in Pennsylvania.
Research the local market
Look for the following trends in the areas you’re targeting:
- Rising home values
- Increased sales activity
- Redevelopment efforts
- Low supply and high demand
Online real estate platforms such as Realtor.com, Redfin, and Zillow can help investors track price trends and days on the market.
Know how to find properties
Online platforms are a good place to start because most have advanced filtering options to help you find distressed or underpriced properties.
However, working with local real estate agents, wholesalers, and other real estate investors can help you find deals that may not otherwise be visible.
Understand your financing options
Regarding fix-and-flip investments, hard money lending plays a vital role.
Hard money lenders such as Park Place Finance can help you secure financing for properties that are difficult or impossible to obtain through traditional means, including distressed properties or foreclosures.
Hard money loans are fast, flexible, and can be structured explicitly for renovation and fix-and-flip scenarios.
Run the numbers
House flipping requires careful and thorough budgeting.
Contact local contractors to estimate costs, and always calculate your after-repair value (ARV) prior to purchasing a property.
A healthy profit margin is generally considered at least 10% of the ARV.
How to plan for a successful renovation process
A well-planned renovation is directly tied to your flip’s profitability.
Let’s talk about how to execute a successful renovation process in six steps.
1. Set a realistic budget
A realistic budget is key to your success and is based on the following:
- Property’s condition
- Market value
- ARV
Keep detailed records of all material, labor, and permit costs, and always set aside an extra 10% to 20% for unforeseen circumstances.
2. Get an inspection
A professional inspector can identify major, costly issues so you can plan appropriately.
3. Create a detailed renovation plan
Focus on the most high-impact renovations that will yield the highest ROI.
Make sure you tailor your renovations to your target buyer’s preferences.
4. Get the necessary permits
Apply for and obtain all required permits before starting work, or you risk costly fines.
5. Hire reliable contractors
Hire experienced, highly recommended contractors with the proper licensing and insurance.
Issues with quality or delays could cost you big time later if you neglect this step.
6. Stick to your timeline
Stay involved throughout the renovations to make sure tasks are getting completed in the correct order.
Be sure to factor in potential delays due to weather, inspections, or other unforeseen circumstances. Remember, time is money!
Work with Park Place Finance
Park Place Finance is a direct hard money lender with in-house capital—and we love helping flippers of all experience levels accomplish their goals.
When you choose to work with us, you can rest assured that a team of real people will be dedicated to funding your fix and flip as quickly as possible.
Apply for your hard money loan here or give us a call at (866) 407-1599.