Buying my First Multifamily in Boston

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Buying my First Multifamily in Boston

Oye Dosumu
Member since 2018 · 17 posts · 4 votes

Hi all,

I moved from Houston to Boston in February and I have been looking at buying a multifamily in Boston since April.. I am finding it very hard to get down a good property because the numbers are not working well enough. Anyone had thoughts on buying multifamily properties in Boston..? any tips will be appreciated. 

Thanks, 

Oye

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Charlie MacPherson
China, ME · Member since 2014 · 3k+ posts · 4k+ votes
8y

@Joe A. You're right about the Cape being seasonal, but there are deals there.

Seasonal rentals are, of course, HUGE.  

Landlords look for winter renters from roughly October 1 to May 1.  A winter rental might run $1800/month where that same property might run $1800/week in the peak season (mid-summer) and about $1600/week in the "shoulder" seasons (late spring and early fall).

There are parts of the Cape where there are a lot of year-round residents too.  Think Barnstable and the surrounding areas and the towns closest to the bridges where you'll find a few Boston commuters (may God have mercy on their souls).

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  • Charlie MacPherson
    China, ME · Member since 2014 · 3k+ posts · 4k+ votes
    8y

    @Oye Dosumu The numbers in Boston are pretty amazing.  3-plexes under $1M are mostly found in Mattapan, Dorchester and Roxbury (higher crime areas) with a few in East Boston.  In fact, the average list price of 3-plexes on the market in Boston is $1.33M.  In Cambridge, the average is

    I always recommend looking to the south, specifically Plymouth, Norfolk and Bristol counties - which is loosely defined as south of Boston, as far west as I-95, south all the way to, but not including the Cape.  

    The average list price for 3-plexes in Norfolk County (excluding Brookline) is $825K.  Bristol Country average is $287K, but those include Fall River and New Bedford where prices are much lower with rents to match.

    Plymouth County is $485K, so numbers tend to work a lot better here. 

    1Reply
  • Oye Dosumu
    OP
    Member since 2018 · 17 posts · 4 votes
    8y

    Thanks 

    @Charlie MacPherson !! I have indeed been looking in dorchester and Mattapan areas, but I have been told location should be my main focus.. hence i started looking at Everett, Revere, etc. the prices in cambridge... well i just didnt bother.

    I will start looking at places in plymouth, Norfolk and Bristol counties and keep you updated!

    Thank you so much for such a detailed answer!

    Regards,

    Oye

    0Reply
  • Alina Trigub
    Rental Property Investor · Glen Rock, NJ · Member since 2015 · 3k+ posts · 2k+ votes
    8y

    @Oye Dosumu In addition to looking for a property, you should network with the local investors. Find local REI clubs through BP and meetup site and start networking. Not only it will allow you to expand your horizon but you may even potentially find people to partner up and buy/afford larger properties to buy.

    0Reply
  • Gualter Amarelo
    Investor · Fall River, MA · Member since 2014 · 399 posts · 300 votes
    8y
    @Oye Dosumu if you are serious about cashflow you might want to take the trip Down to Fall River and check out the 10% cap rates and 30% ROI Cashflow opportunities. With a good agent and property management combination you can rest easy knowing your portfolio is pumping out cash and growing with little effort on your part. Average sales price for the multi’s here is $250k for 3 families. Cheers to your success!
    0Reply
  • Oye Dosumu
    OP
    Member since 2018 · 17 posts · 4 votes
    8y

    Thanks @Alina Trigub, I am starting to get accustomed to the site and I am very open to recommendations! Thanks alot for your thoughts!

    @Gualter Amarelo, I know fall river is alittle far off from Boston, I work around Boston so I intend to owner occupy and I also want a shorter commute to work. But having great ROI does sound awesome. I want to buy a second next year,... I'm thinking of getting the first around revere/boston/everett and then I could get the second around fall river.. let me know your thoughts.

    Thank you all for being so open to helping me navigate my way. I truly appreciate! Humble beginnings.

    1Reply
  • Joe DeFarias
    Investor · Medford, MA · Member since 2015 · 20 posts · 16 votes
    8y

    @Oye Dosumu You're on the right track with the areas you've listed before. I have a couple of properties in Boston and surrounding areas including Medford, Everett and one in Dorchester. The best bang for you buck would be something within the city of Boston. You just have to be patient and know when you see the right property. By going to a bunch of open houses, you'll understand when you've come upon a great deal. When you do find 'the needle in the haystack', do not hesitate and submit a serious offer quickly. Everett is booming but keep an eye on property taxes, they're nearly double than if you owned a property within the city of Boston. You'll pay a premium in the city but it's worth it in the end if your smart about it.

