I first met Mike Hananel, CEO of WNY Metro Horizon, when he ventured into the Buffalo real estate market eight years ago. It was around that time that I wrote a series of articles depicting the turbulent times that Mike’s operation was facing, as he tried to turn around a portfolio of apartment buildings that he and his investors had purchased. Being relatively unfamiliar with the Buffalo landscape, Mike saw an opportunity to acquire a series of buildings that he thought would cash flow, not realizing that the condition of the buildings bordered on deplorable and the occupying tenant base was shaky to say the least. “I had been shown one scenario, and been delivered something completely different,” Mike told me back in the day.
Fast forward eight years and Mike has upped his ante in Buffalo considerably. Just the other day he acquired ten more properties at a price of $1,925,000 (five fourplexes, three doubles and two eight units). “I sold a property in Derby that had come with my original portfolio purchase,” Mike explained. “Which I then exchanged into the other ten properties in the city. At this point we’re consolidating into the city of Buffalo. In order to acquire those ten properties, we talked to and looked at over 100 properties/owners, wrote offers on 30 of those, and then picked up the ten properties from four sellers. It’s not as easy to find larger properties as it was ten years ago, so we’re settling for smaller properties, but more of them. At this point we have 31 properties in the city, and we’re still looking for more. I consider myself lucky that I got into the Buffalo market when I did… since then I’ve learned where to look and what to look for, but it’s not as easy to find the deals these days. Back when I started a lot of people were selling. Now people are holding on.”
Even though Mike is an out-of-state investor, he spends one week a month in Buffalo making sure that his operation runs smoothly. He’s a hands on owner/operator who discovered early on that there is a solid tenant base in Buffalo if you are willing to invest in your apartments. “When I first came to Buffalo,” said Mike. “People told me that I would never find any quality tenants, so don’t bother investing in your buildings. That was one of the problems with this city. I’m glad that I didn’t listen to them. One by one I began to fix up the apartments, and before I knew it I was getting applications from employees at the Medical Campus and business professional. In eight years I have doubled the profit on most of my buildings – the national average to accomplish that is ten years, meaning that Buffalo is ahead of the curve. Now I’m property managing for other building owners as well. I have hired a team of professionals that know how to take care of the properties and the tenants. It was a struggle to reach that point, and we certainly hit some bumps along the road, but sometimes turning a fully laden ship around can be a scary proposition. You can’t just do it overnight. Back then Buffalo was still mainly unchartered territories. It took time to develop a formula. Today my formula is to invest in my units in order to recoup my investments, it’s that simple.”
The demand for attractive apartments is here, it’s like the chicken and the egg… which comes first, the nice apartments or the quality tenants? To me that’s an easy riddle. Today Mike actually looks for apartment buildings that are being poorly managed because he sees that as an opportunity. That steep learning curve that his investment team underwent has opened doors for WNY Metro Horizon that Mike never even anticipated. “Today we’re managing over 600 units in the city of Buffalo,” stated Mike. “We’re also helping other out of town investors penetrate the market. We help them find properties and then we manage their portfolios. We’ve proven that we’re in this business for the long haul and we understand Buffalo. There are still plenty of opportunities here, you just need to know where to look, what you’re looking for, and you better have a good team to run it once you’ve made the acquisition. Looking back, I could never have anticipated that the growth in this market, in Buffalo, would have been so fast.”
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