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Old 04-27-2008, 02:11 AM
 
Location: Christchurch, New Zealand
141 posts, read 312,593 times
Reputation: 124

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Hi..We are contemplating investing in property in the US and are currently looking at the Rochester area. In New Zealand, property prices have become so high that it is difficult to invest and have a decent return. Often rent does not even cover the mortgage interest costs (currently round 10% pa) of the loan.

So given all the publicity of late about the US housing market, and the strong NZD against the USD, we thought we would investigate investing in property in the US - looking at Rochester given its size, industry and lifestyle. We would be long term investors.

As a first port of call, we have been looking at REALTOR.com - Real Estate Listings & Homes For Sale at house prices in Rochester (and in other parts of the US). Prices seem ridiculously low ($10000 - $30,000). Can someone explain to us why, generally, these prices would be so low in Rochester? Have prices really dropped to these levels due to the housing/credit crunch or is it due to the neighbouhoods? Thanks.
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Old 04-27-2008, 06:37 AM
 
Location: (WNY)
5,384 posts, read 10,050,529 times
Reputation: 7658
Quote:
Originally Posted by muir33 View Post
Hi..We are contemplating investing in property in the US and are currently looking at the Rochester area. In New Zealand, property prices have become so high that it is difficult to invest and have a decent return. Often rent does not even cover the mortgage interest costs (currently round 10% pa) of the loan.

So given all the publicity of late about the US housing market, and the strong NZD against the USD, we thought we would investigate investing in property in the US - looking at Rochester given its size, industry and lifestyle. We would be long term investors.

As a first port of call, we have been looking at REALTOR.com - Real Estate Listings & Homes For Sale at house prices in Rochester (and in other parts of the US). Prices seem ridiculously low ($10000 - $30,000). Can someone explain to us why, generally, these prices would be so low in Rochester? Have prices really dropped to these levels due to the housing/credit crunch or is it due to the neighbouhoods? Thanks.

A really nice area to rent out is the Park ave/East Ave area and the streets in between... these properties are never sitting long... Please keep in mind that Rochester property taxes are quite high... I live in a 2000 sqft single family home I built for $175K and is appraised at $190K... our taxes are $7000... this adds greatly to the much lower home prices... it will effect your monthly payment. Something to think about: Condos often have lower taxes and you won't have to maintain the home like you would a detached single family dwelling... most repairs are done through the HOA... a perk since you will not be living in the area for repairs. If you are thinking of a condo... I would look at Pittsford, Fairport, Perinton, Penfield and Brighton... You might want to look at Nothnagle.com - Rochester's Full Service REALTORĀ® since they are the most popular real estate agency in Rochester.

Last edited by skbs; 04-27-2008 at 06:38 AM.. Reason: Spelling
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Old 04-27-2008, 08:04 AM
 
Location: Baltimore, MD
897 posts, read 2,305,028 times
Reputation: 186
Quote:
Originally Posted by muir33 View Post
Hi..We are contemplating investing in property in the US and are currently looking at the Rochester area. In New Zealand, property prices have become so high that it is difficult to invest and have a decent return. Often rent does not even cover the mortgage interest costs (currently round 10% pa) of the loan.

So given all the publicity of late about the US housing market, and the strong NZD against the USD, we thought we would investigate investing in property in the US - looking at Rochester given its size, industry and lifestyle. We would be long term investors.

As a first port of call, we have been looking at REALTOR.com - Real Estate Listings & Homes For Sale at house prices in Rochester (and in other parts of the US). Prices seem ridiculously low ($10000 - $30,000). Can someone explain to us why, generally, these prices would be so low in Rochester? Have prices really dropped to these levels due to the housing/credit crunch or is it due to the neighbouhoods? Thanks.
Rochester during the ups in the housing market only saw a 10% increase in value compared to the rest of the country was about 30 to 40% increase. Rochester is a rust belt city which main jobs were from manufacturing. So now they are trying to rely on tech jobs and expanding the areas colleges. Currently they are trying to gentrification in most parts of the city so it does not look so third world. Rochester value in homes are so low because of demand. No one really wants to move to Rochester. Second Rochester is paid below average on most jobs compared to larger cities. People will argue because of it is so cheap to live here but we are one of the highest tax counties in the country and gas for your car is one of the highest in the country. Food is about average compared to the rest of the country.