    2Reply
  • Scott Morongell
    Investor · Charlotte, NC · Member since 2017 · 791 posts · 479 votes
    8y

    @Oye Dosumu cap rates are very compressed in Boston and it's tough to make a deal pencil. I do not invest there but like the market. You will have to find a mom and pop small owner who is looking to get out of something and capitalize on the opportunity. 

    Why not buy something in Houston if you know the market well and hire a PM?

    1Reply
  • Oye Dosumu
    OP
    Member since 2018 · 17 posts · 4 votes
    8y

    @Joe 

    @Joe DeFarias you're correct. I will watch out for the taxes. I was looking in Malden as well, but the taxes just seem way too high over there. I'll keep looking in Boston. People said Mattapan is a rough neighborhood... but the best deals I've seen so far are over there. However, its safety first for me and my future tenants so I keep that out of my search.. kindly let me know your thoughts on that area.

    @Scott Morongell Yep! I want to invest in Houston so much... but I pay an arm and a leg for rent in Boston, I think if I buy the first one in Boston.. that would save me some of my rent while I build equity.. I am looking at buying the second in Houston.. I hear Atlanta is also great.. I dont really know the market in Houston well because I was not actively learning/looking while I was there. But My strategy is to Buy in/around Boston, then Houston (hire a PM). 

    Thanks so much for your input! Let me know if you have other recommendations! Thanks!!

    0Reply
  • Joe DeFarias
    Investor · Medford, MA · Member since 2015 · 20 posts · 16 votes
    8y

    @Oye Dosumu Malden is not a bad area if you target near Malden Center or Oak Grove (near a T stop) you'll do fine. Malden does have really high taxes as well but if you are using the property as your primary residence, you will qualify for a Residential Exemption. It changes every year but you can qualify to reduce your property taxes significantly if you live in your investment property.

    This also applies in the city of Boston. Make sure you contact the city to find out the percentage of the Residential Exemption. I never use these exemptions in my numbers because I always take into account when I relocate and still own the property purely for investment.

    You can still find deals in Mattapan. Again, if you stay close to the 'T', you cannot go wrong. Young professionals are always looking for apartments near public transportation and Mattapan is on the Red line. Granted it's a high crime area, I predict it will get much better in a few years. As a friendly reminder, there will always be a risk predicting the next hot spot.

    0Reply
  • Joe A.
    Duxbury, MA · Member since 2018 · 17 posts · 3 votes
    8y

    Does anyone have any thoughts on the cape? Seems to not be mentioned here. Too seasonal?

    1Reply
  • Charlie MacPherson
    China, ME · Member since 2014 · 3k+ posts · 4k+ votes
    8y

    @Joe A. You're right about the Cape being seasonal, but there are deals there.

    Seasonal rentals are, of course, HUGE.  

    Landlords look for winter renters from roughly October 1 to May 1.  A winter rental might run $1800/month where that same property might run $1800/week in the peak season (mid-summer) and about $1600/week in the "shoulder" seasons (late spring and early fall).

    There are parts of the Cape where there are a lot of year-round residents too.  Think Barnstable and the surrounding areas and the towns closest to the bridges where you'll find a few Boston commuters (may God have mercy on their souls).

    3Reply
  • Nicholas White
    Rental Property Investor · West Palm Beach, FL · Member since 2018 · 19 posts · 10 votes
    8y
    @Oye Dosumu - is you don’t mind about an hour drive, Manchester, NH has a very strong rental market with much more affordable prices and solid returns (7-10% c-o-c). You can buy 4-8 units for $500k and under and there is so much demand for housing it’s easy to keep them full.
    0Reply
  • Joe A.
    Duxbury, MA · Member since 2018 · 17 posts · 3 votes
    8y

    Thanks @Charlie MacPherson

    Good info on the cape! I hadn’t considered the winter rentals. I was just thinking vacant during off-season.

    0Reply
  • Charlie MacPherson
    China, ME · Member since 2014 · 3k+ posts · 4k+ votes
    8y

    @Joe A. I just checked MLS. Of 39 rentals currently on the market in Barnstable County (encompasses all of the Cape), 9 contain the terms "winter" or "seasonal". Almost 25% of the market.

    Even though the "season" officially ends after Labor Day, you might find that number jumping up after the Columbus Day weekend when it's off-season, no matter how optimistic you are.

    1Reply
  • Brian Ellis
    Rental Property Investor · South shore, MA · Member since 2017 · 1k+ posts · 1k+ votes
    8y

    @Joe A. I believe there is good opportunity in Hyannis specifically. Anywhere else you would have a hard time finding multi families. Anything beyond Yarmouth, you could turn into a vacation rental, depending on specific location. I had interest in Provincetown, but the prices are so high. Numbers looked great though, I would have jumped in if I had the capital. A 350 Square foot condo would bring in around $2200 a week!

