Rochester NY - Worth buying distressed properties?

Question

Hey all! I'm fairly new to real estate and have quickly found that the great Canadian north is a difficult place to get started in with the high properties prices. I've been looking at the closest cities south of the border for investment opportunities. Those being Buffalo and Rochester.

My biggest concerns are the declining population and crime rates. I've been to both cities a couple of times to scout the areas, and I'm uncertain if they're good places for investing in rental properties. The prices (although in rougher neighbourhoods) seem like a great opportunity for fixing and renting.

I guess what I'm looking for is some further insight into the low-end US markets, any cautionary points and so on. Does anyone here have first hand experience with the Rochester/Buffalo markets?
Best,

Reza

Matt Harris · Answer

rochester is a great market to invest for cash flow but flips and appreciation here is limited. There is risk involved in all investments rochester is no exception but i believe its worth it. Best bet is to meet locals and  ask questions and come see for yourself as to not be taken advantage of or make a mistake.

Mark W. · Answer

You can mitigate your concerns about population and crime rates by investing in better neighborhoods.  See South Wedge and some areas of the 19th Ward.  I haven't looked much into it, but I've heard the Merchants/Culver area is picking up steam.

I'm guessing you're looking in Rochester neighborhoods where a $50K duplex or $25K single is the common offering.  As an out of state (and out of country) investor, I would not recommend this.   If you are looking to invest in the low-end markets, expect low-end tenants.  Which means non-payment of rent, frequent damages and repairs, crime, low and declining rents, and headache after headache.  Your properties will get beat on and it will show.  Good PM companies to manage these types of properties are tough to find.

The prices of these properties are so low because they reflect the condition of the area, type of tenants, and the quality of surrounding housing.  I would only consider these if you are local, have experience (with rehabbing and the active management of tenants), and have cajones of steel.  Emphasis on the latter.

Reza Karami · Answer

Thanks for the input @Mark W. and @Mike Cumbie. I'm sort of limited to the low-end market since I'm just starting off and don't have any equity to use other than saved up cash. I definitely intent to move to better markets once I have some equity to play with, but this seemed like a reasonable, although higher-risk starting point. @Jay Helms I mainly rely on Trulia for the crime map and google for the population trends. Do you find those to be somewhat accurate?

Jay Helms · Answer

Reza - what tools are you using to analysis population growth and crime?

Mike Cumbie · Answer

I would echo @Mark W.,

Out of state/Country investing is one thing, doing it with assets that have to be tightly monitored is another.

Rochester NY - Worth buying distressed properties?

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