Rochester Multifamily Deal Analysis

[Peter Magistrale]

Hi Everyone, I'm a first time real estate investor and wanted to get the community's feedback on a prospective multifamily property in Rochester, NY.  First a little about myself and my goals to give proper context.  I'm a CPA and have the goal of building a real estate portfolio that generates $13k in cash flow per month in 10 years to reach financial independence.  There aren't any attractive cash flowing properties in my local market in Long Island, NY so I researched several markets and concluded Rochester, NY is an excellent market for a cash flow investor like myself.

The deal:

6 unit Multifamily property (two - 3 bedroom units and four - 1 bedroom units) in the Maplewood neighborhood of Rochester.  Total annual rent is approximately $40k, annual operating expenses total $16k, and asking price is $225k. New roof and new kitchens in 3 of the 6 units.  This deal would be financed with a 20% down commercial mortgage.  I'd love to hear from investors with experience investing in Rochester and the overall community's thoughts on this deal.  

[Jason V.]

Welcome to BP @Peter Magistrale! 

I lived on Long Island for about 5 years during college (and have spent the rest of my life in the Rochester area) and I can tell you right now: Rochester might come as a bit of a shock to you, depending on the area. There are plenty of areas and suburbs that will feel very much like home to you, but a lot of the city will make Riverhead look like the Hamptons. If you're planning on making a trip up anyway, try to see as many properties as you can - don't make the drive just to look at one. Since you're new to the market, work up and down the price range as well. 

To give you an idea of what this market can be like, I have some friends who just bought a duplex that's probably only a couple of minutes away from the 6 unit you're interested in - and they paid more for 2 units than the 6 you're looking at. And the same distance in the opposite direction there's 11 units for sale for $275k right now. 

That said, I would strongly advise you at least analyze a bunch of deals within easy driving distance of where you are right now, before sinking the money into a remote market. Some of Rochester is cheap for a reason, and local investors haven't bought most of what's on the market for a reason. Don't get lured into the $30k Duplex trap: listen to everything Ben Leybovich has to say about the topic before pulling that particular trigger. Just because it's a lot less expensive than Long Island doesn't automatically make it a good deal. 

If you eventually decide to buy up here, there is a good network of investors, many of whom are on BP.

Good luck!