Some people burn out before they ever get started and others burn out after years of being a real estate investor. Recently I was reading a blog about an investor who was announcing that they were taking a break from the real estate investing business because their local market had tanked and the strain had worn them out.
Not too long I had gone through a burn out myself and I hadn't realized it at first. A couple of years ago, we relocated the headquarters of our business from New York City to Charlotte, NC. We were looking for more room for our family and to get into building and development. We maintained our office and property services division in Buffalo, NY and that continued to be our core business.
But being Charlotte, NC, which is one of the best if not the best real estate market, our new residential and commercial development projects began to overshadow our focus on the Buffalo, NY real estate market. Because Buffalo had never been involved in the five year run up that saw real estate increasing value by double digits, despite the market slump, Buffalo real estate wasn't tanking. It just wasn't as sexy as development and so it all but became the step child of our business.
Yet we had decided that we needed to increase our cash flow so that we could add to payroll and do some personal things we wanted to accomplish. Even though the profits in development are in the millions of dollars, our development projects wouldn't provide us with the immediate cash flow we sought. I was still doing deals in Buffalo, NY and quickly realized that the city that had brought my family and our clients so much wealth was still the best cash flow investment out there. Dollar for dollar I couldn't find an investment opportunity that required so little financial exposure and yet delivered at least double the returns of any other investment.
For example, an investor in Charlotte, NC was telling me how he had made a great investment in a $125,000 property which generated $800 in rents. This was a good investment but it just couldn't compare to Buffalo, NY investments. On any given day I can purchase a fully rented duplex with little to no work for $50,000 that generates $800 to $900 per month in rents. That means I can purchase 2 1/2 times as many properties as the investor in Charlotte and would generate 2 1/2 times more rent. This is why I believe so strongly in Distance Investing, you go where the deals are and create a local team in that area that can keep your investments profitable. This is also why I've always believed in Buffalo as the place in which to invest.
So when Tony had to go up to Buffalo for our business, I decided to tag along. I knew I needed to see if I could get excited again about Buffalo real estate. I arranged to see some larger apartment complexes in both low income and middle income neighborhoods for consideration to be included in both our own portfolio and for some of our clients.
On that very first day we set out to see the apartment complexes and on the way took in the real estate landscape. I tell you I was immediately excited about what I saw and my initial excitement so many years ago came rushing back. I could hardly contain myself there were so many possibilities and opportunities.
When we drove through the low income neighborhoods there were well kept streets and then there were those streets where four houses in a row were boarded up. But even that got me excited. I saw the opportunity to buy those houses, renovate them and contribute to the revitalization of an entire street. The power to be able to focus investment dollars in one area to improve the neighborhood while increasing the value of investors' properties is so powerful. So these investments could be purchased for anywhere from $1,500 to $20,000, prices that are unbelievable to many but all too familiar for us and our clients.
We then went to some of the really nicely kept middle income neighborhoods. These were neighborhoods in which I would live. And the purchase prices of these properties were just $50,000. While we focus on investments that are $50,000 and under, the market in the city is still lower than any other market with the infrastructure as a city that Buffalo has.
With so many choices and so many opportunities, I began to call Buffalo...The Cash Flow Capital of the World. We came back to the office in Charlotte and began to reinvigorate the Buffalo real estate business. We fully committed to get the word out to as many investors as possible. There's no way we could continue to passively benefit from such a goldmine without getting others in on the deal in a big way.
We added a slew of new services and opportunities for investors to get involved no matter their investment strategy. I will be sure to keep focus on our investment strategies in Buffalo, NY because they work. But even if you decide that Buffalo isn't the city for you in which to invest, I urge you to invest somewhere and now! Don't find yourself in the same place six months from now wishing you had taken action...What are you waiting for?