It's Hot around Park Ave Especially for Investment Property!

The temperatures may be falling but the real estate climate around Park Ave is super hot, especially for multi-family investment property.  In the past six weeks or more, I've heard from many investors and want-to-be investors and when we secure an appointment to view these properties, there are usually two or more other investors looking at the same time.

A little free advice here for new and want-to-be investors.  There are three primary ways to loose money on your investment.   

The first is financing.  I meet many investors that want to buy the property as a primary residence simply so they can put a minimum down and mortgage the property to the hilt.  With interest rates so low that is tempting to do but all interest is front loaded, and so this strategy will only work if the investor is committed to a long term investment. 

Next comes maintenance.  Even if you purchase a property in perfect condition, tenants cause wear and tear.  If you can't tell a hammer from a screw-driver and the thought of getting on a ladder breaks you out in a sweat, you will need to hire someone to take care of your property.  So that is profit out of your pocket and into someone else's.

The last biggie is managing your property.  You will only make money if you screen and select good tenants and then collect the rent.  Some investors hire that job out and as a result a good chunk of their income is given a way.

The bottom line, is that there is a lot more work to being an investor than depositing rent checks.  If you need to mortgage the property, hire a handy man plus a property manager, make pretty darn sure that the return on the investment is great enough to cover these expenses. 

Multi-Family Units & the Federal Tax Credit

I learned something new today regarding the Federal Tax credit for first time home buyers (defined as not owning a home in the past 3 years.) If you purchase a 2-family unit as your primary residence, you are only eligible for half of the tax credit and only a third of the credit if you purchase a three-family unit, etc.



There are still no local mortgage lenders that are providing a short term loan so that the tax credit may be used for closing costs. Since Labor Day weekend is the realistic cutoff to have an offer accepted in order to close before the November 30th deadline, I'm no longer optimistic that this loan is even going to be offered. Most lenders are now advising that buyers get a gift from a family member and give a gift back after closing.



Sales are still brisk in Rochester, with houses in the North Winton area selling within hours of being listed. If you'd like more information about buying in the Rochester area, consider signing up for my Buyer Seminar scheduled for Wednesday, June 24, 6 to 7:30 pm.

City Offers Grants to Landlords for Lead Removal

The City of Rochester is offering a lead grant for rental properties that will assist with 90% of the lead remediation related project cost up to $18,000 per unit for porch repair/ replacement, window/door repair/replacement, painting and bare soil treatment. In extreme cases, funding may be used for exterior siding. Landlords are required to contribute 10% of the total project cost.


There are only 75 of these grants available so act fast. To receive an application simply e-mail your: 1) full name, 2) telephone number, 3) address of business, and 4) email address to RocLandlord@TheHousingCouncil.org with "City LEAD Grant Application" as the subject line.

FHA Changes Rules on Buying a Second Property!

I've worked with many a first time homebuyers that have long term goals of building a portfolio of investment property. Often they start with a starter home with plans to stay there for just a few years. As they get more established in careers, they plan to buy a bigger and better home but retain the starter home for rental income. Well, that scenario is about to become a whole lot more difficult to pull off.

Labeled 'Buy and Bail' FHA lenders and other mortgage providers will not provide funding to homeowner that have vacated a principle residence to buy a new residence unless the homeowner is taking a new job or is transferred in an excising job and the new work location is not a reasonable commute. As part of the conditions for the new mortgage, the landlord will need to produce signed leases (of at least one year after the loan is closed!!) as well as proof of security deposits and first months rent. The only other exception is if the owner has at least 25% equity in the property.

These changes in regulations were necessary because of problems in other parts of the country. Homeowners were vacating their existing principle residence and purchasing new residences to either take advantage of home buying opportunities due to stagnant markets or to relocate closer to work due to the rise price of gas. Fortunately (or unfortunately if you are a bargain hunter), Rochester's property values has held steady and it is consider one of the easiest cities for commuting. Nevertheless, these changes are nation wide and Rochester homebuyers will need to abide by them.

Investing in Rochester

With all the turbulence in the stock market the past few weeks, I'm starting to hear from investors again! As one client put it yesterday, he's losing money in his 401K but seeing a 20% return on his city of Rochester rental properties. He wants to buy at least one more property before the end of the year.

What is nice about this particular client is that he knows that rental properties do not take care of themselves. When he purchases property, he budgets for both improvements and repairs and he collects his rents in person so that the maintenance stays top-of-mind. On his days off, he cleaning gutters, making roof repairs, painting trip or doing landscaping. As a result, not only is he collecting good rents but his properties are appreciating at above average rates.

All to often, landlords believe their biggest chore is to go to the bank and cash rent checks. It is refreshing to work with a landlord that understands the responsibility (and rewards) of taking care of their property.

4 Family Home on Rochester East Side

I recently listed a 4 Family Home located just two blocks from the new luxury condos (www.RochestersBestHomes.com/800254) on South Union. It's a great location, just a short walk to down town. The building includes two studio apartments and two one bedroom apartments but could easily be converted to a two or three family unit. It also features off-street parking on Canfield St, which is a dead-end road. Currently, this building is fully rented with $1830 a month gross income. Asking price for this property is $149,900. For details, go to www.RochestersBestHomes.com/812209 . For an appointment to see this property, call 585-414-5513 with a minimum of 48 hours notice.

Buyer Beware!

With all the media attention on the sub-prime mortgage situation, it seems that hardly a day passes when some buyer doesn't ask me about foreclosures. It seems that everybody thinks that is the best way to get the best deal in Rochester real estate.

Today was no exception. I was working with a buyer looking for a multi-family investment property in the city of Rochester. He was pretty excited about a new listing and could tell that it was a foreclosure by all the tape and winterizing stickers in the bathroom photo. The price was right and the description claimed it was a good property in average condition.