You said you want to invest in Rochester property but never told us what or how you want to use your investment.

If it is for rental I can give you an example and you can decide if it is a good investment. Currently my landlord owns a property that he got for $175,000. It rents 2 business and 4 tenant. 1 pays 900 month, 2 pay 550, and 3 pay 600 month. Taxes are about 15,000 a year. He pays for electric, water, and trash, which cost him 900 a month. He currently pays a mortgage of $1000 on the building every month. So if you add all the rent for the year.(income) It would equal $45,600. Now if you add up all the expenses it would equal $37,800. So if you subtract expense from income it would leave you with $7,800 profit.(note. I did not include other expenses or other income taxes that would be paid because they vary .) He owns about 18 buildings so if he makes an average profit of 7000 per building x 18= $126,000.(unfortunately, I believe he has a business partner so the income is divided.)
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Old 04-27-2008, 10:26 AM
 
169 posts, read 437,206 times
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I am a US-based investor with several Rochester properties. The ridiculously cheap city properties you see on the web (under $40,000-$50,000) are stone ghetto properties. The numbers work but good luck collecting rent (IMHO) or cleaning up after the inevitable assault or house fire. That said, you can get great cash flow in better parts of Rochester though your properties will tend to run in the $70,000-$100,000 range for duplexes that throw off $1,200 to $1,500 monthly in cash. Focus on the following zip codes: 14609 (east of Culver Road); 14610; 14620 (southwedge, upper monroe, swillburg); 14607 (north of Mnroe in my book though others may differ - this is the Park Ave area), 14608 (Cornhill area only - the other parts west of Ford Street are terrifyingly bad). Some folks have luck with 14619 (19th ward) but I do not invest in that area. If you do look south of Brooks and west of Thurston.
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Old 04-27-2008, 10:32 AM
 
169 posts, read 437,206 times
Reputation: 131
I should tell you that properties in the 14610 and 14607 areas will generally run much higher than $100,000 (if you go north of Monroe) but you can pick up beautiful turn of the century mansions of greater than 3,000 square feet for under $200,000 that throw off as much as $2,250 to $2,500 in monthly cash. Students from the local colleges tend to rent in this area. The best non-ghetto deals I have seen on the retail market tend to be in the $60,000 range. I have two that I purchased for about $60,000 each that throw off $1,200 in cash each.
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Old 04-27-2008, 03:14 PM
 
Location: Christchurch, New Zealand
141 posts, read 312,593 times
Reputation: 124
Default Thanks

Thanks everyone for your advice. It has given us some food for thought.
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Old 04-28-2008, 10:12 PM
 
6,224 posts, read 14,708,408 times
Reputation: 4547
Default Rentals in Rochester

Rental investment is not for the feint of heart or faint of heart or however you spell it.

I assume you'll pay a rental management company? That will cut into your profits. How will you know the rental management company is doing a good job if you're on the other side of the world?

Don't invest in rental property in Rochester if you think the price of the property itself will go up. Probably won't. I lived in a house many years ago that I bought for $75,000. Seven years later, I sold it for $75,000 and was told I was fortunate. Today, fifteen years later, the house goes for about $85,000. It was a nice neighborhood.

We had six rental homes with 2 to 4 units in each in Rochester. I could tell you stories about tenants that would curl your toes. Nothing like seeing a shot of your rental home on the 11 o'clock news -- when your normal-seeming tenant, whom you just saw a few hours earlier, is accused of some unspeakable crime.

Or you get a call from the police telling you one tenant is standing naked on a ledge on the second floor, screaming, and throwing his stereo equipment out his window. And then the tenant's mother calls and says, PLEASE don't evict him!

Then there's the son of a law enforcement officer (our friend, the law enforcement officer) who doesn't pay his rent, and leaves everything, and we mean everything: dirty dishes, dirty linens, furniture, and his large collection of MACHINE GUNS. Fortunately, our officer friend removed them for us.

The value of two of the rentals went from $60,000 to, at one point, $2,000. Yes, the whole price of each of two apartment houses was $2,000. This was after massive remodeling work went into them. Money. Time. Weekends. Evenings.

There are good parts and bad parts of Rochester. But you're too far away to know what's what.

So be careful.
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Old 04-29-2008, 07:43 AM
 
169 posts, read 437,206 times
Reputation: 131
Just out of curiosity, in which areas of Rochester were your rental houses located?
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