Albany Vs Troy Vs Schenectady?
Albany, NY · Member since 2018 · 43 posts · 17 votes
Hey Everyone!
I am looking to buy my first rental property by the end of the year and currently live in Saratoga Springs, NY. As I am looking for multi family properties, I have been assessing, visiting and analyzing properties in Albany, Schenectady and Troy and I am finding (shocker) there are pros and cons to each market.
I am wondering if any upstate NY investors have done the same and found one market out of the three to be particularly advantageous in terms of tenant base, cash flow, appreciation etc?
Thanks!
Hi @Joshua Lupo - glad to see you're considering investing in the Capital District. I currently own in Troy primarily, Waterford secondarily, and Albany in a tertiary way. I've brokered deals for clients in those areas as well as Cohoes and Watervliet. I personally have avoided Schenectady due to the property taxes, and I think the government there has just screwed things up over the years. Will a casino fix things? How'd that work for Atlantic City?
Troy is on the upswing, but their property taxes have been rising pretty sharply of late. They removed their recycling fee, but replaced it with a much steeper garbage fee(which was really a tax hike as taxes once included garbage but no longer do.) The garbage fee is $160/yr per unit. Taxes are rising there faster than owners' ability to raise rents- this does not bode well and hopefully this is only a short-term phenomenon, but who knows.
If it's more certainty, less risk, but perhaps less upside that you seek, Watervliet might be a good choice. It's a sleepy part of Albany where I don't expect major changes to occur in the near to medium term.
Waterford is a very interesting place- I've had good luck there, though the local government is a little more interesting than I'd like it to be. I picked up this sweet 4 unit(and another uber-chill 6 unit) in a single deal in 2014. That porch you're looking at was built by us! It replaced another porch that was built before I was born and was crumbling because it hadn't been anchored to the bedrock properly. Since it's a historic district, the porch had to be rebuilt to the same appearance. Beaucoup bucks, lemme tell you! But I'm rambling. Good luck with your investment and welcome to the neighborhood,
MG
Hey @Joshua Lupo I am a fellow investor in the region and I would say that there are good pockets in each of those cities. Taxes have been the challenge in those prime areas for the rents that you can get. Don’t hesitate to look outside of the 3 big cities to look at places like Cohoes, Watervliet, Waterford and some other smaller cities inside and around those bigger cities.
Good luck in your search.
Bryce
@Joshua Lupo Do you have a good agent in the area that you are working with?
@Joshua Lupo there is also an investors group that meets in Latham on the 3rd Monday of the month which offers some good resources for investors. Action investors network.
I think that you have to define who you'd like to rent to at first. Students, families, section 8 ... once you decide the answer will be clear where you want to buy the properties.
That's because Albany has the most development out of the cities around. Apartments that are being built, will be very expensive, you will always have an opportunity to offer something more unique for a better price. I think it's always better to be where the action is happening.
You may also want to look at crime maps before you buy (trulia).
@Joshua Lupo I bought a 4 unit in Troy last Summer close to HVCC, and so far have had great luck. There was significant demand the one vacancy I've experienced so far, however it was from almost entirely section 8 applicants, something to keep in mind. My personal belief is that the future is brighter in Albany and Troy over Schenectady. While i love living in Saratoga I'm totally with you on the market being over priced. I'd suggest giving a a look to Warren County (Glens Falls specifically) as there's a lot of money currently pouring into the area. Best of luck with your search.
-Steve
@Joshua Lupo I agree with everything people have said on this post. There are definitely good and bad pockets within each of those cities. I am less partial to the City of Albany. But, I do like its suburbs (if you can find a deal there). I bought my first owner-occupy duplex in Bethlehem and was very happy with that purchase. The returns were not as high, but it was in a good neighborhood, where I felt comfortable living and always had high quality tenants.
Glens Falls has treated me well so far.. Market is pretty competitive but there has been a lot of money dumped into the city. Glens Falls has received multi million dollar grants for a city revitalization and I have noticed business has been expanding.
