All Forum Posts by: Ian T.

Paul's spot on- I personally wouldn't touch the Student Ghetto. When I first started looking I checked out a dozen or so properties there and some of them were just as bad as the crack houses I saw. 

That's not to say you can't make a good return on your money. To me, it's just not worth the headache. 

There are strips of student housing throughout Albany that are the exception, but you are paying up for them with lower returns, still dealing with the headache of higher turnover.

Steve

I own in downtown Albany on Pearl St., a block away from the Palace Theatre, just behind Ten Broeck triangle. While the neighborhood is considered Arbor hill, this area is not at all like the majority of Arbor Hill which I would never invest in due to how dangerous it is. I also own on Delaware Avenue near Albany medical center.

I am focused on properties with 3 or more units, with cap rates > 9% and COC returns > 15%. The more units under one roof the better for obvious economies of scale. I probably look for higher returns than what is average for the area, trying to build in a cushion due to the fact that the majority of the homes will require much more maintenance due to their age. One of the buildings I purchased is 120 years old, and the other is 100 years old.

When I first started researching and analyzing Albany I was extremely optimistic based on the #'s and the photo's of the buildings online. My 1st couple of trips to Albany were eye opening and a hard dose of reality. What looks great on paper losses a few %  points when you look at the state of the  property in person. The very 1st property I looked at in person was an 6 unit townhouse style row houses that I assumed was in great shape given the asking price. What I failed to realize with my online analysis, is that this strip of houses was on a block that was filled with section 8 tenants in houses that were left to deteriorate over time. One of the units I walked into was a crack den with holes in the walls and garbage piled up in the corners of every room. There were visitors in the house that seemed shady to say the least, and the living room was smoke filled from recently smoked crack. The other units were only slightly better and the tenant base was just as bad. Almost all of the units needed to be gut renovated.

What I soon discovered is that each block in Albany is different, and that you need to have someone familiar with the area to distinguish the good from the bad. The only area of exception, in my opinion, is Center Square. This is considered prime real estate within  Albany, fetching higher prices and lower returns. Pine Hills is a good neighborhood but you will need someone familiar with it so you don't get stuck with a property on a troubled block.

If you are open to it, I think there is much more inventory of duplexes with good returns. I personally wouldn't limit myself to one neighborhood. The rental demand is great in Albany- I have only had 1 unit that sat vacant for 2 months which was due to an extreme cold spell last February and March. In raising rents to market rates in the turnkey building I purchased last February, I lost a couple of tenants but these apartments filled with no lag in vacancy at new rents 10% to 20% higher.

I have a great realtor I would be happy to pass along to you, that can offer an objective opinion of a property's location. Feel free to message me for their contact info.

Thanks- Ian

HI Nylisha,

Here's my 2 cents, apologies now for the ramble.

I live in NYC and started investing in Albany a year and a half ago. It's definitely doable   with it's challenges. While I'm perfectly fine with investing in Albany for cash flow, moving there isn't an option for me personally. 

The 1st property I purchased was a vacant 4 unit which needed a fair amount of rehab. The second property is a 5 unit that was turn key, fully occupied. 

Albany can be challenging for several reasons:

1.) You need to have ample capital reserves. The majority of the properties are 80+ years old and suffer from severe deferred maintenance so make sure you build this into your capex budget when negotiating the price. I'm in the process of having a new boiler installed this week on the 5 unit- while I knew that it was reaching end of life, I wasn't expecting to replace it for another couple years.

You also need to factor in that some of the properties are zoned historic which increases the costs when rehabbing the exterior. The 1st property I purchased falls into this category and not realizing this, I had to restore the windows instead of replacing with Vinyl. The cost to replace with decent new windows that complied with the historic zoning board, would have lowered my return substantially.

2.) There is a fair amount of competition for properties that are priced right and when a property comes along that seems to good to be true, it almost always is. I've had to back out of several contracts to purchase. One was due to the seller failing to initially disclose lead that was identified a few months prior. While one of the units was vacant, re-mediated, and certified lead free, there was a family with a small child occupying the other unit which my council advised could very possibly open me up to the liability of a lawsuit down the road. I backed out of another purchase that was a complete gut rehab that had serious structural and infrastructure issues that we found upon closer review with an engineer. They cut corners where corners should never be cut.

