Hi there

Has anyone heard of or invested in property in the above. The prices seem very low on the properties by im not sure on the area. Any advise greatly appricated.

Many thankss

Hi,

I went over to Buffalo around May this year having heard of the yields on offer. I have since bought 4 places there.

I've got mixed thoughts so far. Buying them took around 6 months. That was partly coz of the sub-prime crisis which meant that the lender pulled out just before completion.

The whole process of getting finance and purchasing was painful tbh. The US and, in particular NY state, seems obsessed with paperwork. I guess it's coz it's a litigous society over there.

Buffalo itself has its nice areas (very nice, in fact), some not so nice ones (very not nice, in fact) and some inbetween. It's the inbetween ones that have investment potential. Having a good set of contacts out there is essential to finding them.

The yields you see advertised of 20% or 30% are realistic. Mine all yield between 25-35%. But this is the gross yield and expenses are higher there than investing in the UK. There are higher finance charges and lots of taxes. I personally wouldn't buy anywhere there with less than a 25% yield.

I've held the places for a couple of months now and, income wise, I'm down because I've had to pay out for repairs. I'm hoping that these are just the initial teething problems rather than what I can expect going forward. It's too early to tell whether Bufflao will be a good investment for me. I have mixed feelings so far, but haven't ruled out further investment.

I'm thinking of setting up a site about my experience of property investment in Buffalo. If you're interested in joining it, send me a message.

HTH,
Matt

HI Matt

Thanks for your reply, as you say the yields do sound very high and its nice to know they are for real (if makes sense not just to initially pull you in!!) I have been in contact with a company called Brennan investments Ltd,(did you use an ageny or company) They claim to deal with all the purchase paperwork step by step and everything etc. If you dont mind me asking how did you finance your purchase, and also if i buy outright in cash or by mortgage, is it like England do i own that property outright Freehold or is there any clauses. Sorry for all the questions.

Many thanks Chris

Hi Chris,

I paid cash for one, which I actually bought via Brennan Property Investments. It was a bank repo for £15k all in. I'm told that I can refinance it in a year to get my cash out, but I won't know whether that holds true for another 10 months.

The Brennans were fine - they don't do an awful lot for the money, but they were helpful enough and responsive enough when I called on them. They did say that they 'wouldn't have time' to look over a refurb qoute I got just after the sale went thru, which annoyed me a bit given what they charge. But I got some useful contacts out of it which was one of the main things I wanted. I'd say they provide a reasonable service for a newbie, but the best thing to do is to get over to Buffalo and see it all for yourself.

The others I bought by getting loans from a private investor - expensive at 11% for 50% LTV, but it was my only choice when the mainstream lender pulled out due to the subprime goings-on. It seems that it's easier to finance a place once you have it, rather than financing it for purchase, so I should be able to remortgage to a better rate and LTV than I have now.

Can I ask if you're an experienced investor? Reason is, I don't think I'd recommend it as a newbie - there's a hassle associated with it all, and it helps to have dealt with some over here first. Also, make sure you have a bit of cash spare as you'll probably find the place needs some work and your letting agent will have to keep hold of your rent until you get a tax number which takes around 8 wks (and you can't apply till you actually buy a place).

Thanks,
Matt

Hi Matt

Thanks for that, i have started around 6 years ago property developing with my own company have turned around numerous properties, i never really wanted the hassle of renting properties, so i mainly sold all them on i have kept a few which just tick over etc, but am now looking to start investing over seas due to the current UK market conditions. I have looked at Natal/Berlin/France/Bulgaria etc but of them all the highest yields does seem to be in Western NY. Its good to hear you went through Brennan as this gives me confidence, but i know what you mean £2200! Any contacts greatly appricated.

Cheers Chris

HI Guys
Im looking to do the USA thing also as the yields look really good. Are Brennan £2200 per property or is is it a %? Matt do you recommend going out there and finding your own team? Ive been investing in UK for the last 4 years so have a good idea of how it all works and the one thing Ive learned is you really have to know your area! Are Brennan taking care of all the management etc - or do they literally just find you the place?
Any advice Appreciated
Cheers Amanda

Amanda,

I personally found it very useful to go over there and see the places and, more importantly, the people. I’ve bought a number of places in the UK that I’ve not seen, sometimes in areas I’ve not been to, but it’s different when it’s a whole new market. I got a lot of confidence that the investment potential was real from actually seeing the houses and areas, meeting a couple of realtors, a broker and a managing agent.

