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MARCH 2012 |www.opp.org.uk


BUSINESS


The Pro USA OUTLOOK


| 23


Window of opportunity | High yields and the possibility of price increases provides an “attractive bonus” in the rustbelt cities


He has focused on this area because property prices had already dropped prior to the sub-prime crisis. The area has stronger rentals because of the students, and people here fi nd it hard to get mortgages to purchase properties. Therefore prices are low, rentals are high, and with good management he can obtain higher than usual yields. Western New York State is


different from the rustbelt cities that have suffered badly in the current recession. Buffalo in particular lost its core industrial economy many years ago, and has since developed a broad-based economy with four banking headquarters in the city, as mentioned earlier.


It is now moving into university- backed research with things like Roswell Cancer Research becoming a major employer in the city. Rochester, while also mainly known as a University town, also has the head offi ce of Xerox.


The numbers of higher-income families in Buffalo are growing, and the population is relatively stable, having already seen a reduction when industry declined some years ago. Maintaining and managing the


properties is essential of course and, in Buffalo, there is a growing number of suppliers.


Key Property is a leading local property company in Buffalo. It has been in business since 2008. They are licensed brokers, agents, and contractors with a strong local reputation and the owner has been in the industry for 15 years, supported


by his partner of 10 years. Key Property currently manages around 300 houses, occupied by around 500 tenants. Its staff of 13 offers a full management services, including rent collection, invoicing, maintenance,


“We are buying properties for the yields, so the possible value-rise is an attractive bonus”


and re-leasing properties. They have been glad to partner with foreigners like Alan Findlay, as he can bring in foreign buyers and investors, leaving Key Property to focus on their local


expertise of managing the properties. An example property in the portfolio costs $33,000. Without gearing the yield averaged out at 13.6% over the fi rst 16 months, and the Zestimate price-comparison website showed the value rising to $51,000. An exit after 12 months would have seen around 50% ROI. However, locally sourced fi nance is available, and most of the houses Alan buys have at least 50% gearing on them, increasing the yield considerably. “We are buying these properties for the yields, so the possible rise in value is something we see as an attractive bonus,” Findlay said, referring to the Zestimate values.


Findlay warns that more and more


Alan Findlay holds a BSc in Build- ing Engineering and Management, and an MSc in Urban Planning. He is a fully qualified stockbroker and is member of Securities Institute. He has been in the property invest- ment and development industry for 19 years, including experience as a project manager and property investment manager. Alan has worked in the emerging markets of Eastern Europe, and now runs Findlay Property Investment Ltd.


people are discovering the opportunity in Buffalo and the surrounding area, but with his local networks it is still possible to source good deals. His ideal development of the concept would be to structure a fund around an existing portfolio, and then grow it substantially, or to offer an investor a fi xed return on a secured loan that would be used to expand the portfolio. And he will continue to focus on buyers from overseas.


Key areas | such as the University district and West Side provide stronger rentals with mortgages being harder to obtain


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