Posted by E.Eka on October 16, 2003 at 14:42:15:
I think you’re right Gary. Not to many people want to invest in Pitt either. The job market is a little wavy. I guess that means a better chance to have renters.
10k to 20k properties in NewYork - Posted by raisismith
Posted by raisismith on October 15, 2003 at 22:56:12:
I live in California and I am just getting into realestate investing,…I have about 100k liquid to invest into properties and I am interested in finding properties that are cheap(10k to 20K) and in fare condition with rehab expensis not exceeding 5k to 8k and then appraise for about 35k to 40k,…and I have done alot of research on the internet and I have found many handyman specials and rehab properties in Buffalo NewYork that are forsale for between 10k to 20K,…these properties are on average 100 years old and need updating,…I want to get maybe 4 or 5 of these type of cheap properties and then rehab them and then rent them out and hire a property manager in the area to assist in move-in and collection of month to month rent with 10% of rent as compensation for services. Do you think that since I have the cash to do this,…that it would be a good thing to get involved in,…I want your honest opinion,…because it will weigh heavily on my decision.
Thank for reading,
“Smitty”
Re: 10k to 20k properties in NewYork - Posted by Kristine-CA
Posted by Kristine-CA on October 18, 2003 at 23:37:43:
If you live in CA, I suggest that you apply your ideas to CA real estate. You can apply your numbers here in CA in the Central Valley and other places in the desert. Unemployment and low rents are everywhere of course. Taking on Buffalo when you can take on Barstow or Taft or Lucerne Valley or Bakersfield is too much mis-placed energy.
And you can do better than the numbers you mention here. You can buy for 20K, repair for 10-15 and sell for 80K or get good cash flow if you decide to keep them. Don’t let the Buffalo numbers fool you. You have all the problems of poverty AND some of the worst weather in the world AND older housing stock.
Just my opinions here. Happy hunting. Sincerely, Kristine
look hard, educate and you’ll find deals. - Posted by W
Posted by W on October 17, 2003 at 09:38:34:
What you talking about doing is something that my company specializes in, except we do apartment buildings. Typically our deals will have acquisition cost of 30-60k and rehab cost of 10-80k and end up with a 5-7 times rollup on value from acquisition.
I am currently doing a deal as follows:
Acquisition cost: $60,000.00
Rehab cost: $ 5,000.00
End Value: $276,000.00
This is a turn around project with an excellent rate of capital appreciation and return on investment. I sometimes utilize an investor for my deals, although most of my deals are done in cash and then I cash out on the refinance. All my projects have an end lender in place to insure the refinance in order to cash out of the deals and then I continue to own/operate the deals for cash flow.
Example the deal above has a cash out of aprox.
$156,000.00. This goes full cycle in 6 months.
You should be careful initially when doing deals in other geographic locations. It is a good idea to start in your market if your doing your own deals and then when you have steady cash flow and have worked out the bugs of what your doing, move carefully into other markets. You should always specialize in a segment of the market and strive to be the best in that segment. Working too many segments initially can be a potential problem.
Always, educate yourself on what your doing prior to putting any money into a venture. I have found that by staying in one market initially and gaining good knowledge within that market - one has the best chance for success. I work my market very hard to sort out the good stuff from the garbage.
So be careful and Good luck.
Re: 10k to 20k properties in NewYork - Posted by catbert
Posted by catbert on October 17, 2003 at 08:43:22:
I’m from Buffalo, and live there right now. I’ll let everyone else comment as to the wisdom of investing in an unknown city on the other side of the country. Like every other market, buffalo has it’s paculiarities. The east side is poor and dangerous. there are tons of abandoned houses there. That said, there is a very strong local group that’s working hard to change the east side. They’ve secured quite a bit of support from the city, county, state, and even federal governments. It’s still early days, but the effort is already underway. The west side is better than the east, but only because there’s a bit less crime there. South Buffalo is still largely Irish/Polish, very blue collar, and is somewhat in decline. But suburbs around there are good working class neighborhoods. North Buffalo is the best area of the city. Population here is traditionally Italian/Polish/Russian. Solid neighborhoods, working class, olde two-story, two family properties.
