Newbie from Denver, CO moving to Troy, NY this summer

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Newbie from Denver, CO moving to Troy, NY this summer

Brett Pirie
Troy, NY · Member since 2017 · 48 posts · 11 votes

My wife and I have owned our primary residence, a small condo in Denver's Cap Hill neighborhood, for four years.  It was our first real estate purchase with the plan to hold on to it as a rental when we decide to move on.  Due to the increase in value (according to zillow), selling it sounds like a much better idea.  

Our long term goal has been to own several rental properties generating a reasonable cash flow.  

I am currently enjoying being a stay-at-home-dad for our 8 month old daughter while working on business projects such as developing an app and a couple of small products. Now I'm adding in REI for the reasons you'll see below.

My wife has been accepted to a graduate program at RPI in Troy, NY.  She is grew up about 20 min away, received her undergrad from RPI and has family in the area.  Chances are that we move back east this summer.  

The plan was to sell our Denver condo and rent for 1-1.5 years in Troy.  For the heck of it I started looking at properties in Troy and realized that maybe we could buy a multifamily building, live in one unit while renting out the rest. 

I've found several interesting properties and have started running cash flow numbers on them. I know some of my assumptions will be way off, but right now I'm excited because I can see some positive cash flow. I've followed Chad Carson's post on cash flow to build my spreadsheet, so I think I have a good start on including everything, such as taxes, maintenance and CapEx.

I've been to RPI several times, but have spent very little time in Troy off campus.  Does anyone know much about Troy?  I understand the downtown area is coming back, but that some of the neighborhoods are not doing so well.  A family member in the area says between Canal St and Federal St is becoming a desirable area.  I've been reading neighborhood websites and the local paper, how else can I research the area?  What info am I looking for?  

I see my two big next tasks as develop my cash flow spreadsheet and learn as much as I can about Troy. I'm looking for help to poke holes in my ideas. Is my spreadsheet accurate? How do I analyze multifamily deals? Is Troy even worth considering for REI? Thanks for any help pointing me in direction of finding this info!

Looking forward to contributing to this community!  

-Brett

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Mark Nolan
Professional · Carlsbad, CA · Member since 2012 · 12k+ posts · 1k+ votes
9y

@Brett Pirie

You have come to the right place to connect with the wide array of real estate professionals and investors. Make sure to view the Bigger Pockets book store: https://www.biggerpockets.com/store

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  • Mark Nolan
    Professional · Carlsbad, CA · Member since 2012 · 12k+ posts · 1k+ votes
    9y

    @Brett Pirie

    You have come to the right place to connect with the wide array of real estate professionals and investors. Make sure to view the Bigger Pockets book store: https://www.biggerpockets.com/store

    1Reply
  • James Carlson
    Real Estate Agent · Colorado | stan.store/JamesCarlson · Member since 2014 · 2k+ posts · 2k+ votes
    9y

    Welcome @Brett Pirie. I'll leave the analysis of potential Troy properties to others. Just wanted to say hello to a neighbor. My wife and I own three condos in Cap Hill. We're currently living at 8th and Clarkson. We've probably seen each other on the street. 

    In general, my and my wife's goals are to hang to everything we can get. We're bullish about the Denver market and have long-term ideas to have a small empire of cash-flowing properties. That said, the idea of cashing out, saving on the capital gains, and buying a multi-unit is very appealing. Good luck with your decision-making. And congrats on your new daughter and your wife's new endeavor.

    1Reply
  • Alan Brown
    Rental Property Investor · NY MA CT VT MT, MO · Member since 2015 · 200 posts · 116 votes
    9y

    Hey, welcome to the East!!  I'm a transplant from CO, ID, and MT as well, back to the east.  I think Troy has some great potential, definitely.  I love the idea of house hacking too!  amazing way to build up primary residence tax free equity, with minimal down

    I would say that cashing out CO is the best option: the market is so hot, and equity is no good just sitting around, might as well use it, especially in a place like Troy or Albany where there are tons of reasonably price properties... and cash is king, especially if you want to try the BRRRR strategy on your elbow grease! I'm waiting for May to sell my last property in CO, high up in Coal Creek Canyon, and planning big things with my equity. Been managing it from afar for too many years; pain in the neck to be so far away.

    cheers!

