Single-Family Rental Portfolio Investment Opportunity in Rochester, NY

Red Oak Real Estate Fund I, LP (“The Fund”) is looking to raise $3,100,000 in LP equity to acquire 100% of ROC MGT, LLC (‘the Company”). The investment will fund renovations, pay down current liabilities, and provide operating capital for improvements and potential subsequent acquisitions. In May of 2023, the Fund completed the initial closing of $1,195,000 in initial equity commitments and is currently aiming to fund, at minimum, an additional $1,905,000 in LP equity.

ROC MGT, LLC currently owns and operates 66 Single-Family Rental (“SFR”) properties in Rochester, NY. The Company purchased assets well below replacement cost from motivated sellers, at an average of $33/sf. We have a proven team and strategy in place to renovate the remainder of the portfolio and place tenants at or above the current market rates. Rochester has also been named in a Fortune.com article as the top SFR market in the country, with an 11.7% gross yield and rent-to-list ratio of 0.19.

Upon completion of the acquisition and the deployment of over $1M in rehab capex, the average all-in cost for the improved portfolio will total approximately $70k per property ($49/sf), with an anticipated average monthly rental income of $1,350 per property once fully stabilized.

Why Rochester?

Although the population growth in Rochester has only slightly increased over the past 10 years, experts predict that the downward trend won’t last long. As economists forecast a massive population migration to more livable areas, one of the top places to live in the next 50 years will be Rochester.
The job market in Rochester is growing faster than both the state and the U.S., in terms of private sector job growth year-over-year. According to a report from the Rochester Beacon, the city added 17,100 private sector jobs between February 2021 and February 2022, for a growth rate of 4.1%.
According to Rochester Regional Economic Development (GRE), Rochester is the top metro area for future growth and strategic investment in tech innovation.
New York City aside, the performance of real estate markets in the Northeast remains strong, and Rochester is no exception. According to a recent report from Realtor.com, Rochester is one of the hottest housing markets in the country. Key criteria for being one of the best real estate markets to buy and invest include the lowest days on the market and the number of potential buyers looking for a home.
The hot housing market in Rochester is making it difficult to buy, forcing many would-be homeowners to rent instead. As one local newspaper notes, it’s cheaper to rent in Rochester, which is one reason why renters make up 61% of the occupied housing units in the city. As Bloomberg recently reported, many native New Yorkers are fleeing the Big Apple for the safety and security offered by smaller cities like Rochester.
Rochester ranks high among the top housing markets to watch in 2024, balancing seller's market advantages with affordability. Whether you're looking to invest or find a home, Rochester's market offers a unique combination of value and potential growth.
Generally speaking, the more affordable homes are the lower the demand is for rentals, everything else being equal. However, even in a market like Rochester where prices are low, there are still more people who choose to rent rather than own (both out of desire and necessity). Kiplinger recently published its report of home prices in the 100 largest metro areas to show how affordable housing is based on an affordability index of one to 10, with one being the most affordable and 10 the least affordable. Affordability is based on the percentage of annual income required to buy a median-priced home last year. The housing affordability index of the Rochester metropolitan real estate market is 3, making the MSA one of the more affordable places to own a home. Since the last real estate peak, home prices in Rochester have increased by 44.4% and have grown by 60.3% since the last market bottom. Going forward, Kiplinger also anticipates that house prices will likely continue to rise as surging demand puts more pressure on home values in Rochester and throughout the U.S.
Rochester is ranked by Business Insider as among the top 30 cities to live in as the economy continues to recover. The report looked at nine key quality-of-life metrics including unemployment rate, population density, housing affordability, education levels, and ability to work from home.
We have access to institutional sellers of bulk Real Estate Owned (REO) properties at a very low discount pricing.

What Makes our Investment Stand Out

Access to Inventory:

We have access to institutional sellers of bulk REO properties at very low discount pricing

Our stellar on-the-ground team:

Lighthouse Property Management - Lighthouse plays a crucial role in our operations in Rochester. Their local presence and knowledge are invaluable in managing our properties effectively, ensuring every detail is attended to with professionalism. They handle the collection of rents, property maintenance, turns, and more. Home | Lighthouse Management, LLC (lighthouserochester.com)
Over the past few years, we have grown our network to a diverse range of skilled subcontractors in Rochester. From roofing and painting to electrical and plumbing work, we've got every aspect of property maintenance covered.
We have the best-in-class Realtor team assisting with both the purchase and sale of properties when the right opportunities arise.
We would not invest in a market if we did not feel we had the on-the-ground support required to manage the assets professionally and successfully.

Rent Growth

Rochester has seen a notable increase in rental prices, with data from Zillow showing a jump from $1,100 in January 2019 to $1,500 by August 2022. Yet, compared to many other cities, Rochester maintains an accessible rental market, making it an attractive option for tenants and investors.

The housing market in Rochester is also experiencing steady growth. From a median sale price of $141,000 in January 2019, the figures rose to over $200,000 by August 2022. This consistent growth signals a robust market, yet the prices remain within reach for many homebuyers and investors.