First time investor - Albany NY?

Question

I’m currently looking for my first investment property and I have a few markets in mind, one of which is Albany, NY. Does anyone have experience investing in Albany? Looking to network with other investors, and connect with a local realtor and property manager.

James Wise · Answer

Sup playa.

Nate Monson · Answer

Hi @Rebecca B.

I'm a realtor in Albany,NY who specializes in small multifamily properties. I sent you a connection request. Would be happy to connect!

Drew Sygit · Answer

How much do you know about Property Classes?

Recommend you spend some time learning about them, so you don’t mistakenly buy a property that will NEVER meet your expectations!

A common issue, so Copy & Paste info below:

You’re ALWAYS better off investing locally, where it’s easier to:

·         Learn the market

·         Network to find deals

·         Network to find contractors

·         Be more hands-on

·         Driveby property to keep tabs on it

·         Network to find a decent Property Management Company (PMC)

Next best location is somewhere else you lived, where you have an existing network of family & friends to help you as accomplish the above list as needed.

If you invest OOS, your biggest challenge won't be finding properties to meet your goals on paper, it’ll be successfully building a knowledgeable & trustworthy local team.

The biggest mistake we see OOS investors making in our market, over and over again, is not fully understanding Neighborhood/Property/Tenant Classes and how they impact your probability of success!

They all run their ROI numbers assuming Class A results – when buying Class B, C & even D rentals.

Then they’re shocked when their performance expectations aren't met😞

If you choose to invest OOS, and have little to no landlord experience, we highly recommend targeting Class B Neighborhoods/Properties/Tenants. If you target Class C, you better be prepared emotionally & financially for plenty of challenges.

You can find Class B properties in the Midwest to BRRRR, but it will take more digging and YOU will need to understand how to analyze & identify them - because a lot of agents, wholesalers, PMCs, etc. will try to sell you Class C or D misrepresented as Class B:

·         Many of them don't know/care what Class the properties are, so they're incompetent.

·         Others know exactly what they are doing, so should be labeled as crooks!EITHER WAY YOU LOSE!

Why is Property Class so important for investors to understand and apply in their investing strategies?

Because the Property Class dictates the Class of the tenant pool that the property will attract.

The Tenant Class greatly impacts rental income stability and property maintenance/damage by tenants.

Both Property Class and Tenant Class will affect what type of contractors, handymen and property management companies you should target and be willing to deal with a property.

The Property Class will also impact the maintenance & renovations you do to, “Maintain to the Neighborhood/Market”.

Why is that important?

Well, if you buy & renovate a property in Class D area to Class A standards, what Tenant Class will actually rent it?

Or, if you put several Class D tenants in a Class A four-plex, what do you think will happen to the property?

What do you think will happen if you rehab a Class D rental to Class A standards?

So, if you fail to apply the correct assumptions to a property, your expectations won’t be met, and it may even be a financial disaster.

We use the following to rank Property Classes, in order of importance:

• Property Tenant Pool: closely linked to location, but not always.
• Property Location: closely linked to tenant pool, but not always.
• Property Condition & Amenities: it’s important to, “Maintain to the Neighborhood/Market.”

Property Tenant Pool: closely linked to location, but not always.

Property Location: closely linked to tenant pool, but not always.

Property Condition & Amenities: it’s important to, “Maintain to the Neighborhood/Market.”

Key metrics for each Property Class:

Class A Properties:Tenant Pool: Majority of FICO scores 680+, no convictions/evictions in last 7 years.Tenant Default: 0-5% probability of eviction or early lease termination.Section 8: Class A rents are too high and won’t be approved.Vacancies: 5-10%, depending on market conditions.Cashflow vs Appreciation: Typically, 3-5 years for positive cashflow, but you get highest relative rent & value appreciation.

Class B Properties:Tenant Pool: Majority of FICO scores 620-680, some blemishes, no convictions/evictions in last 5 years.Tenant Default: 5-10% probability of eviction or early lease termination.Vacancies: 10-15%, depending on market conditions.Cashflow vs Appreciation: Typically, 1-3 years for positive cashflow, balanced amounts of relative rent & value appreciation.Section 8: Class B rents are usually too high for the Section 8 program.