The most important person in your team is the management agent. You need to be confident that you can trust them when you can’t get over there to see what’s going in for yourself. I’ve heard tales of managing agents who ‘forget’ to pay landlords. And you need the management agent’s advice to make sure that you’re buying in a decent area (Buffalo can vary from street to street, even in the same area).

Matt

Hi - I am new here and certainly new to buying property abroad (I am UK based)

Has anyone seen the following:

"an American Tragedy - Real Estate News" (sorry, as I am new here I am not allowed to put links in, I am sure you can find this via google)

they describe what has happened to one Australian investor in Buffalo, Kathy:
The first property, for which Kathy paid US$79,500 had been bought by James Graham for US$37,000. The second property, for which Kathy paid US$51,900, had been bought by James Graham for US$11,000. Yes, that's right, eleven thousand dollars - and just two weeks before he on-sold it to Kathy for US$51,900. The third property, for which Kathy paid US$34,900, had been bought by James Graham for US$13,000. So, from just one Aussie investor (a single and seriously ill single mother), self-professed devout Christian James Graham made a quick gross profit of US$105,300 (which, in 2005, amounted to around $160,000 Aussie dollars).


see Reply by Dan Glushefski

(again, I can't put the link in)

the problem with property flipping in Buffalo must be so bad, that the Mayor of Buffalo issued a warning:


Learn about fraudulent flipping
(if you look up Mayor of Buffalo and Anti-flipping task force you will find the link)

WHY DOES FRAUDULENT FLIPPING HAPPEN IN BUFFALO?
Typically, in a city with a shrinking population such as Buffalo there are too many homes and not enough people to live in them. At its peak Buffalo had a population of nearly 600,000 residents who needed housing and supported businesses and services. Currently Buffalo has half the population, less than 300,000 residents, so there are too many houses and too many commercial properties. It is a simple case of supply and demand. In some areas of the City the supply of property is greater than the demand for property. This oversupply results in low property values in these parts of the city. Inexpensive housing combined with the possibility of high assessed value relative to the actual value, results in flippers seeking to purchase properties for quick resale or to use them as a tax shelter. As the practice of flipping has increasingly taken place, the City of Buffalo has become known as a place to buy cheap property.

and:

WHAT IS AN EXAMPLE OF A FLIPPED PROPERTY?
A typical scam of unethical property flipping involves:

A property valued at $15,000 is purchased for $10,000 by a person who claims to be an investor. Within six months the property is sold without any improvements for $20,000 to another person who claims to be an investor, and within another six months the property is sold without any improvements to an unsuspecting homeowner for an inflated value of $55,000. The seller works with an appraiser to fraudulently inflate the value of the property so that a mortgage can be obtained for $55,000 even though the property is still only worth $15,000. Within a few years the overpriced loan takes its toll on the homeowner, she has trouble paying the bills because she needed to invest in major repairs and her mortgage payments are not affordable because of a high or variable interest rate and hidden fees.

An example of a known flipped property in the City of Buffalo is 41 Loepere.
The short history of ownership of this property: 8/7/03 Lender takes over the property in foreclosure proceedings 10/17/03 Lender transferred the property back to HUD 3/22/04 An investor purchased the property from HUD for $3,500 6/8/04 An investor purchased property from the previous purchaser for $8,000 11/17/04 A current owner who purchased the property from an internet auction site for $21,500 41 Loepere is vacant, has been cited 14 housing code violations and is now for slated for demolition. The current owner has never appeared in court to face housing code violations.


A list with contacts that may be useful is on the mayors site

Strategies to make a sound investment in Buffalo
(again , I can't post the link)
you have links to check whether a real estate agent or home inspector is actually licenced, etc

any thoughts on this?
am I being paranoid?

Why do people get burned?
Because they are lazy, they fall for glossy brochures and salespeoples slick patter.

If you want cheap safe high yield property I know of some in Germany, but Im not a saleman and I have no brochures, so you wont buy any. Ah well, such is life

__________________
Been investing abroad a few years. Always amazed people invest in places that produce just a few months rent per year

Hi,

I am going over to Rochester NY in a few weeks time to have a look at buying property.

Can anyone suggest a good realtor/agent, management company, good quality builder for works needed and the areas I don't want to buy in?

I have been in touch with a few estate agents and found they don't answer questions fully i.e best areas, worst areas, demand for rentals ......etc

Any info greatly appreciated.