Rochester, NY Real Estate Market

[Jacob Treptow]

I need some advice. What is everyone's advice on the current state of the Rochester Real Estate market for investors. I understand there are still some good returns to be made in the city but South Wedge, Park Ave (obviously), North Winton, and East Rochester just seem to be overpriced. I have been doing multiple 4-Square Analysis every week and the returns just don't seem to be worth the investment. Are people just accepting lower returns or negative cash flow?

The reason I ask for advice is I have invested in limited properties and have never experienced a downturn in the real estate market since I started investing. Are there some "more experienced" investors who maybe have been through multiple cycles that can reflect on today's market? Is it out priced for them or am I just expecting too much for a return, which could very well be the answer. Also from following the local forum's it does seem to be a large amount of people investing in Rochester from outside the area through local PM's. Maybe these outside investors have pulled down local return rates to national levels. 

Just interested to hear other people's opinion. 

[Account Closed]

@Jacob Treptow 

It is not just you, it has been tough to find good deals in the areas you are looking.  That has come up in a few recent podcasts about the need to create good deals as they are increasingly hard to find.

I tend to focus in the same areas as you and have had the same dilemma, lower the rate of return you are willing to accept, or wait it out.  The dangers of both options are obvious, and who knows when, or if, we will get back to the cap rates we have seen in the past.

Just my perspective but I have maintained my minimum return requirements while exploring some additional options.  The podcast with @Dave Van Horn was great and provides an alternative way to make a solid return, with reduced hassle factor (as my wife likes to call it).  

I have also looked at some other smaller markets that are closer.  Places like Geneva have seen some good growth recently, but again there are the risks of smaller markets.  

Something else to consider overall is the state of New York and how landlords are treated.  Legislation is working it way through the system to prevent landlords from outright refusing to accept Section 8.  Hard to say what that may mean long term and if New York will be increasingly hostile to landlords.  There may be an opportunity for some lower end housing in all of that, just not an area I have much experience.  

Good luck with the search and please post what you are thinking about doing going forward.