New to Real Estate, could use some help in Upstate New York

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New to Real Estate, could use some help in Upstate New York

Tim Brann
Central Square, NY · Member since 2016 · 3 posts · 0 votes

As stated I'm new to Real Estate but have been reading all the books I can get my hands on in order to educate myself before jumping in.  It's time to get off the sidelines!  Does anyone have experience in the Upstate New York area or somewhere similar?  What I mean by this are low to average costing multi-family homes with above average taxes (#ILoveNY).  Typical Options in this area area as follows;

4 unit house- 190k with 7,500 in taxes and gross rental income of ~2,800-3,000

2 unit house- 115k with 3,000-5,000 in taxes and gross rental income of ~1,500-1,700

Im looking to house hack (live in residence for 1yr) with my first deal and get into the game with low money down (~10k) Without diving into a bunch specifics what I'm after here is what % should I carry for vacancies, repairs, & capital expenditures.

Also with this type of investment my calculated cash flow always seems to be low ~$100/unit. What is a good number to shoot for? Or is using Cash-on-Cash ROI a better route and looking for around 10%?

Any help would be greatly appreciated as I embark on my journey towards financial freedom.

Timothy Brann, Syracuse, NY

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  • Tim Brann
    OP
    Central Square, NY · Member since 2016 · 3 posts · 0 votes
    10y

    I should add that it is a fairly stable market.  Not a ton of appreciation or depreciation of value going on around here.

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  • Steve B.
    Rental Property Investor · Arlington, VA · Member since 2014 · 111 posts · 35 votes
    10y

    @Tim Brann Let me be the first to welcome you to biggerpockets! I'm also Upstate down the thruway from you in the Albany area. I lived in Watertown for 3 years and had a rental there until a year ago. Lets just say I'm glad I sold the rental in Watertown as the rental market is even worse now. I also wouldn't invest in Oswego as the nuclear plant closing will affect the town. 

    House hacking is the way to go, if I were you I would find a place in Syracuse. I've always felt like Syracuse University is the glue that keeps the multi family market together there and I don't think that will ever change since its a top rated school. When they made the final four this year they out sold all the other schools for merchandise, even more than the Tar Heels! In fact the Orange sold more stuff in the week leading up to the final four than any other school in history. Needless to say they will never have a shortage of applicants, and those kids need a place to live. Like most college cities in the northeast, they really are not building anything more so a multi family purchase there would be solid for you. Remember you make your money when you buy since appreciation is pretty flat.

    Yes taxes are high in NY but hopefully you can find a deal and grieve the taxes. Another problem to account for is most of these homes are 100 years old, budget at least 15% for maintenance and capex. Also run your numbers for cash flow as if you will not be living there as I'm sure you don't want to live there forever. $100/door I have always felt is tight in Upstate mainly because of the taxes and maintenance, try to get $150-200.

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  • Jerry Padilla
    Lender · Rochester, NY · Member since 2014 · 3k+ posts · 1k+ votes
    10y

    @Tim Brann

    Welcome to BP. I invest in Rochester NY and started by house hacking a duplex, with an FHA Mortgage. I am glad to provide you with additional info on FHA Financing.

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  • Charles Preuss
    Pennellville, NY · Member since 2016 · 18 posts · 7 votes
    10y
    Hello Tim, I agree at least 200+ on cash flow that's why the more units the better as long as they are what the market wants in terms of bedroom and bath. Focus on location. City of Syracuse is best for buy and holds. Also to keep yourself safe consider creating an LLC for liability purposes. If you don't know the Syracuse location well I'd definitely suggest getting out there and seeing the neighborhoods understand the rental rates for each area. There are some SFH that previous investors are liquidating around town with tenants already at the property. SU hill is a prime spot but all great things come with a price. Many people selling homes in that area charge at least 30% more then what house is worth. Specially in the student housing prime spots. Some of the surrounding neighborhoods near south campus are good for flipping though for professors. I am in the same market feel free to contact me if you have any questions.
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  • James Wheelock
    Investor · Utica, NY · Member since 2015 · 36 posts · 12 votes
    10y
    Hey Tim, welcome to BP. I am near you in Utica, similar markets. Stable but not a ton of appreciation unless you travel to suburbs. If I were you I'd look into 4 units. Perfect size to learn the ropes on. I can attest I am doing it right now. We bought for ~25k a door and receive 3000 in gross rents on that property. However like it was mentioned above I believe. Houses being old, probably should account for 10-15% to maintenance/CapEx. And the legal protection an LLC provides is nice but I think it's is tough to qualify for an fha through an entity. May need to set that up long after closing.
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  • Tim Brann
    OP
    Central Square, NY · Member since 2016 · 3 posts · 0 votes
    10y

    Thanks for the responses everyone.  When reading the books or listening to podcasts, in the back of my head I was saying "Yea but this doesn't apply or isn't possible in upstate NY".  It's great to hear from people in my area, and in under a day of posting is awesome!

    I agree that SU hill is a great place to look, although college kids may cause quite a bit of damage.  I am also really interested in the Tipp Hill area (I rented there for 3 years).  The problem with both of these is that they are tough to get into to with "deals" very unlikely.  Also as Steve B. said they are most likely 100+ years old with original mechanicals (HVAC/Electric) which can be very costly to replace.

    So what do you guys think is it better to aim for $150-$200 monthly cash flow per door or a Cash-on-Cash return of >10%?  

    I ask because with low money down my cash flow per door will be proportionately lower

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