Need help with Locations . . . why so cheap?

Question

I am new to investing and just formed my LLC - i am considering starting off with 4 properties - i have been looking at really cheap properties in Rochester, Utica, Albany and Saracuse in New York and Fort Wayne in Indiana - has anyone dabbled in those markets? I would like to start off with something there but not sure why these prices are so low.  H E L P.

N/A N/A · Answer

Ft. Wayne is a very troubled market. Check your census numbers on that particular MSA.

The dynamics between NC, your NY markets and Ft. Wayne Indiana couldn't possibly be any more different.

I love it when coastal guys come to our region and think they're stealing property from us. In the Cincinnati area recently, there was a new home development right next to a city park with a nice public golf course. Very nice, quiet street. Brick 3500 sf 4/2.5 homes with 2 car garages on .25 acre. Starting at $650,000. CA execs are jumping all over themselves to get in the door.

The houses are MAYBE $300K max in any comparable area. Just good marketing with local representation in CA. Laughing all the way to the bank.

I recently bought a 3/2 in Hamilton Ohio for $15K.

It's a poop log, but it rents for $500 a month.

Julian Chavez · Answer

I own 10 properties in Rochester and I'm doing very well. I love that everyone is scared to go into the area because the properties are so inexpensive. I am starting to flip there as well and everything is working out to make $10k net on each flip and you could do it all day long!! There is an endless supply of properties there. I'm just a few months from not having to work anymore.

One more thing. .. if youre not investing in an area because you are worried about tenant issues, you're really not an investor. If you have to work and deal with that type of issue than you are self employed, big difference. I always factor in property management. It's all about factoring in all the numbers.

Oh BTW I live in CA

N/A N/A · Answer

thanks MikeOH,
What is a flyover country?
I get your drift regarding rental - i intend looking into all that before i acquire a property for rental.  I have looked at some properties in the Ohio area also -

Michael Rossi · Answer

watapolice,

"Flyover Country" is what you see out the window as you fly from one coast to the other.  Generally, prices are far overpriced on the east and west coasts.   The vast majority of the country in-between the coasts is still very reasonable and sane.

Again, I would like to emphasize that it is VERY DIFFICULT to make money with rentals long distance.

Good Luck,

Michael Rossi · Answer

watapolice,

I don't have properties in the areas you listed, but I do have several dozen rentals here in Ohio.  You can buy properties at these prices in the majority of flyover country.  However, buying a rental at $30,000 is no assurance that you can make money with it -  not by a long shot!  The purchase price is irrelevant, what matters in a rental property business is cash flow and equity.  Lower purchase prices usually mean that the rents are lower, vacancies are higher, tenants are worse, etc.  Long distance managment and maintenance can wipe out your cash flow in a hurry.

Good Luck,

Jim Gordon · Answer

What do you mean by the prices are so low? Price is all market driven so I can't really say if the price is low without knowing the market and the specific property. That said there are some markets that are easier to find cashflow properties in than others.

Michael Rossi · Answer

It is best not to dabble at all.  REI is a serious business like any other business.  It is MUCH easier to run a business if it is close to home.  You didn't say what area of REI you are interested in, but it is difficult and expensive to manage rentals or manage contractors for rehabs long distance.  In fact, it can be a nightmare.  I know that because I see out-of-state (primarily California) investors buying rentals here in Ohio all the time.  Almost without exception, they fail in a short period of time because they didn't know the market; didn't have a good property manager; didn't understand cash flow issues; and ended up losing their rear.

Of course, that's good for me, because it gives me a steady source of properties to buy for pennies on the dollar.

I'd suggest investing close to home.  If your market is terrible and you REALLY want to invest, then moving might be the answer.  Almost all of "flyover country" is a great place to invest.

Good Luck,

N/A N/A · Answer

By low I mean homes under 30K and quite a number of the - i was wondering if any has purchased and successfully resold homes in these area or have rental properties..  I am in charlotte nc and the only homes you would find at those prices are mobile homes except for the occasional condos which have high hoa that no investor wants/. i want to get four home - two to flip in the price range of 50k-80k   and two to hold in a rental portfolio in the range of under 30k.  the cities i indicated above falls nicely in the rental portfolio but i need some advice on the cities/