Boston investors...is there any room in this area to start?
Hi everyone! I'm a newbie here and in the RE investing world. I'm right outside of Boston, and as I'm sure you know, things are very pricey here with limited inventory. Is there really any room for a new investor to start here? Should I go somewhere else? Look forward to reading your input, thanks!
#2 New Member Introductions Contributor
- Specialist
- Rockland, MA
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#2 New Member Introductions Contributor
- Specialist
- Rockland, MA
Welcome. Specialized or niche housing like student housing or vacation rentals.
Locate and attend 3 different local REIA club meetings great place to meet people gather resources and info. Here you will meet wholesalers who provide deals and rehabbers (cash buyers). Waltham Black Diamond is probably close.
Two Great reads, I bought both J. Scott The Book on Flipping Houses, The Book on Estimating ReHab Costs http://www.biggerpockets.com/flippingbook
You might consider Niche or Specialized Housing like student housing. Rents can be 2-4 times more. Remember you don't have to own a property to control it.
Download BP’s newest book here some good due diligence in Chapter 10. Real Estate Rewind Starting over
Good Luck
Paul
Tough market, but with appropriate research one can do well. Properties tend to appreciate and rentals are always in demand.
Hi Kate...
As someone who grew up just north of Boston, I agree with Eric that this is definitely a tough market. As I peruse the BP forums, I literally laugh out loud when I read about investors purchasing homes for $50K and under. As you know anything in the greater Boston area would be about 10X that price, and go up from there. Even most of the surrounding suburbs are very expensive. There are always deals to be had, but I can tell you that many of the "rules" people post about, as it relates to purchasing an investment property simply don't work in this part of the country, given that it's probably only behind San Francisco, LA, NYC, and Seattle when it comes to real estate costs.
@Paul Timmins I think of that too! Someone told me they bought a fourplex for 125k, can you imagine?! Although my old landlord bought her watertown 2 fam for close to that in 95' and now rakes in 1850 a month from the bottom unit! The real question is the same I posed to Eric - can an investor get positive cash flow with the inflated prices here right now, with these prices? I'm leaning towards no! 2 Families at 650-800k in waltham/watertown area...is it best to just look elsewhere? The insane appreciation that been happening the last couple years is not sustainable forever, in my opinion anyways...but what do I know, I'm a newbie!
Properties in the key areas of the city ie BB, SE, BH, Midtown and even The Fenway require almost 25% to 30% down in order to create cash flow and appreciation. For me I am investing for retirement so I tend to look for cash flowing properties in these area because of higher rents and appreciation. Now, I trying to bolster my portfolio by looking at the surrounding community. I do not have a lot of time so I wan properties in high demand areas that will rent quickly ( Less than 1 week) after being placed on the market. I expect to make my money with escalating rents.
@Eric Taylor ok, that makes sense. I do not have 30% down for the cost of those houses in the area you mentioned, so I'm guessing I'd have to start smaller at this point in my life. I'd love to go the route of buying a multi-unit and living in one and renting the others to save more - but again in Boston that isn't really an option currently for me unless I find the almost nonexistent deal! I'm really weighting my limited options now - I'm gonna make this happen one way or another!
haha @Mike Hurney - I dont have a ton of money, that's the problem - it's where to start! I'm "young", and while I would have plenty of money to buy something not in the northeast, it doesn't go far in our lovely Boston!
It is a tough market. I literally do BP calculations on every property that hits market and with 30% down only .2% of them will cash flow sufficiently.
wow @Eric Taylor , interesting....curious what you think will happen in Boston in the long run? This appreciation cant be a constant forever and ever!
Have you considered purchasing a two (or more) family to occupy as your primary residence and rent out the other units? I don't know what your financial situation is, but that would require only 3.5% down on an FHA loan. It gives you tremendous flexibility, and puts you in a position of tenants contributing (depending upon where you are...significantly contributing) to your mortgage payments. It's certainly not going to happen in places like Watertown, Newton, Waltham, or most other places very close to the city. That said, if you're receptive to moving (and staying in the same general area) that could be an option for you.
@John White yes this is ideally what I'd like to do - even open to a single family with an inlaw for me to live in. But yes you're right, not going to happen anywhere near Boston with 700k 2 families! I would move, but not as familiar with the rental market outside the 95 ring, I guess more research is needed on my part
If you decide to explore areas north of the city and need any feedback, I'm happy to assist, as that's my area of expertise. If you decide to go south of the city, I'm not the person to brainstorm with :)
Originally posted by @Kate Robb:
wow @Eric Taylor , interesting....curious what you think will happen in Boston in the long run? This appreciation cant be a constant forever and ever!
Best colleges, hospitals, universities coupled with historical sites and tech boom will yield continued rise in values. Rents have to mimic college room and board for the student population, but tuition and fees for these universities is 60K and rising.
@John White I do love reading and stoneham! Does that count as north??
@Eric Taylor I agree, but it can't just go up and up forever with no correction, the market will always be cyclical, right? I read an article on speculation of a global recession soon - I know there is always speculation, but hey it could happen! Was just curious if you thought Boston was in a bubble or not! Love hearing others thoughts!
Reading and Stoneham definitely do qualify as north. That said, I'm not sure they're that much cheaper than places like Watertown or Waltham. You're not going to find very many multis in any (I know you're also receptive to SFR) of these towns. If you're set on staying within that 128 belt, it's probably going to be quite challenging to justify an investment property, unless you can really find a superb deal (likely off market).
Welcome to BP! Are you tied to a specific area due to a job, school, etc.? Would you have to purchase as an owner occupied for the lower down payment? I live North of Boston on the North Shore, but invest mostly in Northern Middlesex County (Lowell) and Northern Central MA (Gardner/Leominster etc.). I can make the numbers work in these areas. Let me know if I can answer any questions about investing in these areas.
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Real Estate Agent MA (#009530456)
- Port Unity LLC
There's always room.
The hotter the market the more creative you have to be. Like Mike Hurney said, Make room!
Go to REIAs, listen to the podcasts, and get started!
Good luck!
I live in Reading and invest exclusively in lowell, location, location, location!
Check into the areas of West Roxbury and Hyde Park. There are deals there if you know where/how to find them.
Agree with many of the posts. We invest in Boston. Direct mail is how we contact people. The MLS is not where we source our deals in this market. I'm sure you can browse expired listings and find motivated sellers, but we do this in parallel with a full time job, so there's no time to make cold calls and create custom mail lists. We work with one list for about 6 months at a time and see what comes from that.
I agree with @John White that you should look to buy a multifamily using first time homebuyer financing (3 units is most common and will help you cover your mortgage).
I also always recommend opening up excel and creating an income and expense spreadsheet to determine what your potential investment would look like (or going to google).
Normally I don't recommend buying anything that does not have positive cash flow, but if you're paying 2k a month in rent right now, it's not necessarily bad if you end up paying 500 a month with a MFH. Just make sure you budget for maintenance and expenses as part of your monthly cash flow analysis - we typically do 7-8% of gross rental income for older Boston homes. And eventually you'll want/need a property manager, especially if you move out after a while.
