Multi family investments in the Hudson Valley NY

35 Replies

Hi all, I'm new to BP and am looking for some advice investing in multi family properties in the Hudson Valley NY. I have cash to invest but I could burn through $200k fast in 25% down payments so the Brrrr concept would be ideal. I have spent a lot of time looking through the MLS listings online as well as working with an agent. Obviously these deals aren't abundant, I'm willing to put the time in. I'm just getting the feeling that this may be a difficult region to implement that strategy due to the high demand, municipal challenges, high prices and lack of invintory. Has anyone out there found success in this region?

Hey @Thomas Flint welcome. Hudson valley is tough. Just based on acquisition and carrying costs due to escrow, driven up by high taxes. However, if you go 3/4 units and can swing the acquisition, owner occupying, fixing the units and refinancing could work! I’d look at maybe investing where the $$s work, and live where you want. 

Good luck! 

I'm in the HV and it's tough right now.  I'm in the middle of a project now but they are very hard to come by at the moment.  You could look at Newburgh, but I'm still not convinced of the long term viability of that city (where I was born and raised).

I'm starting to consider outside of the state given the decline in population and terribly high taxes.

It is tough.  I bought my first multi 3 years ago in harriman.  Bought number 2 in walden 6 months ago.  Althought both decent deals - clearing me 1000/month apiece after expenses - theyre not home runs.  I too am trying to figure out how to invest out of state.  It seems like a daunting task for me - but hey so did buying my first one.  I've just got to figure it out.

Originally posted by @Bradley Miller :

It is tough.  I bought my first multi 3 years ago in harriman.  Bought number 2 in walden 6 months ago.  Althought both decent deals - clearing me 1000/month apiece after expenses - theyre not home runs.  I too am trying to figure out how to invest out of state.  It seems like a daunting task for me - but hey so did buying my first one.  I've just got to figure it out.

Walden is where I have two of my properties.  Great little town but small and hard to find properties.  Let me know if you are ever around, would be happy to discuss the area and see if we can find a deal.

Originally posted by @Thomas Flint :

Hi Frank, I’m not wild about Newburgh either, I don’t see the comeback happening but it seems everything is priced like it is. What out of state markets have you found interesting? Thanks! 

 I've just started collecting data and doing my due diligence.  I'm looking down south.  My parents moved to Florida about five years ago and I'm having them poke around their area.

I need to narrow it down to a handful and then will take some trips.

@Thomas Flint it’s good practice when you first get started to check your judgment. So when you make predictions go back later say a year or two then five, ten, fifteen years down the road and see if your right wrong and by what margins.

Even better if you back up your predictions with buying a property. Then you really learn. If you know what your doing.

I think you guys are wrong on newburgh.

Wait a few years, then a few more, then a few more. I still love to have this same talk with guys I know about what I was buying in 2006. Your crazy, that will never turn around, blah blah blah. Now it’s worth a million more.

@Frank Gucciardo when you and I were talking about Newburgh 2 years ago I bought 54 benkard 47k and 15 Lutheran 16k . I flipped benkard in the summer for 159k profit was about 75k. Lutheran I kept and rehabbed.

@Frank Gucciardo @Thomas Flint

When is the last time you have been to Newburgh? There are permit signs on every other window. New restaurants, bars and shops opening up very frequently. Do you follow any of the Newburgh blogs? I would have to agree with @Account Closed , Change is without a doubt coming. I have gone to a few of these investor meet-ups with 50+ people showing up. Go have lunch any day or the week at Ms.Fairfax and come back to report what you see. The place is packed every single day I go there during lunchtime. There is BIG money being poured into the neighborhood right now. What are the signs you are looking for that you haven't seen? 

I live and work in Brooklyn and have 7 units up there right now. Very happy I purchased them last year. No regrets whatsoever. As a lender, I also have about 10 pre approved clients there consisting of 70% owner occupants. The writing is certainly on the wall! With Beacon building million dollar condos across the river, I look at it in the same way I look at Bed Stuy to Park Slope.

Park Slope has way more amenities, better schools, MUCH more safe, yet Bed Stuy Brownstones still sell for 2--3.5M. Why? As Long as Park Slope sells for 4 million, Bed Stuy will sell for 2 and as time goes by, the gap gets smaller and smaller. Do I think Bed Stuy will one day be Park Slope? Absolutely! 