    1Reply
  • Daniel O.
    Investor · Takoma Park, MD · Member since 2016 · 166 posts · 147 votes
    9y

    Hi Brett,

    Welcome to BP. Troy is a tricky place to invest. A lot of the area is within the FEMA flood zones, meaning lenders will require flood insurance where it didn't used to be required, and that insurance can run you a few thousand dollars on a house that is less than 100K. I've looked at a few places in Troy and quickly learned that the first thing I need to do in screening is check the flood maps. The tools online for using them are a little clunky, but they work once you figure out how to use them. My sense is that some sellers don't understand that the cost of flood insurance makes their property much less attractive to a buyer. They look at what their neighbor just up the hill got for their house and expect something similar. Rents on these two neighboring houses will not be appreciably different, but the potential cash flow certainly will be. Eventually, I think this will sort itself out and the flood zone houses will drop in price accordingly.

    The other thing about Troy is that some parts of it seem to be revitalizing, but others seems stuck in the 1970s. My advice would be to interview some agents and tell them what you are interested in, then really spend some time looking at neighborhoods. Some you may write off pretty quickly depending on your criteria, but don't settle on any without checking them out on a warm Spring evening. Some places that seem OK when the weather is cold seem less so when people start hanging out outside. There are decent multi-family units (duplexes and quads) to be had in decent areas, but you will pay more for them.  Those are the ones I would recommend. The ideal cash flow on them may not be as good as some of the lower-end properties, but those low-end places rarely turn out to be idea.  Best of luck.

    1Reply
  • Brett Pirie
    OP
    Troy, NY · Member since 2017 · 48 posts · 11 votes
    9y

    Thanks everyone for the welcome and advice!

    @James Carlson Hello neighbor!  We're at 11th and Pearl.  We love the neighborhood.  

    @Alan Brown I agree that the equity can be put to better use.  I really like the idea of house hacking as well.  I've done projects on our place and do some handyman work on the side.  Fixing up a single family in Troy while we live there for a year and then renting is definitely worth considering.  

    @Daniel O. Thanks for the great insight to the flood zones in Troy!  I knew the downtown area is on the Hudson while RPI is up the hill, but didn't know about the flood insurance requirement.  I will add that to my cash flow spreadsheet and use that in negotiation.  Good tip about checking out the neighborhood on a warm spring evening.  We have some trips out there planned this spring.  What areas would you recommend for the multi-family units?  I'm willing to take a little lower cash flow for a more stable and quality property.  

    1Reply
  • Brett Pirie
    OP
    Troy, NY · Member since 2017 · 48 posts · 11 votes
    9y

    @Alan Brown I just read about what house hacking really means!  My first newbie error.  Anyway, that's our plan, and now I know what it's called.  

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  • Alan Brown
    Rental Property Investor · NY MA CT VT MT, MO · Member since 2015 · 200 posts · 116 votes
    9y

    Hah! @Brett Pirie, there is a ton to learn, and that's a good thing, especially because BP's podcasts are like a PhD in Real Estate... seriously brilliant stuff.  Motivating too;  I've been driving back and forth between MT and NY a bit, and I've listened to every single podcast, sometimes twice!  I wish I'd had this resource 25 years ago!!

    If you and your wife don't mind a little inconvenience, like sharing a building with renters, there's gold in them thar hills!  Buying a 4 plex with 5% down (or less) is pretty incredible, especially if the numbers show cash flow even with you in there, not paying any rent.  Either way, it will probably pay for all or most of your own rent, and if you live there for a year, you can move on to another one!  It's all about how long you can stand not living in a single family house... but it's certainly a way to amass fantastic cash flow.  Another twist to that, if the market is appreciating really well, (like Denver--which would be the strongest, and probably only, reason to hold on to your house there:  since you've been an  owner occupant for at least 2 years, you have three more years to hold it after you move out and then sell it tax free.  I don't know what the appreciation rate is in Denver, but if it's around 10% in this hot market, it may earn you another 30% passively by the time you sell it--just don't wait too long, where the market could drop) since you've lived in the 4 plex 2 out of 5 years, you can then sell it tax free as well.  In Troy's market, it may be better to just hold it-- your cash on cash return on your down payment will be ridiculouslly high, if you owner occupy a 4 plex or even a 2 or 3 plex for a year.  In 4 or 5 years doing it, you may have a passive income that covers your monthly needs, regardless of any other investing you may be doing in the meantime... and whenever you get tired of living in a multi family, you then house hack a single family home, live there for 2 years, and keep it or sell it tax free!  

    Good luck and let me know when you get here, we'll have coffee!

    1Reply
  • Ben Clemence
    New Haven, CT · Member since 2017 · 7 posts · 2 votes
    9y

    @Brett Pirie couldn't help but notice the title to your post as I put up my own BP intro post.  I'm an RPI grad and lived in Troy from 09-13.  I got to see the area change quite a lot in the those 4 years and more since, I've even seen articles calling Troy the next Brooklyn.  If you have any questions about RPI or Troy I can do my best to answer from the perspective of a former student.  Hopefully someday from the perspective of an investor as well, I've been thinking Troy would be a great place to make some investments and I go there every fall for alumni weekend anyway

    Also, I wouldn't have known to look for the FEMA flood zones when buying in Troy but I can tell you I was there when Irene came through and there were quite a few buildings underwater near the river.

