Buffalo Rising Online

Sep 25th, 12:42pm By queenseyes

In the past, there have been more than a handful of out-of-state real estate investors who have participated in the practice of house flipping. That's because when houses can be picked up at auction for dirt-cheap prices, the temptation is too great to make a quick buck. House flipping has led to crisis situations in many East and West Side neighborhoods - especially when the buyer has no intention of fixing up a property. Instead they are out to turn over the property to an unsuspecting buyer who then gets in over his or her head. When that happens we are faced with a property that sits vacant waiting to be stripped, burned, used for drug trade, etc.

So where does that leave an out-of-state investor who comes to Buffalo with better intentions? That's what Nate 'Rock' Quarry, a UFC fighter (Team Quest with Randy Couture) from the Midwest is learning very quickly. Nate has been purchasing residential properties deep on the city's West Side for a few years now. I've spoken to him a number of times regarding a series of problematic issues that he has been facing. Nate admits that, in one case, he should have had his crew out mowing a lawn when they were inside working on the house, though he wonders how a lawn can be an issue when it is apparent that people are working to fix up the house. “You can come to the properties,” Nate told me. “And you can see that we’re doing work to fix them up. I would rather have someone from The City work with us rather than drive us away.”

When Nate first learned that the real estate market in Buffalo was a good investment, he decided that he wanted to sink hard earned (and I mean hard) money in the market. His thought was to pick up the properties at a pittance and invest some money into rehabbing them. One of the houses that I visited last week is located on West Avenue (near Niagara Street). When I first saw the exterior of the house I couldn't believe that anyone would voluntarily purchase the structure. It was stripped of most of its character and looked as if it was ready for the wrecking ball. Then I saw the work that Nate's crew was doing to the inside of the house. The floors had been redone, the walls were smoothed out and painted, the kitchens were being cleaned up... the interior looked great. He told me that the exterior of the house was scheduled for the same tune-up... if he decides to keep investing in Buffalo.

Ever since Nate first purcased property here he has had nothing but headaches. Apparently finding a solid property management team in this city is quite a task. The fines that he has been receiving from The City have been astronomical, and that, he told me, is enough to scare anyone away. He told me that when his house on West Avenue is finished it will be one of the nicest ones on the block. Where other property owners have disinvested, he has stayed true to his vision of building a nest egg on the West Side.

One day, Nate called me to see if there was anyone around that could help. Or should he pull the plug and take a hit on the chin? "How can I get fined so much for clearing out the mess inside?" he asked. "We're taking out materials and we're getting fined for clearing them out to the front porch. It's obvious that we're doing work inside. I've got a crew doing the work everyday and when I'm in town I'm doing the floors myself. It's very upsetting - I feel like I'm doing The City a favor and all that I get is fine after fine. We remove the debris from the property as quickly as we can and I still get fined. Then, by the time I receive the fines they have already doubled. Then they want me to appear in court - in person on a particular date that I can't make. It's stacked up against the investor who doesn't live in Buffalo."

Do you remember Mike Hananel? He owns Horizon Realty. He went through the same business when he first bought properties here. Once he purchased his buildings, the fines started to roll in. Mike tells me that these properties had plenty of problems, but not until he purchased them did the fines start to accumulate. Mike, like Nate, had a huge learning curve and had it not been for the large number of units that he had invested in, he most likely would have pulled the plug on his investments. Since that time Mike has learned how to deal with The City. So when Nate called asking for advice, I called Mike and now the two are talking. Mike, who lives in LA has now taken Nate under his wing and is helping the UFC fighter navigate the quirky real estate market in Buffalo. “I don’t want to leave the city,” Nate told me. “I want to continue to invest here. But it’s been a nightmare… one thing after another. I’ve got a daughter to think about and I don’t want to spend the rest of my life fighting. I thought that Buffalo would be happy to have me invest my money here… instead I have been plagued with fines.”

When I first called Mike and told him about Nate, the first thing he said was, “What’s his number?” Mike told me that he feels that out-of-state investors are immediately at a disadvantage, yet if the right person sticks it out for long enough, the investment is well worth it. Unfortunately, many investors will not put up with what is fed them. That’s why it’s so important to have quality property managers around. Mike is not a property manager for others… though he feels passionately that an influx of dollars from other cities is what Buffalo needs. He’s even tossed around the idea of helping Nate by helping to manage his real estate investment. “We can’t lose him,” Mike said. “If he’s trying to do the right thing and he’s investing on streets that no one else is, then we need to keep him here. We also need to make sure that his investments are secure. I remember what it was like when I first got here. It was really hard even though I had plenty of handlings in other places. If I can help Nate to strengthen the West Side I will… I also own properties on that side of town and want those properties to go up in value.”

The way Nate looks at it, The City has been communicating with him through a series of fines. “There are prostitutes walking down the street," Nate continued. "But The City knows they have no money. So I’m an easy target. I’m willing to work with The City if they’re willing to work with me.”

Some people might say that an investor should do his or her homework before coming into a 'foreign' real estate market. And if you can't hack it, then get out. Apparently there are plenty of investors who 'can't hack it'. That's why there are only a few legitimate out-of-state investors who continue to invest here. Kissling is one. The team of Wendes Jones and Kenneth Beaver is another, albeit on a smaller scale. But look at what they are doing on Wadsworth, and then look at their own experience. A quote from Wendes:

"My own experience has been unpleasant at best. I’ve heard from many others of similar or even worse struggles. Let’s join together, form a manageable agenda, and present a unified reasonable voice-of-the-people face to the people hired by us to manage these municipal functions. While it is important to fully express the unreasonable reality of the current permitting process, the idea here is not to rehash individual mistreatment but, rather, to devise concrete steps that can become solutions for all of us."