I look at Newburgh no different. Many people want to be a part of the change, would like a nicer house only 7 mins away or to put their own touch on something. With all of the artist in Newburgh right now, they don't want the cookie cutter houses, they would rather buy a building that has some architectural significance and put their own twist on it. The housing stock in Newburgh, even though beat up is gorgeous and once brought back to life, you truly have something spectacular. Follow the artist! This approach has never let NYC investors down. 

I’m in Newburgh several times a week.  Grew up there and still have friends and family there.  I live a couple of towns north of Newburgh. 

The recent gang murder on Liberty st tells me that Newburgh still has a long way to go.

Investor dollars flowing into a city are one thing.  I’m not seeing the renters flowing in.  I am seeing people flee NY because of a severe lack of economic development.  Where are the long term jobs for people in the area?  Commuting 2 hours to NYC gets old (first hand experience for 20 years now). 

Only so many boutiques and coffee shops can be sustained. 

Maybe it’s because I grew up there and have heard and seen this story about Newburgh so many times and it never seems to pan out. 

Honestly, are the rents going up?  Is there a major influx of new renters?  I’m only seeing more rental inventory coming on line that will further depress rents. 

The money to be made in Newburgh was purchased a long time ago.

@Account Closed got in very early and bought right.

I hope I’m wrong and I did seriously look at Newburgh, I just couldn’t get over that gut feel. 

Originally posted by @Account Closed :

@Thomas Flint it’s good practice when you first get started to check your judgment. So when you make predictions go back later say a year or two then five, ten, fifteen years down the road and see if your right wrong and by what margins.

Even better if you back up your predictions with buying a property. Then you really learn. If you know what your doing.

I think you guys are wrong on newburgh.

Wait a few years, then a few more, then a few more. I still love to have this same talk with guys I know about what I was buying in 2006. Your crazy, that will never turn around, blah blah blah. Now it’s worth a million more.

@Frank Gucciardo when you and I were talking about Newburgh 2 years ago I bought 54 benkard 47k and 15 Lutheran 16k . I flipped benkard in the summer for 159k profit was about 75k. Lutheran I kept and rehabbed.

 John, are the renters showing up?  New blood?

@Justin S. I think you nailed it. What signs do i see that Newburgh is turning around?

Crime? Down about 90% in the last few years.

I spent ten years watching newburgh. I would go up and look at 15-20 houses every year or two. Typical day in Newburgh was goto the one hipster coffee shop they had. Then drive around and look at houses. There were gangs, hookers and junkies lining many, many blocks. But even with junkies passed out on the steps the buildings were beautiful, there was blocks with beautiful landscapes one block away always. That’s Newburgh really bad and good right next to each other. It was insane how bad the city was on one block and calm on the next.

I knew it would turn around. I had seen this before.

Sometimes I would bid but I always held off. Then I got busy in bed stuy and forgot about newburgh.

In 2016 I saw the signs that I was looking for. I sold everything I had.

I bought 2 million dollars with of residential and commercial real estate in The high crime areas of Newburgh. I Like to take on dirty projects with lots of crime.

At the time I was one of the biggest cash buyers. I had almost no competition. Or so I thought.

Maybe the liberty group but they weren’t buying too much where I was.

Within 6 months I noticed more buyers.

Then I found out that while I had been buying there were several other groups purchasing lots of RE.

Now I’m like a gold fish. The blocks I own on that used to be D neighborhood drug havens and hooker pick up spots have turned. I’m getting cold called from hedge funds trying to buy my portfolio. Families in old vacant drug spots. A dozen permits out on my block. More dumpsters and contractor trucks then regular cars. Cops on foot. No junkies shooting up anymore in plain sight. Hard to find a hooker.

Thank God I got in when I did. That’s what I think. But who knows. Maybe you guys did more research or your smarter than I. One thing I do know we will have an answer a few years from now.

Good luck with your investing.

I couldn’t agree with Hickey more. I came back up about a year after I did five years ago and the change is palpable. I have since relocated from Manhattan, tested for and received my master plumber’s license here in the city of Newburgh as well as the five boroughs along with the Commonwealth of Massachusetts and I have thrown down my roots firmly and permanently in Newburgh. Speculation from the old guard about how it’s never going to turn is a bunch of nonsense. It’s turning right as we speak.

@Frank Gucciardo I haven’t seen the rents go up much.  But the rents weren’t the problem. An average 2 bedroom is 1250. 2 family means that’s 2500.  that house costs 150-200k today.  So that’s a good investment to me.