    1Reply
  • Lien VuongBusiness Member
    Real Estate Agent · Boston, MA · Member since 2018 · 2k+ posts · 1k+ votes
    8y

    Hey there,

    I think it's hard to pinpoint exactly what you're looking for in terms of a 'good deal' without having a comprehensive conversation about your goals. Are you in it for a longer term appreciation play while house hacking? If so, there are great deals in Boston if you find the added values that are not necessarily apparent to every agent. For example - There's a 7% cap property in Dorchester at the moment that not only cash flows but has 3+ units. Alternatively, if you're looking for an aggressive cash flow plan with a little distance then certainly expanding your search to 15-20+ miles outside Boston would be your target area. 

    I understand being new to the state would be challenging for you but aligning yourself with the right local agent would help to ameliorate some of those concerns. Let me know what your RE and personal goals are and I'd be happy to elaborate more. 

    Hope this helps and best of luck!

    [email protected]
    The Elle Group5153 Reviews
    WebsiteView Page
    1Reply
  • Avery Heilbron
    Realtor · Raleigh-Durham, NC · Member since 2018 · 324 posts · 218 votes
    8y

    @Lien Vuong Do You have any info on the 3+ unit property in dorchester?

    0Reply
  • Jonathan Bowen
    Real Estate Broker · Stoughton, MA · Member since 2012 · 109 posts · 96 votes
    8y

    My thoughts? Don't. Buy in Bristol County, Norfolk County or Plymouth County.

    0Reply
  • Lien VuongBusiness Member
    Real Estate Agent · Boston, MA · Member since 2018 · 2k+ posts · 1k+ votes
    8y

    @Avery Heilbron, If youd like info, please message me privately and I'd be happy to share.

    [email protected]
    The Elle Group5153 Reviews
    WebsiteView Page
    0Reply
  • Joe A.
    Duxbury, MA · Member since 2018 · 17 posts · 3 votes
    8y

    @Brian Ellis Funny you mention small Ptown condos. I came across this one earlier today. It seems like it’s not winter-ready(heated). But who needs winter when you can fetch $2k a week in summer!

    https://www.zillow.com/homedetails/21-Dewey-Ave-UNIT-4-Provincetown-MA-02657/56789694_zpid/

    0Reply
  • Brian Ellis
    Rental Property Investor · South shore, MA · Member since 2017 · 1k+ posts · 1k+ votes
    8y
    @Joe Alcarez that doesn’t look bad! 20k price cut, HOA fees are only $125 Look into it and see how much work it needs. I’m not familiar with condos, but I’ve been told to check with the association to see how stable they are. If it just needs heat you can get that done for 2k Worth taking a look
    0Reply
  • Charlie MacPherson
    China, ME · Member since 2014 · 3k+ posts · 4k+ votes
    8y

    @Jonathan Bowen  Why do you say "Don't. Buy in Bristol County, Norfolk County or Plymouth County."?

    Those three counties have the most reasonable MFR prices in all of eastern Mass.

    You have ZERO chance of hitting a 1% rule in Suffolk and Middlesex counties.  (Suffolk is more commonly 0.6%)

    Sparse chance of it in Essex County, except possibly in the worst towns - Lynn, Lawrence, etc.

    Plus much of Middlesex is in the snow belt, so don't forget to budget extra for snow removal.

    You can get very close to if not exceed 1% in Plymouth County.  (I've actually done it for clients)

    You can get close or even exceed 2% in Taunton, Fall River and New Bedford in Bristol County.

    On top of that, I think Boston, Cambridge, Somerville and Brookline are at the peak of price appreciation.  Just my opinion - and I reserve the right to be wrong - but I think it's all leveling off.

    I'd love to hear your reasoning.  Maybe you can teach me something!

    2Reply
  • Joe A.
    Duxbury, MA · Member since 2018 · 17 posts · 3 votes
    8y

    Good points. I agree with @Charlie MacPherson

    1Reply
  • Oye Dosumu
    OP
    Member since 2018 · 17 posts · 4 votes
    8y

    You guys are awesome! The wealth of knowledge is breath taking. @Lien Vuong 

    @Lien Vuong I'd like to know more about the 3 family property. @Charlie 

    @Charlie MacPherson  Thanks a bunch!

    0Reply
  • Oye Dosumu
    OP
    Member since 2018 · 17 posts · 4 votes
    8y

    @Nicholas White I am starting to look outside of Boston. I will look into Manchester NH as well. Thanks!

    0Reply
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