Would you bet on Buffalo, NY?

29 Replies

I am analysing the Buffalo, NY market and would like your opinion on whether you think it is an attractive market or not - and why!

The facts are:

Annual forecasted % change from 2017-21:

  • GDP 1.6%
  • Employment 0.4%
  • Unemployment rate (% of workforce) 4.9%
  • Household disposable income 1.0%
  • Population 0.0%

To me those projections aren’t the most attractive compared to (1) other individual markets in the US, or (2) the US national average as a whole.

I see Buffalo’s biggest strength to be affordable housing, but I am concerned about (1) its dependency on traditional manufacturing, as other booming areas have moved into tech and services, as well as (2) the ageing population combined with 0% growth until 2021.

Initiatives aiming to grow the city appears to be (1) Buffalo Billion (subsidies to e.g. Solar City) and (2) the major expansion of the University of Buffalo’s medical school.

What do you think of this case? What are Buffalo’s strengths, weaknesses, threats, and opportunities?

/Emil

#Firstpost

You should actually look into Mesa Arizona and Tempe Arizona if you want Kiwi friendly investing. Both The east coast and The West coast of the US have high taxes, high property taxes, high transfer taxes and are more likely to raise taxes than anywhere else.

For the best places to invest in today's market:
Arizona, Colorado, Utah, Michigan (if you do it right), Texas (other than Austin or Dallas), Indiana, Oklahoma, and almost anywhere else in the mid section of the country. If you are VERY experienced and have access to a LOT of capital, the coasts are fine. Each state varies a bit just like N. Island from S. Island.

@Emil Hovgaard  I think Buffalo is full of good deals. Depends on what you are trying to do... buy and hold, rehab? What class neighborhood are you looking at? City of Buffalo changes fast by only a street or two. I just bought house last year in class C neighborhood near Canisus College for 45k. It's a 2 family and rents are $550 and $485. Taxes are super cheap as well in Buffalo. I pay $800/yr. Tenants are also long term tenants. Being you don't live in Buffalo, be thorough with your due diligence on property(mostly in regards to property inspection).

It was a good market 5 years ago. Currently, home prices are over-inflated. To be honest, the local economy can't sustain these higher prices. Rent is unaffordable when there are no jobs to pay for it. You can find deals in less desirable areas like the poster above me. However, check with property management companies as some will not manage properties in certain areas of the east side (high crime). I am always surprised to see people from overseas interested in investing in our small town as this would no longer be considered a hot market. There are so many other cities on the up-swing that would seem more desirable.

@Account Closed thanks for sharing. I'll have a closer look at the rent development and make sure to consult the property management company also. 

@Emil Hovgaard When you reference Arizona, of course, it's made up of a few markets but the Phoenix area dominates.

Phoenix is a metropolitan area in the Sonoran desert with very few damaging weather events outside of the occasional monsoon storm in the summer. A monsoon might generate an inch of rain in 15 minutes but with the overall rain gauge running close to 8 inches per year we are pretty dry, hence the desert. We don't really do snow, rarely ever freezes, don't do tornadoes or earth quakes etc. It's frankly pretty benign outside of the hot and dry. Hot and dry is actually pretty easy on a property and doesn't tend to cause crazy, over the top damage. We do raise a healthy population of termites and about half the properties will need to be treated for termites, rarely have they done any damage and the treatment for most rentals is less than $500 total.

Phoenix has all of the major sporting events, tons of recreation, a major university and land to grow!

Phoenix by and large is a newer city with the population growth really taking off starting in the 70's and still growing today. Why, the weather is great and the job market is pretty decent. We are experiencing solid job growth as the politics have created a favorable tax environment for companies to move to AZ from states like California. Tech companies like the area as we have a good base of software and hardware engineers etc. Intel recently announced a new fabrication facility in Chandler, Google, Apple etc all have a presence. 

If you want to make money in buffalo you need to be using 0 or even negative appreciation as part of your model.

I visit buffalo several times a year, have friends who live in the city, and know other investors who buy in buffalo. I've been tempted to invest there many times but it just does not fit our model as there's no appreciation.

One of my reia groups had several people go to buffalo, buy up all the tax lien properties at huge discounts, rehab, and try to resell.

Here's some average figures

Purchase 20K
Rehab 30K
ARV 65K

That was in 2010. Those same properties are now worth maybe 70K tops.

If your game is cashflow you can make decent gains in areas around UofB but your angle will be volume or multi unit. Doing all that locally let alone from Sydney would be tough, but doable.

Again, I can't stress this enough - expect negative equity in buffalo or any rust belt city. If you factor that into your numbers you will do well.

I just noticed something odd in Buffalo: homes within the city limits having very low property taxes, while those outside the city (e.g. in Cheektowaga) having the higher property taxes common in upstate NY. I have family and friends in upstate NY and the property taxes are really killer. Why are they so much lower within the city?

@Emil Hovgaard some of better neighborhoods are North Buffalo/Hertel Parkside area and then also Elmwood village. I wouldn't recommend east side or west side if you are not familiar with area. Message me if you need help looking into some properties. 

