Sims Foster left Sullivan County at age 18 in 1994 and never expected to return. It is a prison county — home to maximum and minimum security facilities. Foster never aspired to be a corrections officer.
“We grew up with the idea that the heyday of this area was gone and that the Catskills would never be what it was before my time,” says Foster. “There were no opportunities. The economy was bad. Buildings were in disrepair. It was a depressed place.”
So much for youthful expectations. With a thriving second-home community, Sullivan County now benefits from the takeoff of the region. The Catskills and Columbia County have grown into one of the state’s hottest regions for real estate investors.
Guess what? Foster, now 30, is one of them. He and his brother, Ryan, opened a restaurant, Resort, last year. Four years ago, they opened a Tribeca-like coffee shop, Peez Leweez, in Livingston Manor in the county. “This is a great place to invest in real estate,” he said.
In fact, Foster purchased a turn-of-the-century two-bedroom house on three-fourths of an acre for $65,000 in 2003. He also found another two bedroom for $65,000 in 2004. He rents one for $825 a month and the second one for $750 — a special deal for the tenant, who is also the restaurant’s chef. Foster now has his eyes open for other deals, which have become more challenging in the Catskills.
“Investors are very anxious to find rental property in the Catskills and Hudson Valley,” says Mary Ellen Fleming, a broker and former president of the Ulster County Board of Realtors. “Rental property is not on the market very long. Also the property here has been undervalued for so long that people are now rushing to buy and fix up properties.”
There are several hotspots in the region that are grabbing the attention of investors, including North Ulster County, which is two hours from Manhattan and at the foot of the Catskills. In Ulster County, the vacancy rate for rentals is almost zero and investors see the potential as a result. “It is still a seller’s market,” says Win Morrison, who owns Win Morrison Realty.
Still, other brokers expressed caution — and data shows that prices are already going down in some towns, part of the real estate slowdown seen throughout the nation.
“Buyers are not bidding up the prices anymore,” says Jim Bulich, who owns Rip Van Winkle Realty. “Sellers are reducing prices in line with the market rather than the pie in the sky sort of thing we had last year.”
Bulich says Kingston, in Ulster County, still has great deals. The increases in the median home sales price attest to the growth. In 2004, the median sale price for houses in Kingston was $159,000. The price jumped to $182,250 last year. The increase this year isn’t as wide, with the median rising to $188,000.
Woodstock, in Greene County, is another prime place that is pricier, but still has deals. Woodstock also saw a dramatic jump between 2004 and 2005 as the median price grew from $297,500 to $357,200. But so far this year, the number is slightly lower at $340,000.
Frank Cuthbert says the historic Village of Catskill in Greene County is one of the best places to invest. In 1990, Cuthbert smelled opportunity in the Catskills when there were few investors sniffing in the area. “There were so many buildings in poor condition with great architectural bones,” says Cuthbert. “On Main Street, there was an unbroken string of 19thcentury brick buildings, many in disrepair.”
Cuthbert, who at the time owned Magic Cookery, a food services company in Long Island, opened his wallet, buying 12 multiple-family buildings and restoring them. He would spend nearly a million dollars on the hobby over the three-year period. But in 1993, he couldn’t see the hope that originally drew him to Hudson Valley. He sold all 12 building and broke even.
Cuthbert may have bought and sold too early. But he has jumped back into the region with a patience that is paying off. In 2000, he began buying up buildings in Greene County and now again owns over a dozen buildings — most of them multiple-family houses and a couple of mixed used residential-commercial buildings.
Cuthbert spent $3 million acquiring his properties the second time around, but even if you don’t have that kind of money to sink into fixer-uppers, this is still a good time to buy in the Catskills, he said.
“My $3 million is spread over 14 buildings,” Cuthbert said. “You do the math.”
Indeed, the points of entry are not prohibitive for smaller investors. But if the market holds firm, don’t expect that to last too long — and perhaps you can trust the expectations of Sims Foster this time.
“Four years ago, you could get 40 acres and a house for $150,000 to $200,000. Forget it now,” says Foster. “It changes every season.”