For $10k to $20K you’re looking at east side properties. You can find west side properties for $30k-60k, south side for $40k-70k, and north side for $60k-$100k and up.
Good luck.
Re: 10k to 20k properties in NewYork - Posted by David G.
Posted by David G. on October 16, 2003 at 17:21:29:
I have a 4bd/5ba home in Queens, NY. NON QUALIFYING.
Asking for 20K and you assume loan of $115K!!! You have over 240K in equity.
Property is in good condition. Tenants are paying 1,400 month rent. My monthly mortgage [payment is $1890. Since Im out of the country I need a fast sell. My brother in Brooklyn can close deal for me.
David G.
Re: 10k to 20k properties in NewYork - Posted by Julia (NJ)
Posted by Julia (NJ) on October 16, 2003 at 16:43:28:
Smitty-
I was born and raised in Buffalo, although I moved to the metro NYC area 15 years ago. I am in contract on a 4 unit apt building (actually 2 two family buildings) in Buffalo; I hope to close in a few weeks and I am looking for other deals.
HOWEVER, I know a lot of the neighborhoods in Buffalo, although there has been a bit of change since I lived there. I have family in the area, so I am back there a couple of times a year (it is a long drive for me, but it is driveable). There are neighborhoods where one street is OK and a few streets over you wouldn’t want to be out after dark. Buffalo is not a city where I would buy without a lot of on-site research. Plus, you need to have a feel for the rental market. $10,000 probably gets you a house on the East Side, where I WOULD NOT buy, at least not yet. Be aware that the city has prosecuted an investor (Scott Wizig) who purchased a lot of properties from the city at auction and never followed through on promises to buyers to fix them up.
As others have mentioned, the economy is Buffalo is pretty shaky. The city’s finances are now in the hands of a control board since the city is so far in debt. Property taxes are probably going to go up as the city tries to get out of it’s hole. On the other hand, I think that the economy is Buffalo has been down for so long that there is only one way for it to go, and that is up. It is one of the cheapest urban places to live in the country, has quite a few colleges and universities, and has a tremendous cultural community (including one of the world’s premier modern art museums and a first-rate orchestra).
Do I think it’s a good place to invest? Obviously (since I am buying)- but VERY CAREFULLY. You might want to think about funding or partnering with an investor who has more experience with the area, rather than investing “sight unseen”.
Regards-
Julia
Recipe for disaster - Posted by JD
Posted by JD on October 16, 2003 at 12:00:20:
I have rehabbed a few 100 year old properties. So, I can say that your plan is very naive. 10k in rehab costs is the minimum I would budget for rehabbing a 100 year old property if I were doing the electrical and plumbing myself and directly supervising the rest of the work. Rehabbing such properties with contractors over the phone would probably end up in $20,000 per property in rehab costs. And management costs in neighborhoods like that would be much higher that you are probably budgeting.
Re: 10k to 20k properties in NewYork - Posted by E.Eka
Posted by E.Eka on October 16, 2003 at 09:49:37:
I recently moved from Buffalo, NY to the greater DC area, so I know what you’re talking about.
Here’s my question: How will you manage the rehabbers if you live in California? Travel to buffalo every week? Once a month? I forsee that being a lot of headaches, and I’m not Ms. Cleo!!
Also, the housing market in Buffalo is weird. Many companies are leaving the area and people are losing their jobs.
Call realtors in the area to see what they think of the housing market, as well as research heavily the area to see what investment strategy is best! It’s worth the money spent because it could save you THOUSANDS of dollars!
Re: 10k to 20k properties in NewYork - Posted by Gary
Posted by Gary on October 16, 2003 at 08:44:01:
Well… We are in CT. Our plumber also works for a much larger CT investor. This investor has bought several rehab properties (similar to those you describe) in Albany, NY (near Buffalo), and the plumber works primarily on the heating systems. The plumber says that an armed guard is with him at all times; when he goes for supplies, another guard stays with the building, while a second armed guard accompanies him. I guess you would have to ask yourself: do you really want to do this? I suppose if you are completely committed to this plan, it would be best to stay in CA! Gary
Re: 10k to 20k properties in NewYork - Posted by ecb
Posted by ecb on October 16, 2003 at 06:32:19:
Smitty:
Go for it. I’m doing the same thing. I see no reason to buy a house for $50,000 at 600/month rent when I can buy one for $10,000 at $600/month rent. Yes, I do have houses in which I’ve paid more for (they make great collateral) and do have equity in. That’s the thing about the $10k specials — it’s not an equity play…but pure cash flow. And, whatever you do, never fall in love with them.