@Eric James the lower property tax is Mayor Brown. He has held or lowered property taxes every year for the past several years as an incentive to encourage people to move back into the city.

Don't get too turned on by low taxes. Buffalo water, is extremely expensive and sewer rent and garbage is also high and billed separately.  Plus, new rental registration laws with lead based paint abatement requirements could eat up your annual profit. 

@Eric Delcol thank you for sharing those insights. That's really helpful. For me cashflow is the priority and focus, so I would accept no appreciation if accounted for from the beginning.

@Shawn Pappas thanks Shawn. I'll PM you

While this isn't an endorsement of Buffalo investment, it should be noted that Buffalo and other areas of upstate NY have been positioning themselves to be hubs of tech manufacturing. Buffalo will have the biggest domestic solar manufacturing shortly and the interstate 90 corridor, filled with long dwindling manufacturing towns, is on a boom as manufacturing continues to push west from NY Tech Valley (Upper HV/ Capital District). Many of these smaller cities like Illion/Mohawk, Utica and such have low priced real estate with significant industrial infrastructure and an underemployed but well educated work force. Those smaller cities won't be attractive for a foreign investor, mainly due to lack of easy international travel, but for other reading this thread, interested in upstate NY for long term, first and second ring burbs of those locales should expect to see some decent appreciation in the next 4-8 years.

Buffalo as a whole is great Starting Point for Investing. It all comes down to What you want to invest in. I speak with out of area investors all the time and the biggest concern is the rate of return. Some investors want the turn and burn, while others want the long haul. Cheektowaga is great for the long haul b/c you can obtain higher rents. Buffalo is also experiencing a Micro-Bubble where too many inexperienced people are Overpaying for Properties that are just not worth it. WNY Real Estate wasn't impacted too much as a result of the housing crisis b/c buyers here are very conservative but if you start to have a higher demand then you're going to see over inflated prices. If you want investment properties, look for the ones which very low maintenance. IE Sided/Newer Roof/Updated Furnace/Mid to Low-Risk Areas.  It's alot to absorb but try not to jump feet first into the pool. Step very gingerly. 

This thread is amazing for what I'm looking for guys. I'm originally from Buffalo and I'm coming back very soon to do some real estate investing. Anyone who is willing to talk to me about it I would love to have a chat or even meet when I come to Buffalo on the 12th of June. 

@Derrick H. @Shawn Pappas  the info you guys provided helped the most. Thanks a lot.

I bet on Buffalo NY back in 2011 and it was the best thing I could have done for myself.  Granted I am from Buffalo so I wasn't even looking at other markets but, I am sure glad I did.  

Hey Matt, 

Glad to hear you got in before the market upswing! I am originally from Buffalo (Amherst) and recently moved back to the area. I am looking to get involved in my first multi unit in the Buffalo area and would love to pick your brain if you have a free minute. Thanks!

Paul

@Matthew Irish-Jones , I would like to talk as well. If it’s ok with you, could you shoot me a phone number and a good time to talk? I currently invest in the Buffalo suburbs and would like grow.

I think Buffalo is a great place to invest. I started last year in 2017 and bought two doubles. One in Parkside and one in Cheektowaga. Both different areas and tenant pool, but both are doing well. I leverage and am able to get the lowest interest rate for mortgages so that definitely helps the cash flow. I'm looking to purchase another property (5+ units) this spring or summer.

The thing that helped me the most was to analyze many properties per day off the MLS. Once I found something that would give me a great COC return I would offer something I felt reasonable and hope for the best.

I love talking RE so if you have any questions feel free to PM me and we can chat. 

Good luck! - Jesse

My husband is from Gerry NY. About an 1.5 hours from Buffalo. We just became landlords a little over a year ago and we are looking to invest. So many cheap properties in Jamestown, NY $13,000-$50,000. Anyone here investomg in this area? 

Originally posted by @Jesse Imes :

I think Buffalo is a great place to invest. I started last year in 2017 and bought two doubles. One in Parkside and one in Cheektowaga. Both different areas and tenant pool, but both are doing well. I leverage and am able to get the lowest interest rate for mortgages so that definitely helps the cash flow. I'm looking to purchase another property (5+ units) this spring or summer.

The thing that helped me the most was to analyze many properties per day off the MLS. Once I found something that would give me a great COC return I would offer something I felt reasonable and hope for the best.

I love talking RE so if you have any questions feel free to PM me and we can chat. 

Good luck! - Jesse

What kind of COC return or monthly cash flow do you think is reasonable to great for Buffalo? Searching a lot and there's definitely possibilities but they are all fairly close to each other in terms of monthly cash flow.

@Annie Johnson   We are not currently investing that far south.  Most of our investments are focused in and around the city of Buffalo.  Jamestown is a very small town over an hour south of Buffalo.  There are certainly some cheap properties but, the renters pool is smaller as well.  Also keep in mind people can buy a property for what it will cost them to put down first, last and a security deposit.

@Eric Stets   that really depends on what kind of investment you are looking for and how much Capital you are putting down.  A single family home is going to have a lot different numbers than an apartment complex.


Do you have a range in home prices you are looking at?  I could probably give you an estimate on cash flow if you give me a rough idea of what your looking for.

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