Zona Properties, Inc. | P.O. Box 17937, Rochester, NY, 14617
Email: dick.zona@zonaproperties.com | Phone: (585) 506-9430

Purchasing Investment Properties in the Rochester NY area

Posted on: June 4th, 2015 by zonaprop

The greater Monroe County area of New York of which the City of Rochester is the centerpiece, is a great place to live and bring up a family. It is located on Lake Ontario, has a very stable economy (home to Eastman Kodak, Bausch & Lomb and Xerox among others) and has been found of late, because of its affordable housing stock, a great place to invest your money. Enough of my public service announcement, for further information you can contact the visitors’ bureau website at www.visitrochester.com

The city of Rochester is a city where you can buy a single family home for as little as $20,000 and expect a monthly income of at least $550/month or a 2 family property for $30,000 which brings in a monthly income of at least $800-900/month. I receive calls from investors all over the country (and outside of it) asking how this is possible. As someone that was born and raised in the area all of my life I (and other Rochester residents) ask how is possible that you pay $300,000 and above for a 1200 sq.’ 2 bedroom house in your area? To us this is insane. I guess the only thing to say is Se La’vi. I can’t speak for your area but my thoughts on Rochester are related to a steady (but small) appreciation of homes in the city. The suburbs, both east and west of the city, have had a higher appreciation but not in any way like some areas of the country such as California etc. The area is still what most people consider a ‘white collar’ type of town with three of the major corporations in the world (see above) founded here and with two of the three still maintaining their world headquarters in the city. Even though all of them have gone through a major downsizing in the past several years, the people that have been laid off have been absorbed into the local economy in the many startup companies in the area.

A major part of the housing stock in the city was built from 1900 – 1925. Dealing with older homes has the typical problems relating to maintenance & obsolescence. Properties in the lower price range ($10,000 – $60,000) usually are in areas of the city that have a higher concentration of low income tenants and sometimes a greater percentage of crime and problems related to crime. When looking at this price range of property an investor has to take into consideration extra costs related to repairs, turnover, improvements etc. It is not that these items don’t exist in higher priced homes but through experience, properties in these areas tend to have an increased amount of these types of expenses. There is always exceptions to these rules but as a realtor friend expresses to many of his clients, it is the old adage “pay me now or pay me later” concept. You might be able to purchase low but down the road you could have more expenses and losses that affect the bottom line. Hiring a good property manager will help, but even a good property manager can’t change the circumstances of the neighborhood or all outside forces that affect rentability

Single Family investing vs. doubles & larger buildings

Posted on: February 19th, 2015 by zonaprop

Single family investing vs. doubles & larger buildings

This is a question that comes up many times in conversations with investors. Which vehicle you choose depends a lot on what your goals are in investing in real estate. Are you looking for cash flow? Appreciation? A combination of both? Tax write offs? My observations come mainly from common sense than management experience. Just to outline some factors:

Single Family:

Pro:
– Single family is more desirable to renters in most cases
– Price of homes in the city of Rochester can be as low as $10,000
– Tenants usually pick up the total costs related to utilities, lawn care and snow removal
– On resale you not only have other investors to sell to but also owner-occupants
– Management could possibly be handled by the owner without a professional
Con:
– When you have a vacancy you have 0 income to make repairs etc.
– Resale in lower income or less desirable areas is much slower as owner-occupant buyers who want to live in those areas are usually less qualified for financing

Multi-family (2-8 unit)

Pro:
– When you have one vacancy there is still income to cover monthly costs
– Cost/unit is lower than single family on purchase
– Gross Potential Income (GPI) is higher than single family properties bringing in more money to cover costs and for cash flow profit

Con:
– Larger buildings are usually less desirables to some tenants (especially families with children)
– The cost of exterior upkeep is usually borne by the owner and not the tenants
– The cost of water is usually borne by the owner
– Parking is sometimes limited causing a problem for tenants with cars
– Resale will be likely limited to an investor instead of owner-occupant

Larger buildings (10-50 units)

Pro:
– Many units, thus increasing monthly income
– Cost/unit is lower on purchase
– Smaller units cater to mainly single people or couples (see below)
– Resale will be only to investors

Cons:
– Smaller units cater to mainly single people or couples (see above)
– Resale will be only to investors
– Management will usually require a professional
– All costs are the responsibility of the owner usually including the costs of heat and electric
– There is usually at least always at least one vacancy
– In most cases the cost of an on-site superintendent is recommended

Should I pay the money when I purchase or let the seller pay

Posted on: August 7th, 2013 by zonaprop

Should I spend the money now or later??

Certificate of Occupancy

 

     When purchasing a new investment property this is always a question that comes up between buyers and sellers. The Certificate of Occupancy (could have other names in other cities) is a required document that must be active and transferable at the time of sale in some municipalities. What does it require? It requires the repair of any health and safety code violations that may exist on the building at the time of transfer. Not all cities or towns require this document but it is important to check with the local government office or your realtor to verify if this is a requirement.

     A Certificate of Occupancy is required on all rental properties from 1 to 100 or more units unless you are going to live in one side of the property. To get a C of O in our area (just in the city not necessarily in the outlying towns), and if the current C of O on the property is more than 3 years old, you or the seller have a city building inspector go through the property. He or she will write up any code violations that exist. The majority could be health and safety but the list is not limited to those. This is different from you hiring a building inspector to examine the property to inform you of the condition of and about any problems with the property before you complete the sale. The city inspector will come out when the repairs have been made and will approve the issuance of a C of O which will be good for 6 years. BTW this does not mean that you are free and clear from any future violations or repairs that may come up after the sale. If problems come up from obsolescence or tenant damage etc. the city could be called and sight new issues. One of the items that must be addressed during these inspections in Rochester, and other places, is the evidence of lead paint. This could be costly.

     The idea of bringing these items up is not to scare an investor from purchasing but just to make you aware because very often you can get a much better purchase price by accepting the property ‘as is’ and taking on the responsibility of getting the C of O yourself after purchase. However to do this you need to get a good and honest evaluation of what it is going to cost you to make the repairs. Don’t always trust only the realtor who might or not might have a realistic figure what repairs cost. An outside building inspector and speaking with several contractors is your best bet. Always ask the seller why he or she doesn’t want to get the C of O to transfer to you. Then from a financial standpoint you can decide what the best way to make an offer is. Good Luck!