The only thing I would suggest you give some thought to is not spending all of your cash. Keep some back. Place a couple mortgages on a few homes (if you can). Otherwise, buy two at a time. Rehab one for resale and rent the other.
Hope that helps.
Re: 10k to 20k properties in NewYork - Posted by Todd_OH
Posted by Todd_OH on October 16, 2003 at 05:56:19:
Smitty:
Are you targeting the Buffalo, NY market because that was the only (or simply one of the) market(s) that seemed to fit your investment criteria? Or do you have other reasons for selecting Buffalo, such as proximity to family, etc.?
It appears you are targeting housing that you can acquire with a total out of pocket cost (including fix-up) roughly between $20k - $30K, with a market value of $35k - $40k. I have another suggestion…
You stated you want to use these houses for rental. Another thought might be to (possibly, but not necessarily) sacrifice a little of your equity spread and just buy cheap properties ALREADY IN GOOD CONDITION, and in which there is a very good positive cash flow. By nature of the properties being cheap, it is easier to get the positive cash flow.
Your post implied that you would be doing long distance investing, so what I’ve suggested above eliminates the aggravation of having to manage the rehab from long distance as well. Believe me, its hard enough to manage contractors when you’re standing on the jobsite in front of their face, let alone from coast to coast :-).
If you would consider passive investment opportunities in the Ohio area, feel free to contact me directly by email. In any event, feel free to check out my website at www.HeritageHomeBuyers.net.
Hope this helps!
Todd_OH
Re: 10k to 20k properties in NewYork - Posted by IB (NJ)
Posted by IB (NJ) on October 16, 2003 at 24:05:10:
Hi raisismith:
No offense, but if the opinions of strangers “weigh heavily” on your decision as to whether or not you will invests in property hundreds of miles away, then maybe you’re not yet ready to invest in real estate. You need to conduct more due dilligence than simply throwing a couple of questions on a message board and taking the advice of people you know nothing about regarding a field you know little about.
Since you’re new to REI, I’d seriously consider more studying of the field as well as investing in an area you’re probably more familiar with such as your own backyard. Good luck.
Re: 10k to 20k properties in NewYork - Posted by Julia (NJ)
Posted by Julia (NJ) on October 17, 2003 at 12:05:23:
Hey Catbert-
Are you actively investing in Buffalo?
-Julia
Re: 10k to 20k properties in NewYork - Posted by E.Eka
Posted by E.Eka on October 16, 2003 at 18:00:34:
It seems as if This property has negative cash flow. If that’s the case, why would anyone be interested in it? Could you refinance? what’s the interest rate?
Re: 10k to 20k properties in NewYork - Posted by E.Eka
Posted by E.Eka on October 16, 2003 at 17:08:16:
Everything Julia said is perfectly correct.
Classes of people and neigborhoods can change literally by streets.
Re: 10k to 20k properties in NewYork - Posted by E.Eka
Posted by E.Eka on October 16, 2003 at 10:45:06:
With all due respect, Albany is 5-6 hours east of Buffalo New york and is not close at all. It’s faster to get to Pittsburgh, PA then Albany from Buffalo.
The point is, it’s difficult for the investor to know the city unless he’s close enough to visit it frequently. I can just see problems in his investment strategy.
Re: 10k to 20k properties in NewYork - Posted by catbert
Posted by catbert on October 20, 2003 at 03:09:21:
Julia
Yes, I have several rental properties both in the city and in the suburbs.
catbert
Re: 10k to 20k properties in NewYork - Posted by Gary
Posted by Gary on October 16, 2003 at 14:24:57:
Yup–you’re right! But I was thinking in relative terms: Albany is close to Buffalo, compared to California! Pittsburg may be closer yet (who cares?), but it sure is a heck of a way from California too! And except for the Steelers, I don’t know of anyone who invests in Pittsburg. Gary