Hey everyone, I'm new to real estate investing and live in Rochester, NY. I'm looking to buy my first property, likely a SFH, within the next year and am trying to decide whether or not it makes sense to invest locally or look out of state.
I suppose that I'm just not that great at finding deals yet but is anyone have luck here w/ the 1% rule? I've been doing a lot of research on SFRs, looking at the monthly rent prices and looking at the most recent sale price on Zillow/Realtor.com, and am more often than not finding that homes are renting for less than 1% of the purchase price.
I'd love to hear some stories from investors locally who have had some success investing in class B neighborhoods.
Welcome! What neighborhoods are you looking in and where are you getting your monthly rents from?
There are plenty of 1% deals out there even on the MLS. As an example, 110 Oakland Street is in a solidly B part of South Wedge/Highland Park and listed at $124,900. Everything is going over asking but I happen to know that this one is under contract at ~$137K. There's no doubt that you could get well over $1,370/month in rent for this once you put in some LVP upstairs (see Zillow pics).
Thanks, @Jeff S. . I just took a look at that one. I have been looking in the suburbs mostly, I've got this idea in my head that properties outside of the city would pull longer-term renters? Does it matter?
Like it's been said, there are plenty of houses that meet the 1% rule in Rochester. I'm currently under contract to sell my duplex in Edgerton and that is around 2%+.
However, it's not a single family and I think the area is more of a C.
Best of luck!
Yes, after all reserves and fees I was at about 200 per door per month
Welcome to BP @Ryan Bilak . Best of luck in your search!
Hey Ryan, I am part of a group working in the Rochester area. One of our partners is an agent who comes across tons of deals that would fit your goals. Shoot me a message and a connect and I'd love to hop on the phone with you sometime !
feel free to reach out with any specific questions about Rochester market.
I used to own the duplex at 160 Oakland - bought it for $75K in 2006 and actual gross rents were $1,200 (including a substantial rent break for a long term tenant). Still kicking myself for selling it. That was a good but not great deal back then in southwedge/highland park or North Winton Village. I guess times have changed a bit.
@Frederic Babeux , great, thanks for the insight!
@Josef Sieber , thanks! I will shoot you a note now.
@Martin Grizzanti , thank you, I also joined the new Facebook/networking group you just started, so I'm sure we'll meet soon!
@Darius Ogloza , thanks! I can imagine you wish that you had held onto that one!
Welcome to BP. I invest heavily in towns in the southern tier but have looked at Rochester. SFH can be a tough margin but should be doable. Duplexes are where we decided to make our niche as they return better and possible vacancies don't leave us carrying the mortgage out of pocket.
As a NY Home Inspector I offer this. Take your time vetting properties. We looked at 40 properties to buy our first 4. In looking for your first property you want something that can bring you returns without never ending cash outlay. A "good deal" might bleed you dry if you don't vet it well. We targeted strong structures with new to midlife utilities and that strategy served us well.
If you ever need an inspection give a shout!
Chemung Valley Home Inspection LLC
@Amos Mainville thank you, that’s great advice.
Hey Ryan ,
I’m a new Rochester NY investor as well. Would love to connect and see how your search has been going
A search for suburb single family rentals is going to be tough.
The great thing about the greater rochester area:
it’s cheaper to buy than to rent a house.
The bad thing about the greater rochester area:
It’s cheaper to buy than to rent a house.
In my experience with suburban sfr, more often than not, the tenants are what the french call “un vrai foutoir”, or in English: “a hot mess.” People who would rent long term, do so for financial reasons not personal reasons. Because frankly, in Rochester, it’s financially stupid to rent long term. So who are you left with mostly? People with problems.
So that being said, if you insist on buying single family suburbs, do it in locations close to universities with strong graduate school programs. You will have a higher probability of attracting that high quality long term tenant from a graduate student or PHD candidate that doesn’t want to buy a house. Check out the areas near UR, RIT, Nazareth, and Saint John Fisher!
That’s an interesting point but totally makes sense. Thanks, Matt!
This is just my opinion- maybe you should wait. Right now, the rental markets is in tough position right now due to rent moratorium here in NYS and across America. Post-Pandemic rental business in general require us to do business differently especially how we build relationships with tenants. Flipping houses seem to be the best strategy in this current housing market conditions due to rent moratorium. Do little more research, survey the landscape of local markets, network constantly with us and others before taking the leap. I’m slowing down rentals side of my business and doing more to upping my flipping house projects. I just sold one flip house. It was put on contract quickly as soon as it hit the market.
I find that the 1% rule doesn't work well in Rochester. Our real estate taxes are too high! You need 1.5% or 2%, or 1%plus $500, something to cover taxes. I bought a single family in a Rochester suburb for under 100k, rent it out for 1275/mo. and just barely cashflow. Other aspect are good, though. It's gone up in value, my tenant has no thought of moving out. I'll never hit 5% vacancy. I'll raise the rent next time the lease is up.
My guess is that the rents might be higher than you're estimating.
School taxes in New York are very, very high. Arguably, you get what you pay for as better schools should conceptually fetch higher rents. Couple that with county taxes (usually not too bad) and in some cases village taxes (also ridiculous as who really needs 3 layers of government) and you end up with a huge tax bill. I am paying over $7,000 in property taxes on a house in Pittsford that's probably worth only about $250,000-$275,000. It's on some acreage so I am holding as a potential development play but as cash flow? Not so much.
Well-placed multi's in the city that could use a little elbow grease (Park Ave, University, Southwedge, Highland Park, North Winton Village east of Culver, western end of 19th Ward past Thurston) is how you make money on rentals in Roc. It has become hard to find these properties. They were a dime a dozen 15 years ago.
Welcome to BP. If you need an Ithaca buddy come on down! Nothing but good wine and deals.
Welcome to real estate. It's going to be challenging finding a single family rental that makes sense, especially on sites like Zillow / Realtor.com. I would consider expanding your search to a 2 - 4 unit. When doing so, be careful of any potential tax assessment increase.
@Matt Honeyford Thanks, Matt. Are you still investing in Rochester then? Or are you investing out of state?
@Nick Rutkowski Thanks, will actually be in Ithaca next weekend! Usually one a yea my wife and I go to a spa down there near Ithaca college.