Class C Properties:Tenant Pool: Majority of FICO scores 560-620, many blemishes, but should have no convictions/evictions in last 3 years. Verifying recent 2-years of rental history very important! Same for 2-years of job/income stability.Tenant Default: 10-20% probability of eviction or early lease termination.Section 8: Class C rents usually meet program requirements, proper screening still recommended.Vacancies: 10-20%, depending on market conditions and tenant screening.Cashflow vs Appreciation: Should cashflow immediately, at the lower end of relative rent & value appreciation.Class D Properties:Tenant Pool: Majority of FICO scores under 560, little to no good tradelines, lots of collections & chargeoffs, but should have no convictions/evictions in last 12 months. Verifying last 2-years of rental history and income/employment extremely important to find the “best of the worst”.Tenant Default: 20-30% probability of eviction or early lease termination.Section 8: Class D rents meet program requirements, often challenges to pass Section 8 inspection.Vacancies: 20%+, depending on market conditions and tenant screening.Cashflow vs Appreciation: Typically, all cashflow with little, maybe even negative, relative rent & value appreciation.

Where did we get our FICO credit score information from?

Check out this chart:

FICO Score

Pct of Population

Default Probability

800 or more

13.00%

1.00%

750-799

27.00%

1.00%

700-749

18.00%

4.40%

650-699

15.00%

8.90%

600-649

12.00%

15.80%

550-599

8.00%

22.50%

500-549

5.00%

28.40%

Less than 499

2.00%

41.00%

Source: Fair Isaac Company

Make sure you understand the Class of properties you are looking at and the corresponding results to expect.

For example, Metro Detroit has 132 cities and the City of Detroit 183 Neighborhoods, which we’re analyzing and classifying to make better investing decisions.

Horror Stories from those that did NOT Understand What they were Buying:

https://www.biggerpockets.com/forums/48/topics/1137397-baltimore-a-path-to-never-ending-pain

https://www.biggerpockets.com/forums/432/topics/1231840-sell-at-a-loss-or-rent-at-a-loss

https://www.biggerpockets.com/forums/311/topics/840134-memphis-turnkey-tenant-turnover-costs

https://www.biggerpockets.com/forums/963/topics/1195280-experience-of-oos-investing-in-cleveland-after-15-years

Ayush Mishra · Answer

Make sure to use the crime map. Safety looks like a major concern. Be sure not to get in the cheap neighborhood that ends up being a scary trap.

Diana Khan · Answer

@Rebecca B., since you’re already starting to meet people in Albany, I would spend some time interviewing property managers before you buy anything.

From working with landlords, I’ve learned that the management company can make a huge difference when the owner lives in another state.

I would ask very specific questions. What happens when rent is late? Who handles an emergency repair? At what dollar amount do they need your approval? How often do they inspect the property? Who handles lease renewals? And if there is ever a legal problem with a tenant, what does their process look like?

I’ve seen owners find out too late that they assumed the manager handled something that was never actually part of the agreement.

I would also ask to see the management agreement before choosing a property. The fee is important, but I pay just as much attention to what they actually agree to do for you.

For a first out-of-state rental, I would want to know I can trust the system around the property before I worry about buying more doors.

Since this is New York, I would also have a local New York attorney explain the landlord rules that would apply to the property.

Mendy J. · Answer

Hi Rebbeca

We own a lot of rentals there, for me it’s a great market especially if you live in New York or nearby like myself, which cuts a lot of of the out of state problems. You can DM me if you would like.

Ethan Harris · Answer

Hey Rebecca!  I myself bought my first investment property in Albany and live in the area currently.  I am a full time realtor with the bulk of my business being MultiFamily/Income producing properties in the capital region of NY.  I have plenty of contacts with local lenders, property managers, inspectors, and the like.  I'd be happy to connect and see what makes the most sense for your goals!

Nicholas Floyd · Answer

Rebecca, one thing I’d add as a first-time investor is to compare not only purchase price and rent, but also taxes, insurance, property management, vacancy and financing costs before choosing the market. A deal can look affordable until all of those expenses are included.

I’d also get your financing strategy lined up before you start making offers. Depending on the property and your overall profile, having access to business lines of credit or other business funding can help preserve cash for renovations, reserves and unexpected expenses instead of putting all of your available capital into the acquisition. The right local realtor, property manager and lender/funding relationships can make a big difference when you’re investing from out of state.

Jimmy Lieu · Answer

Welcome to BP, Rebecca! Albany could definitely be worth exploring, especially if you already have a few markets on your shortlist. For a first investment, I’d compare each market based on actual rent-to-price ratios, property taxes, insurance, local landlord laws, and what kind of returns you can realistically get after management and maintenance. If you’re still open to other markets, Columbus could be worth adding to your comparison. I moved here from Portland in 2020 specifically to invest and ended up building a portfolio of 10+ rentals. There are still areas where properties around the $120K–$180K range can get close to the 1% rule, depending on the property and condition. Whatever market you choose, having a solid local agent and property manager who actually understand investment properties makes a huge difference, especially if you’re investing from out of state. Happy to connect and answer any questions you have!