Hi all, I purchased a few properties in Buffalo earlier this year and thought I would give you some preliminary feedback.
Firstly, there is no substitute for doing the leg work yourself which means getting on a plane and touching down in Buffalo. Niagara Falls is only a short drive away as is Toronto so you can make a vacation out of it anyway.
The one thing that I learnt is that no matter how good a deal looks on paper or how pretty the house looks on the net, you really do get a different impression when you are there in person and I would strongly discourage anyone from buying anything without seeing it in person. That would be pretty obvious advice to most of us, but I hear and read of too many people taking a punt only to regret doing so later.
For my investment purposes, I found that properties in the low US$30k gave me the best risk/reward scenario. For that you can get a largish house split into 2 apartments. Decor will be basic and whilst in reasonable repair, the boilers, furnace and roof will all be nearing the end of their life requiring ongoing repair or replacement.
My original intention was to purchase around 15 properties but I only walked away with 3. What I found is that even though I am projected to get around 32% gross rental return, all of it goes to paying rates, insurance, maintenance, management , interest and so on. It’s certainly not the cash cow that I had hoped for with the outgoings significantly more than I had originally projected. Perhaps it won’t be so bad at the end of my first 12 months of ownership, but for now I am happy to rely on projections provided to me by my estate agent who deals frequently with investors.
Unfortunately it hasn’t been smooth sailing since settlement either with a lack of tenants (although I think this is due to poor management rather than lack of tenants), difficulty dealing with gas, water and electricity providers without a social security number and general lack of service from all but my estate agent. I had thought that the US would be very customer service driven but sadly I am finding the opposite. That said these are just teething problems and should be rectified soon… I hope!
I am undecided if I will expand my portfolio or if I will just keep these 3. I guess I will know more in 6 months time. If you want to jump on a plane though, I can thoroughly recommend the agent I used. Just drop me an email at [email protected] for details.
Hope this helps, happy investing,
Anthony Hansen
Anthony Hansen
http://www.f1property.com.auHi Anthony,
Thanks for your message.I must agree with you totally.I also was looking forward to buying a heap of these cash cows only to realise that not everything that looks like gold is gold. I have purchased 5 properties in Buffalo in the past year.Of those 5 I have evicted 2 tenants and are awaiting a court date to evict a third.One of the tenants didnt pay rent for approx 5 months did $1500 US damage to the property before she left and I have just discovered today that prior to leaving she took my knew oven and fridge [angry2][angry2].I have since sacked the property manager involved and now have a new property manager.On a positive note,the other properties are going well with no hassles as yet and still provide a healthy return.There are 3 types of people:1. People who make things happen.
2. People who watch what happens.
3. People who wondered what happened.Thanks Anthony for yr post!
Something that has helped me to take more control over
my propertys over there is to get all the bills sent to me in australia.
This is just one area that u can keep under control & monitor and i have found it helpful as it also frees up the PM s time and energy so they can concentrate on collecting rents etc.
(anything to encourage some motivation!!)We’ve got 70 yrs on planet earth,Lets make the most of every day!
Luke Taylor | Hope Property Investing
http://hopepropertyinvesting.com
Email MeProperty Support,Strategist and Buyers Agent
Hi Anthony
Buffalo has become a renters market due to the influx of investors (local, interstate and O/S) rehabing existing housing stocks over the last 12 to 18 months.
The PM’s have been using this as an excuse to have you spend thousands of $$ to make your empty property more attractive to renters. The reality is most of the full time PM’s there are originally rehab coys and the PM side has developed by default and this is why the service levels are woeful. The relationship is one where the PM holds all of the rights and us as the landlords have all the obligations. I reckon its a bit like putting dracular in charge of the blood bank.
How to solve the problems? The other poster was right by having all the utilites and city taxes mailed to you and you pay them (the PM was always late and incurred penalties and interest). We have gone one step further and liase directly with Belmont, Sec 8 and the Catholic Housing collecting the rents directly, (tenants are on 100% subsidy ) The PMs get their normal commission so they are just there to organise any urgent repairs and deal with outgoing and incoming tennants, even this requires chasing by ourselves .
So, Buffalo is a bit of a volumne game, and even though all our places are in good parts of town, around 20% are dogs, 60% OK and 20% rippers. ie 20% of our places make 80% of our profit, a bit like any business really……
Who knows maybe the Bills will follow the Knights this year and get into the playoffs/finals too.