@Joshua Lupo I have been "house hacking" a duplex in Albany for two years with no regrets. I have not personally invested in Schenectady or Troy but have watched and shopped in both markets for the last three year. What I've "personally" realized as an owner-occupant is.. it really all depends on your Comfort vs Profit restrictions. You are going to see way higher ROI higher CAP RATES ect... in "less" desirable areas and when you see the numbers on the MLS spread sheet your heart starts racing then you do a drive by and don't schedule an appointment. Its a different game for us " house hackers" and Ive just noticed that there are a lot more options in Albany. Schenectady includes the water bill in the taxes "Ive heard " which might justify the extra expense. My water expense for a 3 over 3 duplex is about $1000 a year in Albany (I installed dish washers and washer w/ dryers). "Ive Heard " Schenectady requires you to get re-certified (ROP's) between every tenant. Albanys are every 30 months if I remember correctly. Albany also last year added a separate waste fee of $180 per unit per year minus the first unit so on a duplex its 180 a year ect. Not sure how thats handled in troy or Schenectady. In Regards to condition of the MLS right now I would suggest going OFF MARKET. Call For Rent adds on Craigs list and for rent yard signs ...mail letters to properties saying I want to buy your house lol ..Ive had luck this way. Your Realtor can give you a list of the owners if they are Absentee. Not only will you stand a better chance of getting the best deal but you won't be going up against 25 other investors. consistency pays off with this method... do 5 a day by the end of the week some one will respond. This is a service I'm providing for my clients along with other prospecting techniques and it does work just slow and steady. You will get ppl who may try and get way to much for the property so always use your realtor once you find one. Happy Hunting !!
Take a look at the Colonie, NY market. Taxes are relatively low, neighborhoods are generally safe, and my tenants have been great.
@Sean Bayliss Yes we would LOVE to land something in Colonie but at this time and over the last 2-4 months we have not seen a great deal of opportunities in that area?
@Kyle Gendron Thank you very much for your highly detailed, first hand account it gives us hope! I can appreciate when you talk about higher ROI's in less desirable areas and what looks good on a spreadsheet does not always match what you see in real life. This is a big reason we have passed on a some "deals" where cash flow projected to be great because we would not have felt comfortable there and eventually our goal is to house hack again so we would have to show the place in areas we wouldn't necessarily live ourselves. We are trying to get creative and along with utilizing the MLS, we call craigslist landlords every day and see about selling, track foreclosed properties through HUD and Fannie Mae etc. and also have done periodic door knocking to see if people who's properties seem distressed would consider selling.
Hard work and persistence pays off and I am sure we will end up finding a great starter investment it is just a matter of time I believe at this point.
Hi @Joshua Lupo! Looks like you're where I was about a year ago exactly. I scoured the capital region for a small multi to house hack. I had my trusty rental calculator handy and analyzed deals everyday from hits my realtor sent and on realtor.com. My criteria were not too stringent. I wanted $200 cash flow for a duplex (after PITI and 25% for vacancy, capex, repairs, and management collectively). I found that the numbers in Albany/Schenectady were almost always killed because of the taxes. I found that Saratoga was priced too high. Glens Falls and Queensbury did look nice but I am working in Latham and that commute doesn't interest me. I found Troy and the surrounding area (Cohoes/Watervliet) to be right to make the numbers work.
I was checking listings everyday and found a nice turnkey property in Troy that I jumped on immediately. Because of a mishap in the timing of the appointment, I got to meet the owners who I sold myself to (we're a young couple, with a baby, trying to find an affordable place to live). They loved our story. I wrote them a nice letter too and included a picture of us with the baby. It was a thing of beauty. So when I made an offer (the next day - all offers needed to be in within 24 hours), and they had a bunch of other conventional 20% or cash offers, they didn't care that I only had 3.5% to put down with an FHA - they wanted to sell to me!
House hacking has saved a ton of money and now we're ready for another one just a year later. Keep in mind you'll only likely be able to house hack twice. Once with an FHA and another time with 15% down conventional. After that, the underwriters apparently become suspicious and will require 25% down on a duplex.
Troy has some bad parts. Be vigilant where the property is located. You are charged for water 4x a year (about $150 for me), waste is 2x a year (I think it's $160). In my area homes often include heat so that's another charge to consider (I'm paying ~$1200/year for the two units). Your numbers start to drop when these things are considered.
The homes are old so be sure to get one that's in great condition, unless you're handy (which I am not).
PM me if you have any questions!!
Hi @Joshua Lupo - glad to see you're considering investing in the Capital District. I currently own in Troy primarily, Waterford secondarily, and Albany in a tertiary way. I've brokered deals for clients in those areas as well as Cohoes and Watervliet. I personally have avoided Schenectady due to the property taxes, and I think the government there has just screwed things up over the years. Will a casino fix things? How'd that work for Atlantic City?
Troy is on the upswing, but their property taxes have been rising pretty sharply of late. They removed their recycling fee, but replaced it with a much steeper garbage fee(which was really a tax hike as taxes once included garbage but no longer do.) The garbage fee is $160/yr per unit. Taxes are rising there faster than owners' ability to raise rents- this does not bode well and hopefully this is only a short-term phenomenon, but who knows.
