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