Thoughts on the Buffalo NY market?

Question

im looking for areas to invest in remotely and one I really like so far is Buffalo.  Does anyone have any advice or experience in this market?

Thanks

Timothy Smith · Answer

@Chris Lyman as someone who lives in and invest in Buffalo, I think it is a great place. I’ve lived many places around the country, but this has been home for the last 14 years. Something that you really have to take into consideration is that most buildings here are a century old or even older. That takes very knowledgeable contractors and maintenance, and staying proactive with your management of the physical property itself. You also need someone who knows the specifics of New York State legislation regarding tenants.

You will hear a lot of people trash New York State, but if you are operating honestly, doing your homework, and buy in the right areas, you can mitigate a lot of those problems. The city has definitely seen a rebirth in the last 10 to 20 years and the entry level is extremely low, that being said, you really have to develop a good team if you were going to be out of state.￼

Snow is snow — it happens a few times a year or sometimes there is a very light year. I’d rather deal with snow than hurricanes, wild fires, extreme heat, etc etc but I’m a Northeasterner anyway.

Sarah Jane Zarko · Answer

I owned a rental home there.  It was nothing but trouble.  The pipes got stolen, the tenant flooded the place.  The front door got stolen.  Tenants stole the appliances (which is why you don't generally provide appliances in Buffalo).  The city was often disorganized.  I could never get them to acknowledge that the property was no longer two units.  So, unless you have a boots on the ground in Buffalo, NOOOOOOOO!!!!!!   Also I went through 5 property management companies, all of them skimmed a little extra, got in fights with the tenants, etc.  Just my opinion.

Matthew Irish-Jones · Answer

Tough question to answer without some more clarity.  Pretty much all neighborhoods have renters.  There is rental demand in almost every city and town in WNY.

What is affordable is also relative to each investor.  If you are looking for lowest barrier to entry along with least risk, there are pockets of South Buffalo, the West  side, and Lockport that all meet that criteria.

Matthew Irish-Jones · Answer

Hi Chris,

@Timothy Smith has a lot of great insight as an investor.  Our company is growing 10-15% a year with out of state and country investors.  I tell everyone that the market is less important than the team you pick to run your operation.

Buffalo is a great market if you are looking for a lower barrier to entry and higher cash on cash returns.

I would advise you don't fall into the trap of chasing the cash on cash returns.  Good cash on cash returns take some work, like raising rent over time, doing light value adds, etc..

If you jump in and insist on high cash on cash returns from day one you may find yourself in a tough neighborhood.  Slow and steady and safe is the best way to invest.

Matthew Irish-Jones · Answer

I am managing 700 doors and have not had any of those issues.  If you went through that many property management companies you probably owned a slum property.  What did you pay for it and what was the address?

If the proper permitting was done when you converted the double to a single you would not need them to "acknowledge" anything.

Buffalo is like any city, there are good areas and bad.  There are also owners that buy at $30,000 home that is dilapidated, in the worst part of town, and not in rentable condition to anyone that has a job or just standards in general.

I suppose there is the chance that you were done wrong by 5 property management companies, and had a run of horrible tenants, but I would wager a guess you got what you paid for.  Happy to be corrected if you provide the address of the home you owned.

Jesse Dittmar · Answer

That's great info, thanks Matthew.

Jesse Dittmar · Answer

Curious your thoughts on parts of town that are affordable to buy and also rentable?

Erica K. · Answer

Curious - where do you invest now?

Clayton Plummer · Answer

@chrislyman - I don't know specifically, but I'm sure it is as good as any market.  Can you build a team there? (asking rhetorically - I don't want an answer).  What do you bring to the members of your team that makes them want to/like to work for you and with you?

Also, physically in Buffalo, SNOW!  Specifically snow removal.  You're going to need a good landscaping team to service your properties all times of year.  The snow in Buffalo is guaranteed every year.  It sits right on the end of Lake Erie and gets ALL the lake effect snow.

Not a show stopper, they know how to deal with snow and weather in Buffalo, but it is something to work into your numbers when you are doing your due diligence on a property.

Thoughts on the Buffalo NY market?

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