If it's more certainty, less risk, but perhaps less upside that you seek, Watervliet might be a good choice. It's a sleepy part of Albany where I don't expect major changes to occur in the near to medium term.
Waterford is a very interesting place- I've had good luck there, though the local government is a little more interesting than I'd like it to be. I picked up this sweet 4 unit(and another uber-chill 6 unit) in a single deal in 2014. That porch you're looking at was built by us! It replaced another porch that was built before I was born and was crumbling because it hadn't been anchored to the bedrock properly. Since it's a historic district, the porch had to be rebuilt to the same appearance. Beaucoup bucks, lemme tell you! But I'm rambling. Good luck with your investment and welcome to the neighborhood,
MG
@Michael Gansberg Wow very much appreciate the insight especially from someone with your credentials! We have been told to avoid Schenectady due to high taxes and not so favorable landlord laws. That being said, when we travel to and analyze properties the ROI on some of them is really quite competitive and these are not in warzones either. For instance, there is one right now I have looked at that is off of upper union ave and no more than 5 minutes from Niskayuna HS which is a great area. Rents seem strong and structure seems solid with no glaring structural issues but internally could use some cosmetic redesign.
We have spent time searching in Troy as well and have had some places that peaked our interest but as you mentioned were seeing an uptick in their taxes but rents are not keeping pace and in terms of quality vs shotty areas Troy seems to have tighter margins in our experience.
We like the long terms prospects of Albany with the industries and all of the colleges and simply the abundance of renters. We are aware this is a highly competitive market and we have been outbid several times now and are questioning whether its time to focus less on Albany and more on the tertiary markets.
You mentioned Albany not as a primary focus for your but as a tertiary location whereas typically I have it the other way around where the Watervliets, Cohoes and Waterfords are more so secondary. Why is that?
Happy to help, @Joshua Lupo - early in my investing career, I purchased stuff that was mostly ready to go. Albany worked well with that investment approach. Later on, I've acquired only distressed assets as I can accomplish greater value-add with my team on those assets than can most typical purchasers, and I can accomplish greater value add for myself on those properties relative to the non-distressed asset class.
Albany resists those efforts, however; in order to rehab distressed assets in Albany, you need licensed plumbers and electricians for any plumbing/electrical work. And they must be licensed in Albany proper- there are not many of those licensed plumbers and electricians around(because Albany licenses so few of them,) so they have a bit of a monopoly. This causes very expensive rehab costs in Albany, relative to even Albany's near neighbors, and I believe it's a primary driver of the urban blight that's evident in parts of Albany. If people could rehab those houses with less expensive labor, they would- but some of these houses are so far gone that there's no economic benefit to fixing them up when the plumbing bill is $25k and the electrical bill is about the same. So by trying to protect its citizenry, I believe the government of Albany has made an incorrect calculation. The plumbing and electrical may be marginally safer, but the increased blight due to government's pricing distortions likely causes harm to Albany's citizens in other ways that may be less evident than a burst pipe or an electrical fire, but may be equally or perhaps even more pernicious. Hope this helps! I'm spending my last day on vacation, so back to the beach with me, looking forward to hearing about your first investment,
MG
@Sean Lauber Hey Sean, that's an awesome story very cool for sure! Curious about the water / waste payments.. is that $150 TOTAL for the water, and $160 total for trash? Thanks so much. Would it be Ok if I had any future Troy questions? Looking to pick up a multi myself pretty soon hopefully.
@Christian Nachtrieb It's $160 per unit for the year. So for me with the duplex it's $320 for the year total. For water it's billed quarterly, I paid $192 the first quarter and $160 the second, so in total for the year probably somewhere in around $700-800. For sure you can contact me with any questions. I'll help anyway I can.
@Michael Gansberg I'm not sure if you remember me but we spoke last year around this time and the biggest piece of advice I took from you was to get something in good shape, especially in the beginning. I took that advice and we found a great property that was well maintained by an older couple for the past 45 years. I remember during our walk through we noticed a small leak on a section of plumbing in the house. It really was a *very slow* leak, barely dripping. Upon discovery, the owner had a melt down and wrapped it tightly with his handkerchief. I think this was the first time I ever saw a handkerchief. He called the plumber right away. With that kind of attention we knew the property was in excellent shape. The inspector verified this. Now that we own it, the only things that have needed work was reversing the polarity on some outlets and putting in GFCIs. We lucked out for sure.