My wife Carin and I are fortunate to own a small portfolio of nine rental properties in the Palmyra, Hershey, Hummelstown area. Here's how we got started.
The "mistakes". I like to think of every mistake as an opportunity to learn. I made several of them in the beginning, but I believe while each was a step back at the time - each also allowed me to move forward over time. When I was 23 years old, I bought my first house at 604 Bosler Avenue in Lemoyne, moving directly from my parents' home in Carlisle. At that time, I planned two things. First, to never sell a home, and second, to never pay rent. Neither of those went as planned. I purchased Bosler for $72,000 I believe. My dad redid the kitchen, and we made numerous other upgrades (when I say 'we', I am referring to a live-in girlfriend prior to Carin). Ultimately, I lived there for two years or so, and after going through a bad breakup, I decided one day to sell. I literally drove to the hardware store in New Cumberland, bought a “for sale by owner” sign and zip tied it to the front porch. I forget if it was one or two days later, but I got an offer. While it was a rash decision that I certainly wasn't sure of, I sold the home and doing so allowed me to hit the "reset" button on my personal life (thus breaking 'rule' one). With no place to live, I was fortunate enough to have a sister who was moving out of a condo in Carlisle. I rented from her for a few months before moving to Gaithersburg, MD for my first job at Verizon Wireless. This started a string of rental leases that lasted almost consistently from 2005 to 2011. You see, I was never in one place long enough for it to make sense to buy, moving from Gaithersburg, Germantown, to Carlisle, to Buffalo, to Rochester, and to Wappinger Falls, NY - renting in each city as I went with the exception of Carlisle. I did buy a new townhome in Carlisle at 215 Stonehedge Drive back in 2008, but the purchase agreement involved a lease-back to the builder for a year. I lived in that home for less than a year, but still own it today as rental #1. With that one, I have actually lost money every month for the 14 years I have owned it, but have committed to holding it and paying it off as I know it will be a nice vehicle in retirement in an ever appreciating market.
Next came 447 Graystone Court in Palmyra. After getting married to Carin and selling her place in Lebanon, we scrambled to find a home in a good school district somewhere between her family in Cleona and mine in Carlisle. We randomly settled on Palmyra back in 2011, beginning our time here with rental #2. We bought that home at a great time, still possessing the original mortgage with a 3.25% interest loan (we even got some seller assistance) and this is one of our best properties. As a single family home in Palmyra, this home caters to a certain niche of renters who are looking for a single family detached home and are willing to pay a premium for it. Rental #3 came when we as Realtors came to terms with sellers looking for a quick, easy sale and purchased a townhome in Rockledge at 1962 Wexford Road, Palmyra in late 2017. This was our first rental bought specifically as a rental, and we learned the 'hard' way that to get a good rate on a mortgage as an investor you often need to put 25% down. Still, to this day this is one of my favorite properties. It is in great shape, has a view into the adjacent horse farm, and has had the same tenant since day one. Next came 343 Jonathan Court, Hummelstown as #4. This was a townhouse in Orchard Run, across from Indian Echo Caverns. This one perplexed me as I happened to see it for sale at a ridiculously low price. While we weren't in the market at the time, I went and saw it and noticed it didn’t need a ton of work. Surprisingly, the next day the price was reduced, and I immediately went for it. I wrote a cash offer and purchased the place for just over $100,000. I did about a month's worth of repairs, including fixing a surprise broken pipe, getting rid of termites, replacing all the flooring, front door, garage door, and all of the appliances. I was able to do a cash-out mortgage and recover most of the money I put into it. Due to a couple sloppy tenants, I just yesterday finished renovating this property for the second time. This go around, I repainted most walls and trim, and replaced the kitchen cabinets, main level flooring (luxury vinyl plank is the way to go) and put on a new composition deck. This is now one of my favorites as I am really happy with the condition.
