As a long-time investor in Buffalo, NY investment property, I’m often asked about the nature of the Buffalo market. I like questions like this one because it gives me an excuse to talk about the Erie Canal and Niagara Falls. Buffalo boomed due to the Canal—a time when people looked at the awesome power of the Falls (which stifled transportation for centuries) shrugged, and likely said “We can work with this.”
In other words, it is a resilient market; it’s for people who don’t see obstacles, but see possibilities; people who see ways to succeed where others have failed; and who are willing to work hard to get what they want.
The Buffalo real estate market is in a bit of a flux right now, which is why a lot of professionals are looking at Buffalo, NY investment property. It’s a way to balance an unsteady market with a solid source of passive income. And, given the rate of distressed properties and the coming foreclosure crisis, having investment property in your portfolio—specifically in Buffalo, NY—might be your best bet.
Understanding the Buffalo, NY Economy
To understand the Buffalo investment property market, we have to first look at its economy. For decades, Buffalo had been on a slow decline, as its industrial base slowly went away. While it’s still a really important shipping and hydroelectric hub, as the heart of western New York, it hadn’t seen much revitalization.
That changed over the last 20 years. It’s taken a more diversified approach to the economy, adding in a lot of light industry, high-tech manufacturing, health, and service-based private companies. As such, Buffalo weathered the Great Recession relatively well, and saw job growth year after year—but then COVID-19 hit.
After initial job loss, the economy recovered about two-thirds of the jobs loss before stalling. The second wave hit hard, leading to even more unemployment. Though the official number is at about 7%, that doesn’t take into account people who have left the job market. Experts estimate that the “true unemployment rate” is closer to 10%.
The COVID-19 pandemic has led to much economic distress in the region. But, the news isn’t all bad: an unpredicted combination of events is creating the possibility for a booming rental market.
Why the Buffalo NY Investment Property Market May Be Worth It Right Now
Investment properties in uncertain times can often be a smart long-term play. After all, you are able to hold onto a property and generate passive income while waiting for the market to rebound. But in the case of Buffalo, it could also be a very good short-term policy.
Let’s look at why.
For one thing, Buffalo has been locked in a seller’s market for a while now. Like everywhere else at the beginning of the pandemic, inventory went down. And it has stayed tight. Where people are buying, they are buying at inflated prices due to bidding wars. Buffalo has experienced some of the highest price inflation in the nation this year.
This will be disrupted by economic problems. While government-backed mortgage relief has forestalled the wave of foreclosures, it hasn’t precluded them. The distressed property market is beginning to swell, which means more houses are coming on the market.
In some ways, this is good for the fix-and-flip types, who are armed with more housing stock in their portfolio. But the reason this is good for investment property is the other unforeseen trend: in-migration toward Buffalo.
According to Buffalo Business First, the city is among the top in the nation for its inflow-outflow ratio. Redfin, an online real-estate brokerage firm based in Seattle, reported that since the pandemic hit, Buffalo has had the third-highest gain in net inflow—the number of people looking to move in minus the number of people looking to leave.
According to the study, there has been a 107% increase in out-of-towners looking to move to Buffalo—only Santa Barbara, California and Louisville, Kentucky had higher numbers.
Indeed, a full 35% of searches for housing came from outside the region. This makes sense. The pandemic has allowed people to work remotely and question the wisdom of living in a huge city like New York City (which leads the nation in outflow). Buffalo, which has some big-city amenities with housing prices lower than many NYC studio apartments, fits the bill.
But the market is tight. And in a remote world, not everyone wants to buy and settle down. Many likely want to try Buffalo for a year and then maybe move on. It is a more itinerant life.
So what are these people looking for? They are likely looking for a house to rent. And if you are able to snag one of the distressed properties coming on the market, you’ll be able to give them what they want.
The trick is to get them first.
How to Find Distressed Properties in Buffalo
With more and more people looking for houses to rent, you’re going to need a way to find distressed properties to buy and hold before other investors. That’s not easy in a tight market where tons of other investors are looking for properties. A good way to do this is to get leads before they become too popular. I’m able to do just that by being an independently owned and operated HomeVestors® franchisee.
You’ve likely heard of HomeVestors—or at least you know their “We Buy Ugly Houses®” campaign; it’s nationally known. When people need to sell fast—like when mortgage relief stops—they contact HomeVestors because it’s at the top of their mind. As a franchisee, you get a lead to a buyer who is ready to sell.
Now, you’ll still have to evaluate the house, decide how much work to put into it, and be able to rent it out. But, by getting a lead to essentially come to you, you’ve made it past the hardest part—sort of like how the Erie Canal went around the Falls.
If you’re interested, request information about becoming a franchisee today. It’s the best way to take advantage of a resilient market.
Each franchise office is independently owned and operated.
HomeVestors of America® is the nation’s only real estate investing franchise, providing business opportunities to real estate and investment professionals across the nation.