Especially if you own a dozen much lower that that! 

@Frank Gucciardo I do have to thank you bc that conversation we had two years ago about this very subject caused me to go back up and look around. Did you know that? Going back and forth with you made me drive up the next day and I put some bids in bc I saw so much change from my last visit years before.  So thank you for that   

As far as renters yes they are coming. Such good renters that I changed my strategy. Before I was going to buy and hold. Do Minor lipstick renos 10-15k a unit when they turned over. But I had the worst tenants in the whole city. Many drug dealers, guys in parole, hookers addicts and child molesters, rapists etc.

That’s the advantage to buying The Worst Building in a city. Just evicting my own tenants and replacing with good people helped my property value. I had no plans to rent to hiptsters. Just working people.  

The change in Newburgh is so huge and the shift so quick.  Makes what happened in Bed Stuy look like molasses. I felt like there I waited twice as long   

Now I want to appeal to the higher quality tenants that are coming up.  Many small biz owners.  Artists. Contractors want to live in newbrugh bc there is so much work for them.   Ppl like John wood above.  They don’t need jobs bc they are bringing business with them.  

So now I’m putting in 40-50k a unit   

The rents aren’t much higher yet but the tenant pool is much bigger now.  Still tough to rent in January.  But that’s most places.   

@Thomas Flint I've had a ton of success with BRRR. I bought two houses that I flipped in Newburgh but I could have easily Refinaced and kept. I just competed a refi in Newburgh on an 11 unit mixed use property. Purchase was 530k little less then 75k reno. Just appraised at 850k. When I bought it rents were 11k now I'm at 14,500 with much higher quality of tenant. Still working on that one though. I think it's will be 16 soon.

Working on a few more of those.  

Oh man, @Frank Gucciardo , haters gonna hate! ;)
I though you officially retracted your Newburgh-suspicious position a while back on the Newburgh forum, but maybe the cold and some frozen pipes have you down!? We need to do whatever we can to win you over. Let's have coffee sometime! 

As a realtor living and working exclusively in the city of Newburgh, I talk about these issue and questions quite literally every day.

The key is understanding the history and the urban planning incentives that have gotten Newburgh where is it today. Newburgh has a majorly rough history, and I totally understand the hesitancy of Newburgh natives like @Frank Gucciardo to really believe in the turn around. But what I see is: change the planning input, and you get a different result. 

The NY state government literally tore down a beautiful (beautiful!!) city center in 1970 through "Urban Renewal", built the interstate next door, and incentivized a sharp decline in commercial viability in the Newburgh City center. The generally corrupt city government re-zoned the city center to be mostly all residential, so until about 6-7 years ago that cafe Ms Fairfax everyone talks about on Liberty St, for example, would had to have had 18 off street parking spots to open up. This is  row building, so Of COURSE there was no cute cafe there--- the city suffered, commercial business fled, slumlords move in, section 8 abuses ran rampant, etc. It was hard to open and run an above-board business. The county sited all the social service offices in Newburgh and sent their unsupported people our way. The city was, quite literally, designed to fail.
And @Frank Gucciardo is 100% right, past "waves" of interest in Newburgh have failed --- because the investors moving in weren't, well, moving in. A handful of owner occupants and LOTS of non-resident landlords pumped up interest, but the systemic problems of proper zoning, cohesive city planning, effective city-gov representation, etc weren't getting solved. There weren't competent people in city counsel, on the planning board, in the codes department, etc. ... No kidding the progress didn't stick!

Fast forward to now, and you have more and more owner occupants coming into Newburgh and saying f*&# this nonsense, let's change it. The zoning was changed a few years ago to be "form based" which means the city cares more about the historical facade than what goes on behind it in a large part of the city center. Newburgers new and old spruce up their homes, join city management boards, make a fuss a city counsel meetings, etc. Exploitative social housing projects get shut down, corrupt slumlords and gov officials get squeezed out, and things slowly look a little fresher on the block. 

Don't get me wrong, there are still problems to tackle. Most of the planning and zoning boards are still thin on competence (change your permanent address and voters' registration and join one!); the county still sends Newburgh an incredible about of problems to handle (vote to elect the right county officials too!); there are lots of vacant and run down buildings. But there is also creativity, cool programing, businesses moving in, a music festival that attracted 14k+ people to one block in one day last summer, etc etc etc. 