3.) It's hard to find decent property management. I have a one man shop that takes care all the location specific needs i.e. tenant placement, maintenance, etc.. I handle the majority of the paperwork and billing. He's great with the tenants and being onsite when I need him to, but if I were to grow to 20 or more units I'm not sure he could handle it with his day job. 

4.) Never base your financial analysis on the #'s provided by the seller and question everything they provide you. They may be quoting insurance prices on a discounted rate due to multiple properties within a group policy. They may also be quoting you an ACV policy vs. RCV or they may have owned the property for 20 years and it's not insured at its current value. 

You need to know what value the property tax is currently assessed for at it's current tax rate, and estimate what your new taxes will be at the purchase price. I learned this lesson the hard way with the 1st property where I did my financial analysis based on the tax at the time which was $5,000/yr.  After purchasing, I was reassessed at $8,200/yr. This was a substantial hit to my bottom line. Lesson learned.

5.) If you have rehab work, you need a contractor that does quality work and more importantly, someone that you can trust. It took me a while, but I found a great contractor that's a one stop shop and stands behind his work.

With all this said, I've been very actively looking to expand and purchase up to 40 units in Albany. Given the challenges with inventory, I've started to look out of state and specifically in Ohio, with a trip planned there for next week. Investing remotely in Albany gives me comfort that I can succeed further from home with the right team.

Best of luck! Please feel free to message me directly.

Ian

Hi Robert,

Thanks for sharing the details. I agree with Paul and would say you did ok. The $576 for cash flow doesn't include all of your expenses so it's actually lower when you factor in any owner paid utilities IF you have them, snow removal/landscaping, vacancy/credit loss, property management if you are not self managing, maintenance, etc.

I like your strategy for renovating and doing a cash out refi. I have a 4 unit and 5 unit in Albany and did an extensive renovation on the 4 unit before doing a similar cash out refi on both.

One thing I have been able to do is get much higher rents than what I was getting when I assumed the leases in the 5 unit, and much higher rent than I was told by several realtors when I was getting ready to fill the 4 unit. My gross rent on the 5 unit was $4200/month almost a year ago when I purchased it. With turnover and lease renewals I'm at $4700 and should be at $4900 in a year and a half. For the 4 unit I was told I could get $950 for each of the 2 x 2 bedroom units. I actuall filled them at $1115 and $1150 each and this is with tenant paid utilities. There is off street parking and laundry in the apartment which helps making them more attractive.

With that said, I'm curious if you tested the boundaries of what you could have commanded in rent, which may have been affected by the neighborhood.

All the best- Ian

@Brian C.  thanks, I sent Darrin a note yesterday

@Matt Motil agreed. I reached out to Sean yesterday and he has exactly what I'm looking for. Thanks for the suggestion.

Hi Kevin,

I'm an out of state investor looking to move into Columbus multifamily, preferably value add pays.... so I would definitely be interested.

Thanks- Ian

I am an out of state investor in NY currently looking at Multi Family in Columbus, Cleveland, and Cincinnati. I am planning a trip to Ohio in early November. 

I need to line up a Commercial Lender for financing loans between $500k and $1.5MM,

Please message me if you or someone you know can assist.

THANKS!

That's great to hear John- continued success on Columbus and elsewhere. I'm planning a trip to Ohio (Columbus or Cleveland) the weekend of November 7th. I just sent you a note.

Hi All,

I currently have 13 units spread across 3 buildings in Albany NY and I'm about to enter into contract to sell a vacation home rental property that I own in eastern Long Island, looking to do a 1031 exchange into larger multifamily. I live in NYC and I'm priced out of the market, looking for cash flow elsewhere as Albany has limited supply and larger multifamily is non-existent. As most are aware, the NYC market is not kind to cash flow seekers.

Please let me know if you have or are aware of any 20 to 50+ units available with the following criteria:

Price: +/- 2MM

Property Type: +/- C, B

Neighborhood: C,+/- B 

Location: I am open to location and have started researching Ohio (Columbus and Cleveland)

Number of units: +/- 50

I am open to value add plays. 

I have the ability to raise the budget to 3MM for the right deal.

Thanks!

Ian Toth