Good luck
Tony
Thanks for your comments. Having bills sent to me in Australia is probably worthwhile based on your comments but I usually like to have my property managers pay everything to make record keeping easier. Another point to this is that I am not yet set up for internet banking (need to be a HSBC customer for 6 months), and paying by cheque can be slow.
Since posting my original message, I am pleased to say that I have secured 2 more tenants since calling our property manager (Dasa Properties LLC) and giving them a bit of a hurry on.
Now that 270 East Street is now fully let I can give you some further numbers. The 2/3 bedder is rented for $450pcm and the 1 bedder is rented for $300pcm. That gives me a gross rental return of 36% on the US$25k purchase price.
Indicative number for the other 2 properties remain at 32%. I’ll give you the exact numbers as details come to hand. Both properties have 1 apartment let although we are yet to settle on one of them.
I’ll keep you updated on the financials as they come to hand, especially the outgoings which remain vital in working out positive cash flow. If someone has some net return calculations on a spreadsheet then I would love to hear from you. Likewise I am happy to share what I have.
Anthony Hansen
http://www.f1property.com.auAnthony,
Thanks for your informative posts. Buffalo is certainly a unique market and one with many opportunities to also generate reasonable returns providing all going well.
I myself have been researching and investing in the U.S over the past 12 months and have learnt heaps like everyone else here from there first purchase to now. With my knowlege my expectations have also increased.
It is so true about the high costs and taxes associated with the Buffalo market and you really want to be achieving 30% plus returns as a foreign national to make it worth your while.
My first purchase was with a friend of mine which we co purchased for $39k and are getting $650 a month in rent. We are now selling the property because we can do much better in the Texas market. For our startegy anyway. Since my first purchase in Buffalo, I have also done a rehab on a duplex with my contact who also lives in buffalo and found this a much better way to go.
I have found rehabbing and then renting them out incrteases your rate of return greatly. Dont get me wrong though, rehabbing also has its headaches and its a constant battle keeping on top of contractors.
In my honest opinion, anyone thinking of investing in Buffalo needs to be prepared for headcahes and be prepared to have an active role in there investment.
I would be interested in anyone else on the forum has actually rehabbed homes in Buffalo and how it went. I would be interested as to how you went about it because in all honesty, I would never have attempted it without the help of my friend and business partner who is a local in the market.
regards
Chad
Providing Turnkey Real Estate Investments In The USA.
We also provide Owner Finance in a new emerging market.E-mail:[email protected]
web: http://www.gr8realestateinvestments.comHey guys!
Tony I like yr wisdom on the buffalo market!
I have experienced the same thing with property management just being a secondary thing for the rehabbers.Often the managers use there own companys to do the repairs on the propertys and charge heaps for it.Or they outscourse it and put a margin on top of what they paid.Tony, May i ask who you use for property management in Buffalo?
I have done a bit of research around the traps on DASA (Dave and Lisa Smith) and have heard they are ok but charge alot for repairs.They also apparently take a while to get tenants in yr house(apparently waiting for the best tenants)Has any one had and long term experience with DASA?
Thanks guys
LukeWe’ve got 70 yrs on planet earth,Lets make the most of every day!
Luke Taylor | Hope Property Investing
http://hopepropertyinvesting.com
Email MeProperty Support,Strategist and Buyers Agent
Luke,
I have had very lengthy conversations with Dave both in person and over the phone.
My business partner who lives in Buffalo also gets on very well with Dave. I havent actually used him for property management because my business partner manages ours, however have had quotes for rehabs from them. They have also inspected many rehabs of my business partner for several clients wanting to buy his properties over the years..Thats really how they got to know each other.They are expensive on there quotes compared to other contractors. The main advantage they have though is that delays are minimal. They have a good supply of contrctors. You will pay a premium though.
As I said, i dont know much about there property management other than they are definately the biggest company who “specialises” in property management in Buffalo.
I have also heard that it is taking a while to tenant homes but mainly due because they are looking for the right tennant.
So yeah management is definately a challenge and for now they appear to be the best option.
One of the key things that Dave said to me was to stay in the good areas as they rent out easier for obvious reasons.In his opinion where you invest will have allot to do with the outome and performance when it comes to tennants.
Regards
Providing Turnkey Real Estate Investments In The USA.
We also provide Owner Finance in a new emerging market.E-mail:[email protected]
web: http://www.gr8realestateinvestments.comHi Luke
Have used a couple of PM’s.
