New Casino in Schenectady, investment opportunity?

Question

Hey Bigger Pockets,

Many of us in the capital district are aware of the new casino being built in Schenectady, New York. It'll be ready in 2016, about 40 minutes away from Albany and Troy. I'm still a newbie when it comes to real estate investing, but it makes a lot of sense to me to think that the casino would drive real estate prices through the roof in the area.

That makes sense...right?

It would be bringing thousands of jobs in and even more tourists, turning Schenectady into a tourist attraction on the Mohawk River and driving real estate prices up within the next 5 years. Seems to me like a huge opportunity but i would love your professional (or amateur) opinions! Anyone had any experience with real estate nearby casinos? Any and all feedback is appreciated.

-Ausitn

Steve B. · Answer

@Austin Wark

I've been following this myself over the past year or so. Like you, I was pretty optimistic when the casino was announced and immediately started looking at investment property to purchase in the downtown and the goose hill neighborhoods. I was assuming if these developers are willing to risk millions of dollars on a project then surely it will improve Schenectady and be a huge boost for the city in the way of higher property values and lower taxes.

I then decided to dig past the surface and see what affects this will really have. I think the Seneca casino in Niagara Falls is a very close comparison, and @Pamela DeLorenzo made some good points. Niagara Falls and Schenectady are very similar cities, that had a robust manufacturing past but today have fallen on hard times and struggle with job loss and a declining population. If you look at the statistics, Niagara Falls has not really got much better. Property values have declined, taxes are even higher than Schenectady, and maybe jobs were created for the casino but most of those are low paying. A lot of the revenue that the city received was squandered by the local politicians and given to their special interests and developer buddies, there are lots of reports about this out there. This is NY, the land of the corrupt politician, the same will happen in Schenectady.

If both casinos were being built today, I would put my money on Niagara Falls reaping the benefits and Schenectady wouldn't even come close to covering the spread. Why? Because the Seneca casino was built as a resort to prevent Americans from crossing the border into Canada to go gamble and the simple fact that Niagara Falls, NY is located near one of the most popular tourist destinations in the country. Schenectady doesn't have either, it won't be nearly the size of the Seneca casino and I think the bulk of the customers will come from the local area and won't spend the night. Casinos are everywhere now and NY is way too late to the game in my opinion, revenue is falling everywhere because the market is being over-saturated. Also keep in mind MGM is building one in Springfield, MA.

Pamela DeLorenzo · Answer

Yes @Steve Babiak you bring up another big factor to consider and that is other casino's popping up everywhere.  It used to be a big deal to go to a casino, but now you can get to one with a short car trip or a bus group tour.  What happens is the pot gets divided up among more players [casino's  that is] as there is only so much money people have to 'spread the wealth' around; thus each one's profit may be diluted as other casinos are built.

As for taxes going down @Austin Wark and @Ryan Vienneau, good luck with that.  Once Albany get a hold of a tax, it only goes up, not down.  Ha! And love your pun Ryan about speculating that an investment might be a gamble that pays off.

Steve Babiak · Answer

@Pamela DeLorenzo already mentioned Atlantic City as a location where casinos in the end did not turn out to be such a windfall; what is partly to blame is that other nearby areas legalized casino gambling so that Atlantic City no longer was the gamblers' destination - they could travel less of a distance to gamble.

So now SE area of PA has casinos, and values for real estate really haven't increased just due to casinos. As I understand it, some of that casino revenue is partly used to subsidize the local horse racing tracks that have been experiencing a decline in their revenue.

Ryan Vienneau · Answer

I know Averill Park fairly well, I went to RPI, my wife grew up in Troy and my mother-in-law lives in Albia (off Pawling), and my full time job is in Castleton.

Rensselaer county also has notoriously high taxes, nowhere near as bad as Schenectady but above average.  It's also developed a reputation along with Wynantskill and Sand Lake for having a well-publicized heroine problem, not sure if its affected the market much but beware if you're planning on landlording.

Overall, that rural area southeast of Troy is good for buyers/renters looking to live in the country but still be within striking distance of Troy or Albany, but I'd probably pick N. Greenbush as the suburb of choice in Rensselaer county, Averill Park would probably be my 2nd pick though.

Austin Wark · Answer

@Ryan Vienneau Funny, was just reading your intro to BP post. By the looks of if, you really seem to know the markets in the area. I myself live in Averill Park, right outside of Troy.

