All Forum Posts by: Wesley Sherow

Bigger Pockets Upstate Community 
(However small our group is) 

I am in contract to purchase 12 apartments in one portfolio, and a small duplex from another. Among these buildings 9 units are in the northern Troy (Lancingburg) area. Walking around this area it's clear to see that the city is investing - new bus lines, new businesses, some nicely restored historic buildings. At the same time every other block seems to have some low quality low class properties. 

Now I know Lancingburg may be the farthest away in terms of the development of Troy, but i'm looking for other investors who know this area, own or have owned properties here, and can give feedback on the trend of this area. 

The reason I ask is the following: 
1. I am quoting the scale of renovation - do I put split units, do I invest in nicer finishes, do I give a light cosmetic re-do, or do I bring the property up to modern standards? How nice I can go on this renovation is dependent on the marketability of a higher end product, and whether we can find those renters here. 

2. I'm trying to feel how many years away the growth of this neighborhood looks to be. On a 2-5 year turnaround I may put our entire budget into this today, however 5-10 years and it might make more sense to stabilize the portfolio and hold onto it to do a full renovation at a later date. 

Regardless on the above, i'd love to add to my rolodex anyone who's in this area or speculating on it. 

Enjoy the week BP community! 

Justin, 

You may be able to find some newer looking cabins on AirBnB and reach out to those listers to see how/where they built theirs. Maybe a good first step! 

Best of luck!

Agreed with the above. Especially in upstate NY. If it's structurally sound, leave it. 

Good morning! Troy is an excellent location to start buying in. Luckily it’s a very straightforward location. 

 Donald,

Troy is an excellent town to invest in. It's seen a lot of growth in the downtown area, and because of it's linear layout, the regions are pretty easily distinguished. Downtown i'd describe as everything around Dinosaur BBQ. Any properties that are in walking distance from downtown are going to be decent investment, as downtown's footprint continues to grow. Then you have two more distinct regions.

First, northern troy, aka Lancingburg. That area is probably farthest from being a nice place to invest. Although the town is doing a lot to spur investment, such as building new bus lines, it's probably about 5-7 years away from it's full turnaround, and maybe more. I am purchasing some properties in that area, but knowing what it's like over there i'm expecting a very management heavy portfolio. 

Second, southern troy. Near Hudson Valley Community college. This area I believe is closest to matching downtown troy's growth. There's already a lot of development, so you're not coming into an emerging market, but more so recently emerged. 

The biggest returns will be in Lancingburg, the smallest in downtown troy, and middle of the road returns in southern troy. And you're looking at about a similar relationship in the amount of work you can expect to do. There are obviously always exceptions. Best of luck! 

Wes

Vincent,

All of the above advice is excellent. In addition to that, i'd strongly recommend you pick up one of Bigger Pockets beginner's books. Real estate becomes very repetitious for people like @Jay Thomas and I who've been doing it for a while. If I had to go back and explain real estate to myself when I was just starting, I honestly don't even know where'd I'd begin. There's a million tips and tricks out there, but there's tons of resources out there made exactly for you! 

"The Book on Managing Rental Properties" by BP's Brandon Turner and Heather Turner might be a good start. 

Best of luck! 

Wes

I figured I'd add in here some of my own experience. I used to manage one of the biggest low end portfolios in Upstate New York. I've seen nearly every low-end, class C/C- tenant issue in the book. On one occasion the tenant refused us entry to get work done that was required by the codes department. The tenant would literally barricade the door with their bodies to prevent entry. 

In my case I was able to communicate with the city that the tenant was refusing entry, and we were unable to complete the work for that reason. Communicating ahead helped us out, as the codes department was able to postpone the complete by date of the codes violation by almost 6 months with constant communication. 

We additionally used this bad behavior to qualify the resident for a nuisance eviction. God forbid the work you need to do is an emergency, i'd consider showing up with police, to explain the emergency basis, and let the law enforcement give access to the apartment. I'll preface that however the law doesn't like putting their hands on tenants while they're in the unit, so it's gotta be a true emergency. 

Overall it's a tough situation, and certainly not the norm once you have a stable portfolio of good tenants. Definitely sounds like we won't be renewing that tenant's lease, huh? 

Best of luck. 

@Brandon Gidicsin I was lucky enough to fundraise my first deal with other people here on the BP community. The best advice I ever got was to never put down the phone. Getting investors is very akin to simply putting yourself out there as frequently as possible, and obsessively enjoying conversations about real estate. One of the best litmus tests on fundraising is often the deal. Sometimes I find deals that are so great suddenly my network which is otherwise quiet suddenly explodes with interest in investing. 

I'm a strong believe in the "if you build it they will come" mentality. If you find that amazing deal, which likely your first one will have to be, they will come. Then after you've done a bunch, you'll be able to more easily fundraise the simpler or smaller return on investment bread and butter deals. 

I have a network of investors also, so if you have details feel free to send them my way - though I focus primarily on the Capital Region in and around Albany. 

Hey @Andrew Carlon i'm sorry nobody responded to you! How rude! :)

I'm invested in the Hudson area, as well as the Capital Region. I have done numerous AirBnBs, but nowadays I focus primarily on residential multifamily. Please reach out if you are still looking into that and want to connect! 

Well since a lot of the conversation is about the life insurance policy, let me chime in on the where to begin. This is wholly based on my experience, but I'd say the best formula is the following: 

-Learn to underwrite deals. Find a financial model, but a simple one, that helps calculate NOI, based on Income and Expense. In consideration of debt service, understand calculating cash flows. Also consider capex costs, renovation costs, etc.

-Underwrite deals - as many as you can find. Search zillow, find properties that look like a great deal. Then take out the excel sheet and underwrite it. What's the income, what's the expense, what's the debt service, and how much money do I have to put into it?

-Think you have a good deal? Put in an offer. Request actual real life data, utility bills, insurance bills, taxes, etc. During this time take back to your financial model and keep updating it to get it as accurate as possible. 

Now at this point you're at the last step of getting into things, which is closing on the deal. Now that you're here, it's about doing the work you set out to do. If it's a turnkey investment that might not be much, but if it's a value add, well get ready to hire your contractors or swing a hammer. 

Real estate done right is one of the most rewarding careers. If you have questions lmk :)

@Munim Jalil Wanted to chime in here. Would you consider taking maximum leverage on these properties? A refinance at this point for these stabilized assets might be a good play so that you can take the funds and roll them into the next deal. I personally focus on the Upstate New York market, though I have a lot of friends who invest in the NYC area. 9% cap rates however in the NYC area is in my understanding a pretty great return in a market that's more-so known for lower returns and higher stability. 

It always astounds me at the small quantity of units that's referenced in deals worth $1-2M+. I am currently refinancing on a similar property, however upstate. There I purchased a 10 unit for $735k, and after about $250k down and another $100k in renovation budgets, we just got a term sheet at the $1.5M evaluation. If you'd consider investing further north in the upstate NY region, I could tell you a bit about what the market is like up here. More notably, it's a lot more effort, but the returns for a skilled investor are exceptional. 

Just recently I entered into contract into a similar scale of deal. 12 Apartments spread between Troy and Cohoes, NY at about $50,000/door. The ARV in this market is approximately $120-140k/door, so we are seeing another good one here in terms of potential.

The thing that sets the NYC market a bit apart from other markets, is that it's much easier for RE to remain passive even up to 10 units or so with large quantities invested. In younger markets you'll be purchasing north of 100+ units for the same amount of cash in the deal as you have there - which never ceases to amaze me.