Seeking tips on expanding portfolio around Boston, MA

2 Replies

Hi BP, this is my first post. I'm really excited to get started.

My wife and I currently own a 2 bdrm condo in Newton, MA that we rent out. I'm only earning $400 cash-flow per month on a $2400 rent payment. We have a lot of equity (about $350k) and are looking for a better investment.

My plan is to sell it in June when our current lease is up and 1031 for two 3-families around Boston. This would be my first experience in a true investment property and I plan on managing the properties using Buildium as my software platform (company I work for). Long-term strategy is to grow through buy-and-hold and eventually move to full-time REI once cash flow can replace my current w2 earnings.

Assuming $350k to spend, does anyone have any ideas on a better way to spend it than 20% down on two 3-families? (Assuming they can be purchased/rehabbed for a combined $1.5 mil?)

Appreciate any suggestions/ideas. Also interested in connecting with any like-minded investors around Boston to network/potential partnership/etc.

Jay

@Jay Green Overall, it seems like a sound strategy to me.  

However, MFR's in Boston have been escalating in price like crazy. I'm a little concerned that we might be near the top of the cycle because I don't think rents can keep up. Most MFRs I've seen are at 0.6% - 0.8%.

Look at MFR sales in South Boston

In 2013, there were 39 units sold, with an average price of $727,949 and 37 days on market.

In 2016, there were 36 units sold, with an average price of 1,272,467 and 50 days on market.

A 73% increase in 3 years.

3 bed rentals in South Boston over the last 3 months averaged $3,346.

I've felt for a long time that the better deals are found south of Boston in Plymouth and Bristol counties.  

There are high income towns like Cohasset and Hingham if you prefer those - though there are not many MFRs there.  

There are lots of solid non-luxury towns like Plymouth (though we have luxury oceanfront properties and more in Pine Hills too), Pembroke, Kingston, Halifax, Hanson, Carver, Plympton, etc.

For some real low cost opportunities, take a look at Brockton, Taunton, Fall River and New Bedford.  I've recently seen 2% deals here.


Let's look at Brockton's numbers compared to South Boston.

In 2013, there were 135 units sold, with an average price of $224,022 and 62 days on market.

In 2016, there were 234 units sold, with an average price of 332,541 and 71 days on market.

3 bed rentals in Brockton over the last 3 months averaged $1,783.

Strong appreciation at 48% over those same three years, but with a price point only 26% of South Boston, you can buy about 4 times as many properties with the same capital investment, which should increase your cash flow, diversify risk and get you solid price appreciation.

If you want to chat about a strategy moving forward, feel free to reach out.

@Charlie MacPherson I really appreciate your data, thanks so much for sharing. I don't know much about those communities but ill definitely check them out. My goal was to stick in Watertown/Waltham and was thinking of checking out Revere/Malden/Chelsea but I've never thought to look South of the city, and now will. Jay

Free eBook from BiggerPockets!

Ultimate Beginner's Guide Book Cover

Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!

  • Actionable advice for getting started,
  • Discover the 10 Most Lucrative Real Estate Niches,
  • Learn how to get started with or without money,
  • Explore Real-Life Strategies for Building Wealth,
  • And a LOT more.

Lock We hate spam just as much as you

Join the Largest Real Estate Investing Community

Basic membership is free, forever.

By signing up, you indicate that you agree to the BiggerPockets Terms & Conditions.