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Old 08-24-2018, 10:22 AM
 
116 posts, read 582,337 times
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I've been in ROC a while now. I've always had in the back of my mind the idea to start buying properties, renting them out, rinse & repeat. I have no experience in this, but I've read a decent bit about it.

The problem I have though is I can't clearly make the numbers work. For all intents and purposes properties do not appreciate in value in this area, at least in most towns, and by any amount really worth considering (specifically they grow around inflation, at the most). So the variables to consider seem to me to be:

- mortgage rate
- property taxes
- repairs
- rent payments

Assume I manage it myself...

So if I had $100k sitting on a desk right now, I could either put it into the stock market, and historically that gives 6-7% return after taxes.

Or I could buy a $100k property, rent it out for ~$1100/month, but then from that I need to cover repairs, occasional lost months (no tenant), property taxes. Even taking that $100k and buying a $200k property leveraging half of it via mortgage it seems tough to make it work.

I know some other things come in like tax write off.

I did speak with a friend who does rich people's finances as his job and he said he has yet to come upon any client of his in this area who really makes this sort of thing work. Now, buying apartment buildings yes, but in terms of the kind of hobby thing people do on the side buying 1-4 unit properties and renting them he's never seen the case where the money the person makes is more than they would make just dumping it into equities and getting on with their life.

Any thoughts...?
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Old 08-24-2018, 10:35 AM
 
3,531 posts, read 2,136,077 times
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Not that you're interested in doing this but my boss recently started renting out his properties and he's been approached about being "mentored" by a bunch of old, white guys who are long time in the business. They told him that the real way to make money is to form a LLC, buy cheap properties, don't pay the taxes. Since New York takes so long to foreclose, you get 3-5 years of rent money. Then when it goes up for auction, you or one of your buddies buy it for nothing and repeat.
Another thing is that if you're interested in buying auctioned/foreclosures, it seems difficult bc allegedly, this group of guys all work together to get them.
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Old 08-24-2018, 07:26 PM
 
2,388 posts, read 1,687,896 times
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Yes it can be done, but you need to gather more information on your own first. Too many people are trying to get in cheap, just cover over the flaws and then make a killing. Not good. Do it right and you can get 20-30% ROI
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Old 08-25-2018, 06:59 AM
 
116 posts, read 582,337 times
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Quote:
Originally Posted by hellob View Post
Not that you're interested in doing this but my boss recently started renting out his properties and he's been approached about being "mentored" by a bunch of old, white guys who are long time in the business. They told him that the real way to make money is to form a LLC, buy cheap properties, don't pay the taxes. Since New York takes so long to foreclose, you get 3-5 years of rent money. Then when it goes up for auction, you or one of your buddies buy it for nothing and repeat.
Another thing is that if you're interested in buying auctioned/foreclosures, it seems difficult bc allegedly, this group of guys all work together to get them.
That does sound pretty hokey
Quote:
Originally Posted by JWRocks View Post
Yes it can be done, but you need to gather more information on your own first. Too many people are trying to get in cheap, just cover over the flaws and then make a killing. Not good. Do it right and you can get 20-30% ROI
Can you make 20%, though? I think a consistent mid teens ROI makes it worth doing. I'm about as far from getting in cheap/easy cover flaws as a person could be. But I still can't see what the numbers look like. I think there is some real estate group in Rochester for people who do this sort of thing.

I know a lot of people do the FHA where you live in one side for a year thing, but that's an impossibility for me (family, schools, etc.).
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Old 09-27-2018, 09:59 PM
 
Location: Tyler, TX, born + raised SF Bay
3,630 posts, read 1,505,953 times
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I omitted this question from the thread I recently posted, because maybe it'll be covered here.

Essentially, I see a lot of fairly neglected 3-, 4-, and 5-plexes for sale dirty cheap in Rochester proper. It seems like it would be a no-brainer to make good money off of this, but there's gotta be a catch, otherwise someone would already be making sure these get snapped up. I've a bit of experience in property management. So, what is that catch?
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Old 10-03-2018, 10:09 AM
 
1,510 posts, read 1,054,170 times
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I buy and hold properties in the Albany area. I am not too familiar with real estate in ROC but I have started to watch certain neighborhoods.

I buy in small towns around Albany. A typical deal for me would look like this:

$85K purchase price (duplex)
Rent totals - Around $1,200 a month
Taxes - Around $2,500 - $4,500 a year

I typically pay all cash although I have started to mortgage recently. If you pay cash for the properties there's no real way you can lose. Just make sure you have a good manager.

Even on a deal like the one I described above, you're looking at a solid return even if you have a mortgage on it.

I only purchase duplexes where at least one of the units has a long term tenant in it. Preferably like to buy properties where both units are already rented.
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Old 10-11-2018, 04:55 AM
 
116 posts, read 582,337 times
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Quote:
Originally Posted by MrJones17 View Post
I buy and hold properties in the Albany area. I am not too familiar with real estate in ROC but I have started to watch certain neighborhoods.

I buy in small towns around Albany. A typical deal for me would look like this:

$85K purchase price (duplex)
Rent totals - Around $1,200 a month
Taxes - Around $2,500 - $4,500 a year

I typically pay all cash although I have started to mortgage recently. If you pay cash for the properties there's no real way you can lose. Just make sure you have a good manager.

Even on a deal like the one I described above, you're looking at a solid return even if you have a mortgage on it.

I only purchase duplexes where at least one of the units has a long term tenant in it. Preferably like to buy properties where both units are already rented.
Appreciate the insight. Here is my analysis--let me know if you think I'm off.

$1200 * 12 = $14,400
- $3500 taxes
- $1400 property management
- $1500 maintenance
= $8,000

$85k in returning $8,000 = 9.4%

That's pretty much right at the historical return of the stock market, which requires zero effort. You do hedge against things like a stock market crash like we saw yesterday, but you can also lose tenants or some years have to replace a roof or furnace.

This is why I can't see through the fog on investing in residential real estate in NY. Do you feel this gives you a better long-term (10-20 years) return than an index fund?
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