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Buffalo Area Guide

Why invest in Buffalo buy to let property?

Buffalo is a city on the shores of Lake Erie in upstate New York. Both Buffalo & Niagara Falls have been in the unusual position of missing the extremes of the US real estate boom and the subsequent downturn. Buffalo is now one of the top ten fastest growing cities for the key ‘college graduates’ demographic and is firmly back on the growth track in terms of GDP growth, unemployment, and population.

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Prices from just $30,000

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10-15% rent yields

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Rising home prices

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Low maintenance costs

Local economy

The largest economic sectors in Buffalo are education and health care and the economy has remained stable in these areas through the economic upheavals of the last few years.

Now is the time to invest in Buffalo, debt levels are low and the majority of investors are buying with cash. We have a relatively short time to invest in this area as the economy improves and prices start to rise.

The real estate market is picking up as loans become more readily available and institutional and larger investors are “discovering” the high net yields available. They will soon start to bulk purchase pushing prices up and net yields down.

Window of Investment Opportunity

We have access to a good range of fully refurbished, tenanted and managed three bedroom houses that cost between $30,000 – $50,000 per property (approx. £20,000 to £33,000) with typical NET yields of 10-15% on rental income. These prices are for refurbished properties and the prices are lower than the local average price. They offer fantastic investment opportunities.

No. Bedrooms Mar – Jun ’15 y-o-y 3 months prior 1 year prior 5 years prior
2 bedrooms $59,000 -23.9% $62,000 $77,500 $78,723
3 bedrooms $89,950 -0.1% $93,000 $90,000 $88,000
4 bedrooms $123,842 -2.8% $87,000 $127,460 $88,760
All properties $94,500 -4.1% $90,000 $98,500 $86,000

Source: Trulia home price statistics

The Rental Market and Tenant Retention

The Buffalo foreclosure rate is amongst the lowest in the US, and the percentage of the population renting rather than buying their homes is very high.

ROI/Capital Growth Potential

We estimate an upside capital growth over the next two to three years of 30 to 50% as larger and institutional investors are expected to start aggressively bulk purchasing in Buffalo. Now is the time to invest in this area for short-term capital growth and long term rental income.

5-Year Forecast for Buffalo/Niagara Falls

Buffalo as a city Is very much on the up. We expect this will be reflected in real estate prices, which are incredibly cheap now. This will not last as hedge funds and other larger investors begin to take advantage of the high yield and growing economy. We would factor in a 10% per year estimate, but in some gentrifying areas, it could be a lot more.

PCG Invest’s Buffalo Partner

Our Buffalo partner has been actively buying in the region since 2009. He is a seasoned investor, has a good reputation in the local industry and has an insider’s knowledge of the market.

What is the Purchasing Criteria?

The focus is on two main factors when looking for properties within the region and yield bracket when choosing for investors.

  1. Stable income. This means can this house be rented with zero/close to zero void periods for the near future? Factors that influence this are:

– Kerb appeal

– Quality of surrounding neighbourhood

– Tenant Demand

– Large employers nearby

– Quality of property

  1. Gentrification potential. Every city has one or more areas in some stage of the gentrification process. For landlords this means both faster capital growth potential and an improving quality of tenant.

Signs to look out for are usually quite obvious:

– New cafés/restaurants

– Bookshops

– Art galleries

– ‘Hipster’ businesses like organic/vegetarian food/craft/galleries/spaces

If Starbucks has opened, you’re too late.

Typical Maintenance Costs

Factor in 1/3 of gross rent for all taxes, trash collection, maintenance, water, lawns, and property management. With a well-maintained single unit and long term tenants, maintenance costs are likely to be little beyond the odd leaky tap and likely very low (under 5%) of the gross rent.

Why Our Buffalo Partner Works with PCG Invest

“We have chosen to allow PCG to represent our properties as we know them to be a company of good standing that provide a safe and reliable service to their clients. PCG Invest offer a unique, hands on management service that ensures we are well advised from initial interest through to completion”.

Management Companies

We work with three local management companies, all of which have been vetted by us.

See our latest Buffalo investments

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