When I moved into my house on Liberty St just 3 years ago, the cops almost arrested me several times over the course of a month for "breaking into a vacant building." Now I think it's hilarious that I called the cops over this past summer for some kids knocking over my outdoor flower planters. (Turns out it had been happening a lot of the block, so the cops set up a special nighttime flower patrol! Adorable and ridiculous!)

And speaking of the PD, they are great, realistic, and lead but visionaries.  They don't give small time weed dealers and smokers a hard time, and instead focus on targeted harassment of big players in drugs and violence. As an underfunded unit, they have had to focus on effectiveness. New drug dealer making moves? --the PD invested in a special truck with grills built into the side that the park in front of the dealers stoop-- and they make hotdogs for all the kids on the block for the week, making for an seriously embarrassed, called-out, and broke dealer. A kid looks like (s)he is going down a violent path? Instead of arresting him/her they invite them to a community forum made up of families effected by gun violence... and they just talk for a few hours. Since this particular program was started three years ago, gun violence is down nearly 90%. PDs around the country are flying in to learn more, and we should be proud. Yes, two young men were shot and killed in Newburgh this fall. I knew one of them, and the loss of young life is beyond tragic. The good news is that is more and more rare in our community. In other good news, I just sold the two abandoned houses directly across the street from where this shooting happened to owner occupants from out of town. They are 100% undeterred, and plan to renovate and stake up on the block. 
I could go on and on about how the city's infrastructure is improving -- like how you can get a building permit in a week when it used to take 3 months a couple years ago-- but frankly if you need convincing, that's fine. We're fine to have a bigger slice of the pie for the people who share the vision! Newburgh is a special place where one still needs to have a city sensibility, a big heart, and a willingness to be flexible and creative. It's truly not for everybody, and investors entering Newburgh should be thinking "development" rather than "set it and forget it." That being said, if you do come, you'll get to hang out with @Account Closed

I was first considering Newburgh about four years ago. Maybe more but I was unsure with what I was seeing.  Then about two years ago I started looking again. And the deals were getting harder and harder to find. But I stumbled upon a very great opportunity and bought two houses both multi family. Now I feel like I won of small jackpot. Newburg is changing. I see it happening every single day. From the store fronts to the building permits in every other building. Yes, the renters are coming! My good friend who peaked my interest called me the other morning as I am almost done with my first big renovation - She wanted to tell me that her two unit property was gone within two days and the pool of tenants was vastly different than those who applied for apartments five years ago. There is a huge film production movement that is heading up that way as well. From my understanding they are shooting a big movie up there this coming year from friends of mine who used to work for the Teamsters. The secret is out and Newburgh is changing. I hear people talk about it in Soho bars and on Subway trains in Brooklyn. Is it perfect? Nope far from it. But for those who have the patience and the vision, our investments will bear the fruits in the coming years. 

@Frank Gucciardo you mentioned the shooting.

Shootings happen in cities.

I made more than a million dollars off a property in Brooklyn that three people got shot near while I owned it. All drug related. People are going to get shot. In cities it’s more common. If they’re shooting landlords or tenants I’m going to think hard about that. Drug dealers? Well they knew what they were doing.

Crime is down 90% in Newburgh. Did you address that? Are you aware of what that does to property values? That’s what I’m making 75k on a 47k purchase.

Are you doing deals where your making that kind of money? If so where?

Originally posted by @Thomas Flint :

Hi Bradley, did you renovate or find under market rents with the property’s you have? How many units are they? Thanks 

 Hey Thomas I have a 4-unit in Harriman that worked for me.  Under market rents - inherited great tenants and I currently live here.  So rents are still under market but was able to buy it at a bargain.  

The 3-unit in walden was just a solid true turnkey house that I am able to clear 1000 a month with. No grand slam but I'm happy with it. I also just got an accepted offer on a 3 family in Florida NY today actually - there seems to be some tax issues surrounding it but I am optimistic!

@Account Closed thanks for the tip.. I have looked at a few places in the Washington heights section of Newburgh, I was very impressed with the tenants I met during the walk through. Long term 20+ years in the building and solid people. I felt like they were listed high and been on the market for 200+ days. Have you had any difficulty working with the city in terms of permits, historical society.... I’ve heard from some local investors that renovations have become more difficult lately. I’ll definitely reconsider my opinion on Newburgh. Thanks again