I am seeking ideas and creative solutions for a portfolio of roughly 12 mortgage-free, single-, two-family and four-unit rental homes in Sullivan County, NY occupied primarily by low-income families. Costs of capital improvements, repairs and maintenance have been draining our cash for too long. Although the depressed economy is expected to pick up in 3+ years, we need to slim down, sell off our holdings (6 properties are for sale) and/or creatively repurpose them. As an example of a "creative solution," I'm contacting the 100,000 Homes campaign in NYC to see if there is interest to expand their program into a rural area at lower cost than NYC housing.
The history:
For nearly 40 years, this residential real estate portfolio has been a source of profit, fun, even community service for our family. The philosophy of the owners (my parents) is to encourage each tenant -- often low-income or on Section 8 -- to truly create a home. To further that mission, we've managed P&L as a portfolio (vs. individual properties), consistently investing in substantial, necessary and voluntary enhancements over decades: new sewer systems, new HVAC, improving drainage, upgrading appliances, adding new porches, etc. Beyond funding improvements, we've kept up on maintenance, and helped out hard-working tenants who had fallen behind on rent for good reason.
The crash of 2008 changed everything. Personally, extracting a heavy toll on my parents' cash reserves. Regionally, the downturn depressed real estate values -- and they've stayed down. Slowed second-home purchases. Capped rents. Since, the cost of building materials and labor steadily increases. Also rising since 2008 (and draining cash) is the frequency of trouble calls -- often due to increased frequency and severity of extreme weather.
In short, due to circumstances largely beyond our control, the rental portfolio has become a financial albatross and we have listed about half the properties for sale.
It's not all dire.
- Properties are located in a beautiful region of the Catskill Mountains, several within one mile of the Delaware River.
- Properties are located in three townships: Callicoon, Delaware and Fremont.
- Properties are concentrated in the southern tier of New York State in and around the Marcellus Shale, the largest shale plate in the US, often called the “Saudi Arabia of natural gas."
- New home buyers in these townships tend to be second home or summer home buyers from the greater NYC metro (2.5 hours away).
And while job creation and economic growth in Sullivan and Delaware Counties in New York state are slow, the 3 - 5 year economic outlook is much more promising. Across the river in Pennsylvania, energy companies have been leasing land from individual farmers to drill for natural gas, with individual farmers receiving $1+ million checks upfront, plus a percentage of the take. There are also a number of job creation major projects -- from a school for Chinese students to casinos and some manufacturing. More on that here: http://www.catskillsedc.com/.
Thank you for any / all ideas.