    1Reply
  • Brett Pirie
    OP
    Troy, NY · Member since 2017 · 48 posts · 11 votes
    9y

    @Alan Brown thanks for the BP podcast recommendation, I didn't about that yet and will definitely check it out.  

    We can do a couple more years of close quarter living, after that we'll probably look for SFH with a descent amount of land. Although, if we get hooked in the cash flow we might live in these types of places for a while like you suggest! Based on my numbers for a few places in Troy we could see positive cash flow while living in one of the units. That would be awesome! Although, I might have to rerun the numbers with flood insurance which will eat heavily into our cash flow. It still could be worth it to live there for a year and then rent out all the units. Or look for places out of the flood plain.

    I think I understand you're saying that a reason to hang on to our Cap Hill condo would be to hope it appreciates over the next couple years even if the rental doesn't have much cash flow.  I hadn't thought if it that way; something to think about.  Based on my cash flow numbers we'd be lucky to get a couple hundred/month from this place, making selling it look much more appealing.  That, and we need the equity in this place to buy the next one.  

    Do we need to live in a property for 2 out of 5 years in order to sell it tax free as a primary residence?  I'll also get myself up to speed on cash on cash return on the down payment.  I have a vague idea and will do some research.  

    Thanks for all your help and info!  I'll definitely let you know when we get out there!  

    @Ben Clemence Did you see the BP thread about Troy being the new Brooklyn?  It's a month old with some informative discussions about Troy.  My wife graduated from RPI in I think '07.  There were some areas that they would avoid that have since improved.  I'll ask her what those areas are and get your take on how they've changed.   What was your major at RPI?  My father-in-law is a professor of Electrical Engineering there.  What parts of Troy did you live in while going school?  

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  • Shawn AckermanPro Member
    Real Estate Entrepreneur · Mid West, East Coast · Member since 2015 · 3k+ posts · 1k+ votes
    9y

    @Brett Pirie Welcome to BP!!! You have found the holy grail for REI! Uh, let's see, Taxes, Taxes and Taxes!!!! Before I began investing in the Mid-West I looked at Schanectady, Rochester and a few other spots up north and there were two issues that I found. Property taxes and property management are the killers. get around those two hurdles and you'll have it made. Best of luck to you!

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  • Andrew SyriosPro Member
    Moderator
    Residential Real Estate Investor · Kansas City, MO · Member since 2014 · 10k+ posts · 5k+ votes
    9y

    Welcome aboard Brett!

    Podcast Guest on Show #121
    0Reply
  • Alan Brown
    Rental Property Investor · NY MA CT VT MT, MO · Member since 2015 · 200 posts · 116 votes
    9y

    @Shawn Ackerman, excellent points!  Problem is, property management is a serious conundrum wherever you look I think... 

    I've always managed my own properties, and then made enough windfall on a property in CO to buy a few 4 plexes in the midwest.  Hired a highly recommended PM company, and have been nothing but disgusted since:  seems like their main focus is milking me and the properties for every dime they can!  I've interviewed some other Property Managers, but the changeover will be a headache, and I have no guarantees they'll be any better!  

    BTW there is a list of 83 questions to ask a potential PM company written by a PM in Phoenix, somewhere in BP's archives, in case anyone wants to look that up...pretty helpful;

     Listened to a different Podcast lately that interviewed a PM in Jacksonville, and he pointed out that he only leases for 2 years or more, because when he had hired a PM years before, he realized that their Leasing fees were as much as a year's worth of management, so his PM of course focused on new leasing every year.  AND of course they don't show properties until they're vacant, so I lose a month of rent every time there''s a turnover.

    Sorry to rant and rave, but I'm looking for a success story with a PM involved!  

    Also, as far as taxes in NY go, they ARE ridiculous, but typically, the pricing of properties reflects that as well I'm finding.

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  • Brett Pirie
    OP
    Troy, NY · Member since 2017 · 48 posts · 11 votes
    9y

    @Shawn Ackerman Right now I've feel like I've walked into the holy grail of REI! There is way more info and helpful people that I could've imagined. I've heard the property taxes are high in NY and built that into my cash flow spreadsheet. The problem is that I don't know where to get accurate numbers. Zillow is all over the board, varying by several thousand over the years on the same property; I just picked the highest one as a starting point. Where do you guys go for property tax info?

