Investing in Upstate NY...Yay or Nay??

57 Replies | Upstate New York, New York

Hi Guys!  How do you feel about investing in multi-family units in Upstate NY (specifically Schenectady) today?  I know GE was a big draw back in the day in regards to employment, but I'm not sure about the current market.  Gentrification has taken over pretty much all of New York City (the 5 boroughs), so I'm trying to think outside of the box.  Any thoughts?

Upstate is fine. Schenectady is awful. Look into the rules they have regarding rental certificates. They had a code enforcement officer kill people a few years back and things are not ok since.

I wouldn’t do it. I grew up in upstate ny and it’s not really a booming area of the us to say the least.

If you study the macro economic trends you can see that more people are moving out of upstate ny than into it.

Also, small towns are dying accross the country in general with the exception being college towns.

Feel free to ask me any specific questions. 

Hi Auria,

I invest in several areas around the Capital Region, including Schenectady. Just like any city, in Schenectady, there are some good parts and some bad ones for investing. The main downtown strip has undergone a temendous revitalization in the last several years. Also, the area around Erie Blvd has seen a lot of growth, including the new casino that opened not too long ago. There are also some new construction projects ongoing. So, the area has definitely seen some significant improvement. What remains tough is the regulatory environment. Schenectady code enforcement is very strict and some would say difficult to work with. Schenectady also requires a new Certificate of Occupancy every time you turn over a unit, which comes with a fee to the city. Depending on the quality of the units and the location, the tenant base may be challenging as well.

I think overall, the area is on the upswing and there are definitely still a lot of opportunities to find properties at a discount. If you decide to invest in Schenectady from afar, I would suggest getting in touch with a local investor/real estate agent to help you. Hope this helps.

Vitaliy 

Personally I would look South, look for a State w warmer weather so you don’t have to worry about snow removal, look for a State w Friendlier Landlord laws.
I prefer to flight South for 2 hours than driving North for 2 hours..
That’s just me, I’m sure others will have different opinions

Investor from the Ithaca area here. I own a couple of multifamily properties in the area between Ithaca and Cortland. One of the interesting things about the economy here is that it is in large part driven by four schools: Cornell, Ithaca College, SUNY Cortland, and Tompkins Cortland Community College - meaning that the market here stays relatively stable and since there are lots of non-permanent people, the rental market stays reasonably strong (even if you aren't doing student rentals). It looks like there are a couple of schools in Schenectady, so that may help keep the market stable even if there is some downturn in future. 

YMMV, so do your homework.

@Auria Moore , @Tim Burke is onto something. In the aftermath of the Great Recession, when I started in the business, I tracked a number of markets around the country, including Ithaca, NY and Charlottesville, VA. Both cities are anchored by huge universities. And both cities saw unemployment stay below 6.5%, even though nationally unemployment peaked at nearly 11%.

You’ve also missed the most obvious upstate market, that is easy to access from Brooklyn: Albany.  It’s anchored by the state government, which is never going away, and by universities and hospitals.  It missed the Bubble going up and coming down.  It’s definitely cheaper than NYC.  It’s worth a look.  

I agree with @Jonathan Twombly - there are certainly opportunities in the Capital District. Schenectady has been a challenging place to invest for quite awhile- with GE paring down further, I don't know that I'd make a bet on it- and were casinos a panacea, Atlantic City would look quite different than it does.

Troy has been very good to me- it's a bedroom community to Albany, and its downtown is pretty happening in its own right. Waterford is similar- a bedroom community and a quiet place where reasonable returns are possible. I've brokered some deals in Watervliet(though I don't own anything there,) my clients who've bought there are happy that they did.

You could look at Cohoes as well, but the local government is a little challenging. Amsterdam, I've heard through the grapevine, has an odd problem with their water system- it tends to erode certain parts of plumbing systems and leads to weird and catastrophic failures. Plus if you buy a building with a vacant unit, the local government can try to make that a permanent vacancy(shrink your unit count.) Such heavy-handed tactics are very bad for property values. Hope this helped, @Auria Moore .

Hi guys - I may be way up there ( Rochester ) but it has been amazing. Been doing it for the last 13 years. Like any other city, there are some great areas and some not so much. The city is tough to deal with but fair. Housing is cheaper then the 5 boroughs and the caps are in double digit. Building a team is key while growing in volume quickly to offset losses from
Evictions, repairs, etc. PM me and I will be happy to share additional information.

