New member looking to BRRRR upstate NY

[Marika Aubrey]

Excited to be learning here!

I'm Manhattan based but wanting to BRRRR upstate.

Hit me with your advice and wisdom 🙏

[Stephanie Jacobson]

*cracks knuckles*

Alright, here we go.

What are your goals? You can find a market in New York to accommodate pretty much any investment style. The three markets I know the best are Syracuse, Binghamton and Ithaca, and they're radically different. I understand the capital region, the Adirondack region, and Western New York (Rochester and Buffalo) have their strengths and weaknesses, but I'm going to focus on this central part of the state.

Binghamton is my favorite investment market for a few reasons, but it's not for everyone.

STRENGTHS
-  low prices
-  blue collar overall, meaning lots of resources for contractors
-  growing university, consistently growing rents
-  I expect to see an actual 10% cap rate here, higher if the property needs work
-  compared to downstate, permitting, evictions, etc. are simple and quick
-  no code compliance inspections required on existing multifamilies

WEAKNESSES
-  no. natural. appreciation. Like at all. Do not bank on it. It just won't happen
-  low ARVs even if you do renovate. Be very careful when calculating for a refi or sale
-  recent zoning changes have been confusing and ridiculously restrictive for student housing
-  some properties are $50k for a reason, run
-  it looks... bleak. And depressing. It's fine. We're used to it.
-  lots of downstate absentee landlords have let properties go to crap. Don't do that

Summary: Binghamton is the best market upstate, hands-down, for cashflow. It's the easiest to work in as far as regulations and rehabbing. Student rentals really drive the market, but thanks to recent zoning changes, legal student rentals are incredibly hard to come by. If you choose to buy here, pay very close attention to zoning, and run your BRRRR numbers conservatively. Rent varies wildly depending on condition, who your tenants are, and where your property is located.


Ithaca is like another planet.

STRENGTHS
-  appreciation is pretty much guaranteed, no matter how crummy your property is
-  student housing isn't restricted, they'll live anywhere
-  having an ivy league school means there's a lot of money flying around
-  rent is high
-  tons of development and growth going on
- strong STR performance outside the city proper

WEAKNESSES
-  almost absurdly high prices
-  similarly absurdly low cap rates
-  pesky annual inspections required on multifamily properties
-  most deals happen behind closed doors, and agents tend to be very unhelpful
-  5-7% cap rates typical, sometimes lower

Summary: Ithaca is a great market to park your money in and wait. You don't have to do anything to your property, it will sell for higher than you bought it for last year. If you have a pretty place that's furnished nicely, you can rent to students for more than $1100/bed, which can add up for large, older homes with many bedrooms. Watch out for those pesky annual inspections, though- they'll get you just because they feel like it, after letting the last owner slide for some twenty years.


Syracuse is a sort of happy medium between the two. 

STRENGTHS
-  strong affordable housing market
-  cool city with a great feel
-  nicely mixed neighborhoods with properties in need of repair next to nice homes
-  large university, robust medical community
-  decent rents overall, currently trading at 8-10% cap rates
-  Micron promises growth

WEAKNESSES
-  Micron hype is making people spend way too much on properties
-  pesky code compliance inspections here too
-  student housing area is incredibly compact and difficult to get in to
-  difficult to predict if a property will benefit from renovation or not
-  contractors are overwhelmed, difficult to get estimates

Summary: Syracuse is experiencing a lot of change right now, in a good way. They're anticipating the entire landscape being changed by Micron over the next few years, which is cause for plenty of optimism and excitement. You're rolling the dice a little bit, banking on that though, so when just starting out, stick with a solid rental that's performing well enough within commuting distance from Clay.

Alright, hope that helps! I'd love to see some other agents/investors weigh in on Rochester, Buffalo, Albany and other cities up here. Good luck @Marika Aubrey, keep us posted!