You mention that that the only thing that would benefit us would be tax rates dropping. As Pamela was saying though, she's seen this before, and it wasn't pretty. I wish I was in the position to be able to take such gambles but as a beginner investor (still researching) I cannot. I would be very interested to hear of any successes (or failures) involving the new casino though.

I do have a question though for you Ryan... Like i said you seem to know the area pretty well, do you have any insights on Averill Park's real estate market? I know its a pretty small town, not sure if you have even heard of it lol. Thanks for your time.

-Austin

Ryan Vienneau · Answer

Hi Austin, I live about 10 mins from where the casino is being built (Ballston Lake) and have been wondering the same.  Overall, Schenectady is always tempting because purchase prices are so low, but the taxes are so ridiculous it's hard to get anything to appreciate there.  I was very close this summer to buying 2 duplexes one block over from the casino that were $50k each, fully rented, but the taxes were like $6k. The only way I see Schenectady being worthwhile is if the casino brings taxes down, then landlord profits and home values will rise overnight, but there's a lot of debate as to whether or not that will happen, and Schenectady has somewhat of a reputation for being corrupt, so I don't want to speculate there personally, but it could be a gamble that pays off.

Pamela DeLorenzo · Answer

No worries Austin, glad I could help.  My sister lives in Cohoes and I've visited a number of times - including the Saratoga track - quite lovely in fact, so I'm a little familiar with that region.  The housing is nice out your way though.   --Pam

Austin Wark · Answer

Thank you @Pamela DeLorenzo and @Mark Elliott, I apologize about my lack of responding I have not been availible.

Pamela, that's exactly what I needed, personal experience. What your saying makes sense, the smaller businesses will get put out of buisness, thus driving the locals and the local market down. Thank you for opening my eyes too that. Like you said there are always deals, maybe a vacation rental close to the casino would do well? Like air bnb or something similar. Although Schenectady is deffinatley not a popular attraction lol, only thing worth seeing is the casino.

Mark, that's kindve what I was just saying, deffinatley not built in a nice city. They are expecting the new casino to bring in people from even outside the capital district but that may be pretty optimistic. You guys are right, I realize now that it's probably not going to bring many new house buyers or anything or the sorts, just gamblers driving down for the day/night then heading right back up to their homes. Only spending their money strictly at the casino.

-Austin

Mark Elliott · Answer

i agree with pamela. the casino itself is a nice structure. both in niagara falls and buffalo. but, neither of these were built in what i would call nice neighborhoods, and neither has improved any of the neighborhoods they sit in. the plight of these cities is not due to the casinos, but it hasn't done anything to improve the situations either. i am no against gambling or casinos, but they aren't the answers either

Pamela DeLorenzo · Answer

Hello Austin, let me first disclose that I am an amateur investor yet I do have the experience of living near a number of casino's.  Here in the Niagara/Buffalo NY region there are at least 4 casino's within 30 minutes of one another.  Albeit two are on the US side and are Seneca nation owned, another two are just 5 minutes across the US/Canadian border.  Then there are a few other scattered gambling venues (Ft. Erie race track, Batavia downs) nearby as well.  It was my opinion prior to their opening in 2002 that a casino would not help us out and might possibly hurt other businesses nearby.  I'm sad to say that in fact has proved true.  Many smaller businesses have closed their doors, leaving vacant buildings not on the tax rolls.  It seemed to invite a lot of 'absentee landlords' too as there appears to be more rentals than home-owners. I cannot validate the veracity of my claims apart from watching the blight creep into what was once beautiful neighborhoods across the city.

That said, the city/county receives casino monies via an agreement negotiated with the state between all the parties resulting in some work on the parks, roads and infrastructure in general along with increased police presence.

What's missing is the promises of wealth pouring into the city; the job creation, lower taxes due to the coffers being full, increased tourism and of course, the  housing boom.  To be fair there are pockets that continue to expand and improve, but it seems most of that has happened outside the city.  Buffalo has seen some marked improvements as of late and it appears that it will continue.  The Buffalo casino is not a full-service operation and it is the investors/developers who can claim the credit for the turnaround there, not the casino.

I wish I could tell you to expect housing prices to rise and people flocking to the area but alas that has not been our experience here.  I think you'll find similar scenario in Atlantic City.  In my estimation, banking on the casino for a windfall is not the answer you're hoping for, however don't let that deter you; there are deals out there you can benefit from in any market and I hope you can write me down the road and tell me how wrong I am.

New Casino in Schenectady, investment opportunity?

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