I recently visited Buffalo NY and am trying to figure out if its a good place to invest. Below is the number I came up with for one of the properties(It's listed a few months back and it's sold already, but there are other deals that look similar to this one).
The number looks great on paper(see attached image), but I have some concerns:
1. I am from the Bay area, Buffalo is definitely not as vibrant as any city in the Bay area.
2. I am looking at the neighborhood around Buffalo University, my niche is college students.
3. Buffalo has a decreasing population (http://worldpopulationreview.com/us-cities/buffalo...).
I would love to have some inputs from the experts here. Appreciate any feedbacks you can give me :)
@Calvin Liang First off I just want to say great job on looking out of state for a market and doing some pretty in depth due diligence. I've heard buffalo to be a pretty stable market and on one of the podcasts the guests spoke about how the market was least impacted by the crash in 2008 compared to the surrounding areas. On bestplaces.net they claim the population growth has grown 21% since 2014... since that conflicts with the data you presented I wouldn't be worry to much about it. Take a flight and stay there for a bit and see the market yourself and what you think of it. Google maps, online pictures, and online sources are much different than an in person view of the city and real estate situation. I think you are on to something and just need to go there yourself and check it out and see what you think!
@Calvin Liang I have been investing in Buffalo since 2011. I currently own 25 units and manage 45. I think Buffalo is a great place to invest. There are some neighborhoods that are over priced and all we are seeing is owner occupied purchases in those areas. They are not for investors, the Elmwood Village is a perfect example of this.
Like any city, you need to find the right deal on the right block. If you do that, you can get great cash flow and steady appreciation.
I don't have the statistics on population in front of me but I can tell you that the main difference in Buffalo is all of the millennials want to live downtown. College students are staying in the city, many people that would not have visited the city ten years ago are now buying houses and living there permanently. Rents are continuing to go up as young professionals move into the city, and more families populate the area.
The city in general is seeing business growth (I work in the city as well), new restaurants and the opening up of our water front. For anyone 18-35 years old the city is the place to live right now.
Happy to chat about investing in Buffalo anytime. Let me know if I can help.
@Calvin Liang The numbers you posted above do not surprise me in the least. We are seeing deals like this constantly. The one thing I can tell you is generally speaking our vacancy rate is WELL below 10%, generally around 5%. The maintenance can be another variable that can be tough to predict. We have gotten to the point where we can tell roughly exactly what our monthly maintenance fee will be just by walking through the place.
@Matthew Irish-Jones Thank you for the feedback. Your information definitely gives me more confidence in the Buffalo market. Will definitely want to chat with you more in the future once I start taking action!
@Michael Guzik Interesting, I need to look more into that growth number. But overall Buffalo seems like a safe place to invest. Thank you for the feedback!
@Calvin Liang if your niche is college students then the market around these schools are doing well and most other things would be somewhat irrelevant to you. I know UB South the best and the houses in that area are doing well and you can still get some good priced homes that will appreciate with good rents.
If you focus on students the area around UB south should be a strong market for a few reasons.
1. Tuition is now free for SUNY schools for NYS students who have parents that make less than around 100k.
2. UB is the biggest school in the SUNY system.
3. UB just opened a large medical school downtown which is on the subway line with the UB South (University Heights area)
4. The Canisius College area is another nice area since it's close to Canisius and on the same subway line as UB South and UB Medical school
5. The margins for student housing in Buffalo are quite nice around 300-350 per room per month for modest conditions.
Any questions let me know
@Andrew Carducci Thank you for the feedback, great information!
What is the financing environment out there for investors? I am interested in this market. Seems like a great place for cash flow. Might take a ride out there to see the market for myself. Do you have any advice for out of state investors?
@Christopher Lynch I was getting 3.25% interest rates back in 2011 when I first started on conventional loans. I have since moved to commercial loans since we are buying multiple properties under an LLC.
We have a relationship with a local bank. We get somewhat favorable terms since we are a good customer and have a relationship.
We have never had an issue getting financing, do you know if you are looking for a conventional or commercial loan?
My advice would be to find a local investor willing to share his team: home inspector, Real Estate agent, and a great property management company that will run the numbers for you and advise you on specific investments.
Let me know if you want me to recommend a Real Estate agent.
@Matthew Irish-Jones I am self-employed and was trying to get a loan from the local bank. But, the bank wants a better financial history. Do you have any bank to recommend? I don't wanna go to a private lender if I have better options due to the higher interest rate.
@Calvin Liang For commercial I use Bank of Akron which is a local bank. We are getting commercial loans though. I am not sure if you are looking for commercial or conventional. Commercial loans have a higher interest rate but, you can get loans as an LLC.
I am an investor in Buffalo, Tonawanda and North Tonawanda, looking to expand my business.
I will be there next week, Happy to meet.
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