Updated: Aug 31, 2023
We get the questions often so we wanted to put together a comprehensive buying guide to the Poconos where we'll cover a range of topics and what to buy to maximize your ROI! Ready? Ready!
** Please Note - the owner (me!) of PRM is a licensed Real Estate Agent but we pursue management and rentals full-time. If you need a real estate agent, we have great agents that will be able to assist your needs. Please ask! **
The two main topics we want to cover are where and what. That is...
(1) Where to buy in the Poconos (2) What type of home to buy.
But before we get into it, I feel it is important to explain a few things about the growing interest in the Poconos as to "cut to the chase" a bit.
Alright, let's get into it!
The Poconos is a large, loosely defined area, and depending on who you speak to they will give you different dividing lines. For us, we'll stick to our service area, which is this...
In order to best understand "where" to buy, you must first understand a bit about the Poconos rental market. While It's proximity to major metropolitan areas is a major demand driver, the two peak season are very much Summer and Winter. And in order to get the best results from your future rental property, you want to buy in an area that will take advantage of that summer and winter demand.
First, let's talk communities. Many communities will meet this qualifier, but some of the better ones that we would recommend include, in no particular order:
#1 - Lake Harmony Estates - Lake Harmony is one of the most sought-after areas in the Poconos because of it's lake (allows motorboats), proximity to skiing, dining and other attractions. While the Poconos is going through a bit of a renaissance, Lake Harmony has always remained in-demand (even got a shout out in the HBO show Mare of Easttown!). Not to be confused with the neighboring Split Rock HOA, which had a Deed provision stating that owners are not allowed to rent for less than 30 days, and while this has not been historically enforced, the resort is under new ownership and they may have the right to enforce this in the future.
#2 - Brier Crest Woods - located adjacent to Lake Harmony, and is able to capitalize on many of the attractions there while not having to pay the higher purchase prices.
#3 - Emerald Lakes - comprised of 5+ smaller lakes, Emerald Lakes is located in the heart of the Poconos, attractive to NYC/Philly/NJ travelers and close area attractions (waterparks, skiing, dining)
#4 - Towamensing Trails - located in Albrightsville, TT is one of the closest destinations for travelers coming from the Philadelphia area.
Other Communities - The below communities are some of the larger communities in our service area, but do come with some notable downsides. Once again, the right home in any of these communities can still be very worthwhile (see the next section for that logic!).
Now that we've covered communities, I want to talk about townships. In 2022, we saw a lot of changes to the rental ordinances, which were put in place by the local townships. Every township now has some kind of ordinance, or regulations so host rent responsibly and it's not the wild wild west. Some communities are more lenient than others, and I want to break it down.
This map isn't exact, but it's actually pretty darn good if I do say so myself! if you need to see more exact coordinates, please type in the township directly into google maps (seen here ).
Keep in mind, almost all townships now require an annual license and payment. This usually includes an inspection prior to the license being given. They also enforce caps for maximum occupancy, which is as follows:
The only exception to the above is for Tobyhanna Township, which does not allow for the additional +2 guests and have instead elected for 2 guests per bedroom with a hard cap of 10 guests.
For this reason, homes that are outside of Tobyhanna Township and can sleep more than 10 guests are particularly desirable! It's important to note that Tobyhanna township also cuts directly through Arrowhead Lakes, Locust Lake, Stillwater Lakes and Emerald Lakes, so if you're able to purchase a home in those communities and have your home not be in Tobyhanna Township you'll be at a particularly great advantage.
So now that we have identified some of our favorite communities, it's important to understand which type of home to buy.
First first thing to understand is 50+% of rental homes in the Poconos are 3 bedroom homes. If you are able to find a 4 or 5 bedroom home, there will be a few distinct advantages:
(the above image shows Albrightsville, but similar ratios can be found in surrounding zip codes)
Having a 4+ bedroom home is not a prerequisite, we manage many 2-3 bedroom homes that perform exceedingly well, but if you do have a 3 bedroom home you'll want to stick out from the crowd. A few ways to do that is by considering the following:
"Unique" Value: There has never been more rental homes on the market, seeing greater than a 2x growth in a ~2 year period! More rental homes means more competition, so one of the best ways to make sure you cash-flow positively and have a worthwhile investment is to look for home that is unique. You do not need the aforementioned 4+ bedroom home, if you do stick to an elementary 3 bed/2 bath home that is similar to many neighboring homes, you will have to compete on price to win rentals.(the above image shows Albrightsville, but similar growth trends can be found in surrounding zip codes)
We're in unprecedented times, and the market is changing quickly, but we wanted to provide some (very) directional numbers so you can better understand what you may be able to make.
It's not just the home. Management matters! First things first, a home's earning potential isn't static and the marketing and management matter! Sure, some homes will inherently make more money than others, but the below estimates are specific to our management expertise. We use nifty tools like Dynamic Pricing and Minimum Length of Stays to maximize your earning potential. PriceLabs also evaluated this and concluded that homes managed by professionals tend to make 37.8% more .
Gross Annual Revenue - this is the amount that you make before expenses. The nightly rate changes drastically based on weekday vs weekend, season, holiday, etc. so we like to look at earning potential on an annual basis to best understand what success looks like.
Low-End: $25k-$35k GAR - this might be a 3 bedroom saltbox home with no distinctive features Mid-Range: $50k-$60k GAR - this might be a 4 bedroom home, with a hot tub, in a rental friendly community High-End: $80k-$150k GAR - this might be a 5 bedroom home, with the higher end of this spectrum likely being a home with high-end furnishing and/or on the water.
Please Note: we do adjust our management fee depending on the home's performance. Generally, a low-end home will be 25% management fee, mid range might be 22.5% and high-end might be 20%.
Our average home (mean average) has a GAR of $55,500 and rents for 145 nights of the year (~40% occupancy). However, the most important metric is GAR. Sure, we can lower the nightly rate and have you booked for more nights, but if you make less money than its not worth it!
As of early 2023, you might expect... - 3 bedroom home: $275-$325k purchase price | $30k-$40k GAR - 4 bedroom home: $375-$450k purchase price | $55k-$70k GAR - 5 bedroom home: $500k-$700k purchase price | $80k-upwards GAR
(as a rule of thumb, for lakefront, expect to pay 2x on the purchase price and the GAR will also be approx. 2x).
You also have to consider the rental costs. GAR is the gross annual revenue, but there are costs that go into operating this "business", which include..
(you can learn more about this, and see it visually, in our Expectations on Profitability post)
You can expect your GAR to net down to about 55-60%. For example, if you have a home that Grosses $75k, you may expect to see $42k-$45k range.
If you are interested in learning more about what you could make on a home, please reach out to us at www.PoconoRentals.com/Inquiry and we can put that together for you!