Our 5th rental came with the acquisition of 1925 Wexford Road, Palmyra (Rockledge) in August 2018. This one was on the open market, and we had to compete against other buyers for it. This one is not my favorite property as it needed some updating, we have cycled through a few tenants here and even had to evict one; but I am happy with the condition of the property and who lives there today. #6 came when we purchased 1876 Wexford Road, Palmyra (another townhome in Rockledge) in June 2020. This one was listed at a super low price of $139,900. There were numerous offers, and we picked it up for $147,000. This one took a decent amount of work as it was covered in wallpaper and needed all new flooring and some other updates. After polishing it quite a bit and adding stainless steel appliances, granite, and a shiplap fireplace wall, it was fought for as a rental and has treated us well since. Rental #7 came in September 2020 with the purchase of 1665 Macintosh Way, Hummelstown - again in Orchard Run. I remember unsuccessfully attempting a sight-unseen offer while the home was "Coming Soon" with this one while working on 1876 Wexford Road. I ultimately had to wait for the home to come on market and competed with 6 or so other parties to win this home. I did a little electrical work and replaced the garage door and immediately put it on the market. The same tenants are there since day one.
Rental property #8 came with the purchase of 602 Cambridge Court, Palmyra (another one in Rockledge) in April 2021. I wasn't really excited about this one as the location is kind of exposed to the main road, and it lacked a sunroom. I ultimately lost the bid for the property but then the buyers bailed out of the deal. The agent called me a day or two later and told me it was ours if I wanted it. I thought about it for a few seconds as I wasn't really sure, but I decided I did, and today I am glad I did. This one involved just replacing some hardware and the upstairs carpeting and adding a door to the office (all while locking myself in the bathroom and having to have Rob Cleapor rescue me). I put it up and rented it right away.
Our last (and 9th) rental purchased to date was 1540 Macintosh Way, Hummelstown (again in Orchard Run), in October 2021. I did nothing other than shampoo the carpets on this one and even found an off-market tenant and have had no real problems since (just a bathtub leak). This is a great property in a nice neighborhood with a great backyard.
So, why did I share all of this and why are we doing it? The act of managing rentals does not come without stress, hassles, and the upfront and somewhat regular outlay of money. As Realtors, Carin and I don’t get a pension or retirement benefits of any sort, so we are really limited to what we can save in IRA's and other investments as well as other avenues, like real estate. We have never taken a single penny of rental income from these properties - instead choosing to apply all extra income to the principle balance and even pay all related expenses out of pocket - therefore we are technically losing money short term. We did, however, purchase them all on 15-year mortgages (with the exception of the first two properties we occupied being on 30 year amortizations). I have strategically selected additional amounts to be added to the principle balances both monthly and as lump sums so they should all pay off early and be a nice (somewhat) passive income vehicle for us through retirement.
With the exception of 447 Graystone Court, Palmyra and 215 Stonehedge Drive, Carlisle - the properties purchased to live in, we target 3 bedroom Hershey, Hummelstown, or Palmyra area townhomes - largely on slabs. With no basements, and homeowner's associations that care for the exterior maintenance, this limits our responsibilities to largely just furnaces, air conditioners, water heaters and the cosmetics. Generally speaking, when a tenant vacates, we can refresh a unit in a week or two for a few thousand dollars - sometimes less. Also, by having our rentals close to our Palmyra home, we can easily keep tabs on them and have been able to leverage tools offered by Zillow and Transunion to keep our marketing and tenant acquisition costs low.
If I had to do it over again - and my advice to anyone looking to get started is this. If you are in a position where you can relocate from property to property easily, buy several properties in your early years in quick succession. Doing so (and living in the properties for at least 6 months each) will allow you to purchase the properties at 3% or 5% down conventionally or even multi-units (up to 4 units) with just 3.5% down. Had I followed this strategy and known what I do now, I could have bought properties at the rate of 4 to 1 in the beginning periods of our investing, albeit we would have had to have moved every six months or so, but a small price to pay to build a portfolio quickly and (rather) inexpensively.
If you are looking to learn more about investing in Hershey, Palmyra, Hummelstown or surrounding area real estate, look me up or give me a call at 717-685-6885.