    @Alan Brown My mom owns two rental properties in CO both managed by a PM and she's had better success than when she was self managing.  Now that I'm learning more I'll ask her some more detailed questions about how it's working out for her.  

    You bring up an interesting point that I hadn't considered, the incentives are inherently different for the PM and property owner.  If the leasing fees are that high, I can see why the PM would want to get new tenants each year.  

    My long term plan was to hire a PM after we move on.  I'm fine taking on that responsibility when I'm living in the building or close by, but it seems like it would be such a hassle long distance.  

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  • Shawn AckermanPro Member
    Real Estate Entrepreneur · Mid West, East Coast · Member since 2015 · 3k+ posts · 1k+ votes
    9y

    @Alan Brown your spot on.  It's really a matter of vetting in any market you decide to invest in.  nothing like the Mid-West my friend :)

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  • Shawn AckermanPro Member
    Real Estate Entrepreneur · Mid West, East Coast · Member since 2015 · 3k+ posts · 1k+ votes
    9y

    @Brett Pirie in my market which is the Milwaukee WI market, you can simply go on the tax assessors website for the county and get the last years tax amount.  Best of luck to you.

    1Reply
  • Brett Pirie
    OP
    Troy, NY · Member since 2017 · 48 posts · 11 votes
    9y

    @Shawn Ackerman Awesome, thanks!  

    0Reply
  • Ben Clemence
    New Haven, CT · Member since 2017 · 7 posts · 2 votes
    9y

    @Brett Pirie I had not seen that BP thread, thanks for pointing it out.  There was an article in the Times Union a few years ago about it that got circulated around on Facebook for a bit by some RPI folks.  I did a dual degree in mechanical engineering and social science so it's possible I took one of your father-in-law's classes but probably unlikely.  What did your wife study while she was there?  After freshman year I lived up pawling ave for a few years and then spent my senior year in south troy right near washington square park. That area has some amazing architecture from when Troy was one of the wealthiest cities in the country and I got to live near it on a students budget which I thought was pretty cool. 

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  • Eric Brundige
    Rental Property Investor · Troy, NY · Member since 2016 · 21 posts · 17 votes
    9y

    Hey @Brett Pirie I'm the guy that made the big post about Troy in the Troy is the new Brooklyn thread and I just live up the road currently. But have lived in Downtown Troy for the previous 3 years, and know all the "people in the know" in the city. You will be able to "house hack" easily while you are here, duplexes are plentiful. Stick with South Troy, the Little Italy neighborhood is up and coming. The market is kind of sluggish right now but you should see a bump in inventory in the spring. You can hit me up if you have any other questions.

    1Reply
  • Brett Pirie
    OP
    Troy, NY · Member since 2017 · 48 posts · 11 votes
    9y

    Thanks for stopping by @Eric Brundige!  That's encouraging to hear that there should be an inventory bump in the spring.  There were a couple of places on Zillow that interested me and then I just learned about Redfin and saw that they're no longer listed.  Seeing all the duplexes and multifamily properties in Troy is what got me started down the house hacking road!  South Troy is where I've been told to look as well.  Do you know the rough boundaries of Little Italy?  Is it north of Canal St up to Washington Square Park?  

    1Reply
  • Eric Brundige
    Rental Property Investor · Troy, NY · Member since 2016 · 21 posts · 17 votes
    9y
    It's basically from Ida to Liberty. Anything more south can get a little sketchy but it's getting better. Anything around Washington Park is fantastic. The trouble with Troy is it's very block by block. You kinda need to walk/ drive it. Anything around Sage college and you're talking $500k+ but...if you happen to find one you can get $1200 to $1700 rents. I live here and I still need to hop in the car to check out a block to see if I'd live there.
    0Reply
  • Michael Rodriguez
    Real Estate Investor · Thornton, CO · Member since 2015 · 65 posts · 42 votes
    4y

    @Eric Brundige this is fantastic advice you've been giving on Troy, NY thank you!  

    It seems the law of the old city is block by block.  I found the same in Memphis, Cleveland and of course Detroit.

    # of small investors * high-income professional + young interesting people + old architecture = Velocity of gentrification.  

    The velocity of gentrification * outside bigger money interest = city come back story.  

    No outside interest then you get this slow grind to turn around areas block by block.  The classic recovery process that we all hear about but when you're living in the city like you are with Troy it probably seems so slow.  

    I did the analysis on Cleveland 5 years ago that I'm doing on Troy now,  Once I actually visited Cleaveland it seemed like it had already came back and I was too late.  I look forward to visiting Troy here in July to see if I talk myself out of investing -:)
     

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