Cannot recommend Toni Santiago (also known as Gernie Property Management) as she and her offsider Dave will take your rent and, put simply, keep it for themselves…..
Cannot recommend Di Brown. Whilst her heart is in the right place she should not be in business for herself. ie unaccountable to anyone.
Lisa from DASA is trying hard and is honest. We now have all up 26 rentals with her. To her credit she has put staff on and trained them up, invested in a decent reporting program so things are going better however there is still room for improvement.
We did met with 4 or 5 other possible PM’s face to face. But their business models and idea of service delivery didn’t seem too worked out…. Patrick from Greenleaf could be worth a call.
NY cashflow site has a fair bit of discussion on this topic which is faced by all investors (local, interstate and OS) and is full of hints and tips to work this particular market and others like Nebraska and Misery (Missouri).
Good luck
Tony
Hi Tony,
I was hoping you could answer a few questions seeing as you have invested in a number of houses in Buffalo.Firstly I have 5 properties in Buffalo and am currently using DASA and have been for about 3 months now,i’m currently going through a few evictions and have already evicted a number of tenants,none of them placed by Lisa.How long have you been with DASA?Have you found that the tenants that have been picked by her have been decent?How have you purchased your properties?Are you going to continue to purchase properties there?Sorry for asking all these questions but if you can answer them I’d appreciate it.
Thanks MartinThere are 3 types of people:1. People who make things happen.
2. People who watch what happens.
3. People who wondered what happened.Hi Martin
Welcome to remote management. I didnt think it should be any different to the way we remotely manage our properties in NSW – however it is. this is even though we (Aust and USA) speak the same language as often the same words have different meanings. This is still the case with having the leg up of my wife who grew up in California, so I can’t say its a cultural thing….
For what its worth I think the best thing is to just keep a real close eye on it. Kill off the lame ducks fast and let your winners run.
Regards
Tony
Hi Tony,
I can certainly agree with you there.I’ve used property managers in Cairns and Rockhampton to manage my properties.I was hoping it would be similar to managing properties remotely in Buffalo alas not to be.It requires a great deal more work .Thanks for your reply.
Martin[jerry]There are 3 types of people:1. People who make things happen.
2. People who watch what happens.
3. People who wondered what happened.Hi all, (oh and Martin I’m sorry I didn’t call you when I said I would but I have been away).
I have only been with Dasa for 2 months. I can’t say I am all that fond of them but it’s kind of like the better the devil you know. Changing managing agents seems like a real battle given all the hoops I have gone through so far.
A crappy experience with Dasa is that on one of my properties they included the utilities in the rent due to some metering problems or whatever it was. That’s no problem except they charges me a full month letting fee on the total amount ($650 rather than $450) as well as a full 10% on the rent. I think this is most unfair and that they should only be charging a fee on the actual rent. Unfortunately Dasa have taken an arrogant stance and continue to charge 10% on the utilities portion as well.
A good property manager who was recommended to me by my realtor is Larry. I’m not sure of the company name other than his offsider is called LaVon Collins. Unfortunately, they have closed their books to new investors. I would have loved to have given Larry my business given the praise he received. In fact my realtor often called Larry when we were on the road to ask about individual streets and he seemed to know Buffalo inside out. I guess that they knock back business is testament to their own work ethic – service the ones you have well.
Maybe we should band together and give our business to someone deserving and to someone that wont rip us off on the maintenance?
Anthony Hansen
http://www.f1property.com.auHey guys!
DASA have actually had a huge increase in propertys to manage .
Last year (october)they managed150-250 now they have 750 on the books !
So i think some of the issue is them trying to keep up with everybody.I spoke to David yesterday and he seemed quite honest about the issues of getting through all the work.So they
have closed business to new investors untill they have more people trained up and new management software to make it easier on them and landlords.Anthony ,i would probably try persevere with yr issues with them and give it some more time as the issues you mention are of course issues to be dealt with but from what i have experienced with management in Buffalo and most of those whom ive spoken too, it could be alot worse. Most people who speak of DASA long term speak higher of them than other managers.Of course i am only going from what i have been told through research regarding DASA though i have spoken to alot of people,regarding management in Buffalo.
We’ve got 70 yrs on planet earth,Lets make the most of every day!
Luke Taylor | Hope Property Investing
http://hopepropertyinvesting.com
Email MeProperty Support,Strategist and Buyers Agent
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