Rental real estate market still strong in Rochester - Rochester Business Journal
National studies by real estate investment company HomeVestors of America, Inc., in conjunction with real estate forecaster Local Market Monitor, continue to identify Rochester as one of the best cities in the country for rental property investors, based on first quarter rankings of the nation’s top 100 markets.
“There are good opportunities for investors in every one of the top 100 markets,” said HomeVestors President David Hicks. “But investors would be wise to take into account other dynamics for the ideal timing to enter the market. Strong growth rates and higher risk-return premiums usually point to the best markets to invest in now.”
Hicks said since home prices in cities like Rochester are low and their economies and employment opportunities are growing, they are the best cities to invest in rental properties right now. In addition, the fact that Rochester that did not experience a housing boom (or bust) also makes it one of the best to invest in.
“I’m not surprised by that, although I think there are different levels of what that means,” said Michael Liess, principal broker and owner of RE/MAX Custom in Rochester.
Without a real estate bust, area home values have stayed in check, Liess said, noting that values been rising slightly, between 1 and 2 percent a year.
“I don’t think home values here will be devastated like they are in other areas of the country,” Liess explained. “A lot of people make a living on out of town investors, which is not entirely bad.”
Liess said Rochester property investors come from all over the world to take advantage of Rochester’s high rental return rate. Landlords and property management companies that maintain and improve properties are good for the neighborhood and good for the investor.
But many rental property investors are uneducated and unsure of what they’re getting into, Liess explained.
“A lot of them are coming from a place where you couldn’t touch a house for under hundreds of thousands of dollars, and here they can pay cash for a house,” he said. “The downside to that is people who are uneducated about what it takes to be a landlord or property investor can have unrealistic expectations, and don’t understand what they’re getting into.”
Thomas Gangemi of Rock Beach Real Estate said Rochester has a higher quality of rental real estate because the city holds landlords to a higher standard.
“All I see is investment purchases,” Gangemi said. “There are a lot more investors purchasing homes than there are buyers or first-time buyers.”
Gangemi used the Park Avenue area as an example of an area dominated by investor homeowners renting their property to tenants.
“I don’t think it’s a negative connotation,” he said. “Park Avenue is one of the most desirable places to be.”
Gangemi said the city’s certificate of occupancy requirement helps keep slum lords out of Rochester and rents stable.
The city describes the certificate of occupancy as being an assurance to a prospective buyer, current owner or tenant that the building substantially conforms to repair and maintenance standards as of the date of issuance. Other cities may have lower rent rates but without a certificate of occupancy, tenants don’t know what they’re getting.
“It keeps rents high, but since property prices are low it’s a good rental property market here,” Gangemi explained.
Hicks said the combination of a growing economy that forces rents higher, and the continuation of low housing prices, makes this the best time in the past 30 years for investors to purchase home rental properties.
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