Why foreign investors fail investing in Rochester, NY?

Investing in Rochester, NY. Why do most out of state and foreign investors fail? Where do I start? What compelled me to write this blog is the enormous amount of phone calls I’ve received throughout the years from frustrated out of state and foreign investors that own properties in Rochester, NY. I’ve received calls from as far as Jerusalem, Israel, Canada, U.K., California, and NYC. Kuwait is the most recent. Every phone call is from a fed up investor begging us to buy or help unload overpriced dilapidated houses in less desirable neighborhoods. Let that sink in… “Overpriced dilapidated houses in less desirable neighborhoods.”  Some get lucky and buy an overpriced gem in a decent or nice location, but decent or nice doesn’t mean anything if it’s overpriced especially when investing in Rochester, NY at least. So, I’m having the same conversation with multiple people. Some get it. Some don’t. The one’s that don’t get it I have to explain to them that:

“You overpaid.”

“Your property is located on one of the worst streets in the city of  Rochester. No, don’t take my word. Google it.”

“We wouldn’t pay that much locally.”

“Majority of property managers in Rochester suck.”

“Your realtor lied.”

“You paid what??? My God” (gasps!)

Now I must say investing in Rochester, NY can be very lucrative IF you buy properly. We are well known worldwide for “cash flowing rental properties.” Approximately 65% of rental properties in Rochester, NY are owned by out of state and foreign investors. So yes, investing in Rochester NY can be very lucrative IF you buy like a local. You must or you will be calling me. I think what the problem is that you get these cash loaded investors from Canada, Israel, California, NYC, etc., that see properties online selling from $30,000 – $250,000+. Compared to where they’re coming from that is PEANUTS. These same properties where they’re from can cost hundreds if not millions of dollars. So they’re like, “yeah let me get 20 of those! No I don’t have to see them. All cash baby!”  They think they’ve hit a gold mine! Then they bring in family, friends, and groups to invest. After 6 or so months the invoices from the property managers start rolling in. OUCH! Then after a year they’re told to keep calm and carry on, lol. Then after two years it’s finally starting to dawn on them that they may have invested in a money pit. You see the PM’s get paid off of placing tenants and maintenance. Each time they need to fill a vacancy they get PAID. Each time they need to make a repair they get PAID, even if it’s for something as little as changing a lightbulb. And being that most of these properties are in less desirable neighborhoods you’re more susceptible to getting nonperforming tenants that haven’t been properly screened, very transient, and some even destroy the properties. By the time you realize you’re in a sinking ship the property is now a dump and possibly vacant. Now you have a sense of urgency to sell. You hate your realtor now. You begin to search online for a solution. And you find us Smith and Nelson House Buyers. And we have the conversation. You’re asking for what you paid for the property or better yet you would like a profit. I then give you the bad news. You don’t get it. I leave the conversation on a good note. I offer referrals, suggestions, and my advice as a local investor. We part ways on good terms. Then I get the phone call several months later or maybe a year later. “Barrington, I’m ready to sell and I know I’m not going to get what I paid for it.”

The bummer is for us living here locally is the blighted neighborhoods. We pay for that. Whether it be economically, socially, etc. Have you ever heard of the broken window theory  James Q. Wilson and George L. Kelling

“Consider a building with a few broken windows. If the windows are not repaired, the tendency is for vandals to break a few more windows. Eventually, they may even break into the building, and if it’s unoccupied, perhaps become squatters or light fires inside. Some litter accumulates. Soon, more litter accumulates. Eventually, people even start leaving bags of refuse from take-out restaurants there or even break into cars.”

Why foreign investors fail when investing in Rochester NY?

Investing in Rochester, NY.

Investing in Rochester, NY.

Investing in Rochester, NY properly.

  • build relationships w/ local full-time investors

  • do your due diligence, research neighborhoods

  • run your own comps and compare them to others

  • if you’re working with a realtor, work with one that owns investment properties (most don’t, they just sell)

  • work with local WHOLESALERS

  • work with known and trusted property managers: Blue Axis Homes , Highfalls Property Management, Gallagher Property Management 

  • go slow

  • buy off market if possible 

  • know that the market here is relatively stable, it does not appreciate much nor does it depreciate. DO NOT bank on appreciation rather bank on cashflow when investing in Rochester, NY

  • contact our local rei FFREIA

  • contact us at Smith and Nelson House Buyers we offer our opinions and suggestions for free

 

And this is coming from a local Rochester, NY investor.  At Smith and Nelson, LLC we buy and hold, flip, manage (our own), and wholesale. We do short sales, lease options. We buy subject to the existing mortgage, consult, volunteer in the community, sit on the board of planning committees, and more. This blog is written by someone knee deep in the trenches. Also I would like to note that Rochester is an amazing city! I’ve lived here for most of my life and Rochester has been great to me. It’s a great place to raise a family and start a career. We have great universities. We are big on arts, film, music, and much more. And we have some pretty cool walkable neighborhoods. And just like any other city we have our less desirable areas. Do your due diligence when investing in Rochester, NY. May the real estate gods be with you!

Smith and Nelson House Buyers

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