I made the appointment and met the buyer on site. Our first impression was the property was better than average condition. The kitchens and baths were dated but functional. One of the apartments had nice gum-wood trim that had not been painted. Each unit had three bedrooms of respectable size. The roof was older but still functioning.

We were both excited about "the find" as we headed back down into the basement. Suddenly my client realized that there was no plumbing in the basement. Someone had gone through and cut the pipes and harvested all the copper! Only in real estate can a house without plumbing be described as in average condition!!!

I often discourage young, first time home buyers from even looking at foreclosures. In most cases, the water, electric and gas have been turned off which makes even major defects obscure, unless you pay several hundred dollars for an inspection. So if you think buying a foreclosure is right for you, remember the old adage, "buyer beware!"

768-770 Grand Ave, Rochester - Open Sunday, 1 to 4

Come on by Sunday afternoon, 1 to 4 pm, to see this very nice 2-family located in Rochester's Culver-Winton neighborhood. Lots of charm remains with gum-wood trim and hardwood floors. Both kitchens and baths have been recently remodeled and the attic has been finished. Newer roof, plumbing and electric! Gas and electric are on separate meters for each unit.


Currently, both apartments are rented, with a monthly income of $1425, but the downstairs tenant has a month-to-month lease so this would make an awesome owner occupant home or investment property. Asking price: $99,500. For more details, click: www.RochestersBestHomes.com/808231

I hope to see you on Sunday!

Rochester Public Market

"Location, Location, Location," is what it is all about when you are thinking about investing in real estate. Investors and want-to-be investors are often asking me what's the current "hot spot" for investing. Usually, once it is a "hot spot" property values have started going up and there are no real bargains to be found.

So how do you find a hot spot before it's a hot spot? Generally, you need to pay close attention to the news so you know where new projects are planned. Then you need a ton of guts and a lot of luck as you scope out what is on the market.

In recent weeks, there have been numerous articles about the Rochester Public Market area and the newly opened Station 55. I went exploring this morning to try to figure out if this might become the next Rochester Hot Spot.

First stop was the Public Market, all decked out for the holidays, llama included. It was cold, but a lot of fun, with great food and plenty of hand-made holiday decorations.

Then we stopped at Station 55, and was glad we did. It's located on Railroad Ave, just down the street from the public market. Downstairs, the old warehouse has been tastefully converted into an indoor market and they had a holiday sale going on. Future plans are for the market to be open Thursday through Sunday mornings. Upstairs are loft apartments. I didn't get to tour the apartments but I saw some photos and they look very nice. I'm rooting for this endeavor to become a huge success.

Then, we drove the neighborhood, up and down the streets that surround the Public Market. It's a very, very poor neighborhood. I lost count of the houses in poor repair as well as deserted and boarded up structures. Back home at the computer, I found nearly 30 houses for sale in this area, many in the $30,000 to $50,000 range, some of which were two family units with decent rent coming in.

So, is this the next South Wedge? I'd say it is worth watching this area. If you want a list of what is currently on the market in this area, send an e-mail to MShelsby@rochester.rr.com.

Mary Shelsby

ReMax First

Financing Investment Property

Happy Thanksgiving everyone! My wife Lori and I are very thankful for Chase. Chase is our first child, born 07/08/07. We just missed that all "07" thing. We certainly won't complain, seeing as though Chase was in a major hurry to enter the world by coming 5 weeks early. He is a happy and healthy baby, and is very social.

Another thing I think we can be Thankful for this holiday season, is the fact that Rochester is a great place to own Investment Property. Let me take a moment to give you an update on the mortgage industry, as it relates to investment properties. Gone are the days of 100% financing for 4-unit rentals. Gone are the days of putting very little down and getting a reasonable rate. There are still some lenders that will allow as little as 5-10% down on multi-unit rentals, but the rates are VERY high. High rates plus minimum down payment will equal a bad net cash flow almost every time. The old cliche "You have to have money to make money" certainly rings true these days with regards to financing investment properties. Putting 20-25% down will yield your lowest interest rates, and will certainly have you on your way to an early retirement.

I Love Rochester

I spent the day with clients from North Jersey. They came to Rochester looking for investment property. I spent as much effort introducing them to Rochester as I did showing them property. And every time they asked me about a location, I assured them it was 15 minutes away. The malls are 15 minutes away. The universities are 15 minutes away. We visited Corn Hill and then in less than 15 minutes we were in the South Wedge. Fifteen minutes to the Public Market or Lake Ontario. In fact, Rochester is known to have some of the shortest commute times in the nation.

This is in contrast to life in North Jersey. No matter what they want to do, they get in line. One of my clients were telling me about the evening before his visit to Rochester. He dropped his son off at the local mall. He never got out of the car, yet it took him an hour just to get out of the mall parking lot! After hearing stories like that, I know I never want to leave Rochester.

By the way, there are some very nice deals on investment property currently on the market. My clients had a difficult time deciding which property to submit an offer on!

Great Time To Be a Landlord

I enjoy watching the ebb and flows of the market. It amazes me how everything is connected. For example, mortgage interest rates have inched up over the past couple of years from 4-point-something to now 6.5 or so. And sub-prime mortgages have dried up. In other words, you have to have pretty good credit to buy a house today.

Guess what? Not as many people are buying houses these days. Two years ago, as you drove through Rochester streets, there were for rent signs on most every block. Today, that is not the case. I recently listed one rental over in Rochester's 19th Ward. I've had 22 phone calls in the past week and the only advertising I've done is put a sign in the yard. I have five houses for sale currently listed and I've not received 10 calls total on the five properties. I'd say it is a very good time to be a landlord.