Schenectady is fine, just make your units nicer than average and you'll be in good shape.  I have 2 duplexes there, and my 3 BR units are getting $1100+ and I have a 4 BR getting $1400, and I'm into them for about $50k/unit average after repairs, so better than the 2% rule.  In fact, my cap rates are over 15 in both, and my tenants are great (carefully screened).  They're both in C+ neighborhoods.  

Troy is stupidly overpriced, it is equally murder-y as Schenectady in parts but everyone is overpaying because of the hipster vibe going on downtown, that bubble will burst eventually when Troy investors begin realizing that rents don't support the sell price and nothing cash flows.  Schenectady has also done a great job revitalizing its downtown like Troy but prices don't reflect it yet.  

Glens Falls is a great option. I would personally stay out of Schenectady- I used to work right on Erie Blvd and I am glad I don't anymore! GE has had massive layoffs.

Just heard that a couple of new big businesses are coming to Glenville Industrial Park soon which will be a boost to the economy in the Schenectady area. Local jobs will generate potential for real estate investments here.  

I would be interested which towns the 2% rule applied to.  And I'd would appreciate if people could point out what towns have:

1) Good rents relative to purchase price

2) Inventory for BRRRR

3) Reasonable rent rules.

4) Some chance of appreciation

Thank you @Dylan M. for pointing out that Glen Falls is good, but please provide details.  

Excellent job with those details, @Ryan Vienneau !

Is anyone a little more downstate?  I work near Poughkeepsie.  Thanks!

Evin

The cash flow in way upstate, read Rochester, Syracuse and Buffalo is crazy good

I don’t know why more people don’t invest there

To me a largish company could provide turn key properties to investors from CA and make some great money.

@Michael Plante although the appreciation is next to nothing in certain parts of upstate NY, the cash flow makes up the difference. Double digit CF in mostly all larger cities is great. Mostly 3-4% rule is realistic in these markets.

Originally posted by @Aqil Dharamsey :

Michael Plante although the appreciation is next to nothing in certain parts of upstate NY, the cash flow makes up the difference. Double digit CF in mostly all larger cities is great. Mostly 3-4% rule is realistic in these markets.

Did you not see I stated the cash flow was crazy good?

The OP also asked about appreciate, hence my noting that appreciation is about nothing  

Been investing and managing properties in Buffalo since 2011.  Cash flow is fantastic and appreciation has been just as good.

With medical corridor, UB expansion, Tesla, and other large employers coming in, plus the Buffalo Billion, water front development, etc... some home values have doubled.  I have a property in the Elmwood village that has doubled in value since 2011 and is my best cash flow property.  

I can't comment on any other NY markets as I am only in Buffalo NY right now. 

Originally posted by @Aqil Dharamsey :

Michael Plante although the appreciation is next to nothing in certain parts of upstate NY, the cash flow makes up the difference. Double digit CF in mostly all larger cities is great. Mostly 3-4% rule is realistic in these markets.

 I agree with Aqil.  Rochester has been good so far. 

Originally posted by @Matthew Irish-Jones :

Been investing and managing properties in Buffalo since 2011.  Cash flow is fantastic and appreciation has been just as good.

With medical corridor, UB expansion, Tesla, and other large employers coming in, plus the Buffalo Billion, water front development, etc... some home values have doubled.  I have a property in the Elmwood village that has doubled in value since 2011 and is my best cash flow property.  

I can't comment on any other NY markets as I am only in Buffalo NY right now. 

Great info.  Most of the duplexes I see available are roughly 110-150K with total monthly expenses around $850, with each side renting out around $800 or so.   Looks pretty solid to me.   Just try to stay in the lower property taxed areas..

Totally off topic, but does anybody know a reliable roofer around Oneonta/Delhi area? I bought a foreclosure in Walton, NY and I need a new flat roof for part of the house, but has been impossible to find anybody. Apparently the good ones are too busy and the rest I contacted never showed up or came to check the roof, but never bothered to send me an estimate. I would appreciate any help. Thanks!!!

Anybody done any deals in Binghamton? I had been looking at other communities out of state, but somehow Binghamton came across my desk and the numbers, at first glance look good. Would love to hear personal experiences.

like all investment areas it is not really yea or nea... each market has opportunities .... it all depends on the deal... you can usually make money if you buy right....