Young Investor From Boston in Quite a Pickle, Share Your Tips

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Young Investor From Boston in Quite a Pickle, Share Your Tips

Mingze Wang
Member since 2018 · 4 posts · 1 vote

Hello everyone, I been into real estate for the past 3 months. Seems like everyone here also like real estate, so I figured I'd ask for some tips.

A little background - I work full time in tech field, but I ALWAYS had a passion for investments. My dad is an accountant and real estate investor in a college town in Western Massachusetts, so I guess that rubbed off on me. In beginning of 2018, with an ambition, no knowledge, and a gun-ho mentality. I made my first offer on a house I can barely afford as a primary resident (3bd, 1.5ba close to Tufts University), I am glad the owners went with another offer, I would of paid close to 2.5k a month in "rent" for a single room assuming I rented out the other rooms at a near optimal price.

Since then, I've read Rich Dad, The Book on Rental Property Investing by Brandon Turner, lurking daily around BP, and I've started listening to BP podcasts. I realized the market is way out of my league around me (Greater Boston Area). People would pay 750k for a 2bd condo ~650 sq ft in Cambridge, some would offer cash with no contingencies. I know it's nuts.

Which bring me my question, what can I do? As a novice investor living in an area with one of the hottest housing market. Here are the things I been looking into:

1. House hacking, in a B-/C+ area that still has access to easy public transit into the city. Extremely hard to come by though, but they do exist

2. Summer vacation rentals in Cape Cod, this create an issue where these are treated as 2nd homes or investment house, where I would not get the best APR and I can't use my ROTH IRA as a down payment for my first home.

3. Get a fix-her-up. I only swung a hammer once or twice and my college degree got me good at googling things. Bank is less willing to finance this as well.

Any one has any tips doing the ones mentioned above around the area? I'd love to listen

I am also looking to join some real estate investment groups for networking purposes. I use meetup and I was able to find a few. If you know a good one, please let me know!

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Jim K.
Handyman · Pittsburgh, PA · Member since 2018 · 5k+ posts · 13k+ votes
7y

@Mingze Wang

Boston is tough. We looked briefly into moving there before we realized we weren't really happy with the idea of living permanently anywhere in the USA. Finally, we realized that we were in one of the best cash-flow rental markets in America and decided to go ahead with getting into real estate through fixer-uppers. I too did not have a degree that prepared me for any sort of manual labor. But I learned that the work really doesn't care who does it, as long as it gets done, and eventually I became a rather good handyman and parlayed that into DIY landlording as a way to break into the market here.

If you're determined to stay in Boston, I cannot recommend getting out to local real estate associations and talking to other local investors highly enough. I have NOT been able to do this as much as I would like to here, and it's hurt me a bit so far.

I would further recommend Option #1 on your list, and I would recommend @Craig Curelop's approach to house-hacking (IMO, his podcast on the BP Money Show and the straightforward approach he lays out is pure gold for anyone thinking about househacking in an expensive metro area).

I would buy my first book on basic home maintenance before I bought my first property, specifically How Your House Works by Charlie Wing. From that point on, I would plan on spending money on Amazon on three different kinds of books: personal finance, real estate investing, and basic home maintenance and improvement.

Mingze, househacking from the start is just one way. I wish I had done it grom the beginning, and it's what I know a bit about now because I'm working on it. I'm sure there are other ways. I'm also sure some of them work. But I've lived through the success of local real estate investing, careful saving, and investing in SFR and small multifamily. I know my way is working for me and I've seen others fail.

I wish you the very best of luck.

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  • Mingze Wang
    OP
    Member since 2018 · 4 posts · 1 vote
    7y

    I also looked into FHA option. I don't love it because of the mortgage insurance if I put < 20%. Given the high housing price, that stacks up.

    0Reply
  • Jim K.
    Handyman · Pittsburgh, PA · Member since 2018 · 5k+ posts · 13k+ votes
    7y

    @Mingze Wang

    Boston is tough. We looked briefly into moving there before we realized we weren't really happy with the idea of living permanently anywhere in the USA. Finally, we realized that we were in one of the best cash-flow rental markets in America and decided to go ahead with getting into real estate through fixer-uppers. I too did not have a degree that prepared me for any sort of manual labor. But I learned that the work really doesn't care who does it, as long as it gets done, and eventually I became a rather good handyman and parlayed that into DIY landlording as a way to break into the market here.

    If you're determined to stay in Boston, I cannot recommend getting out to local real estate associations and talking to other local investors highly enough. I have NOT been able to do this as much as I would like to here, and it's hurt me a bit so far.

    I would further recommend Option #1 on your list, and I would recommend @Craig Curelop's approach to house-hacking (IMO, his podcast on the BP Money Show and the straightforward approach he lays out is pure gold for anyone thinking about househacking in an expensive metro area).

    I would buy my first book on basic home maintenance before I bought my first property, specifically How Your House Works by Charlie Wing. From that point on, I would plan on spending money on Amazon on three different kinds of books: personal finance, real estate investing, and basic home maintenance and improvement.

    Mingze, househacking from the start is just one way. I wish I had done it grom the beginning, and it's what I know a bit about now because I'm working on it. I'm sure there are other ways. I'm also sure some of them work. But I've lived through the success of local real estate investing, careful saving, and investing in SFR and small multifamily. I know my way is working for me and I've seen others fail.

    I wish you the very best of luck.

    2Reply
  • Charlie MacPherson
    China, ME · Member since 2014 · 3k+ posts · 4k+ votes
    7y

    @Mingze Wang There's another option.  Look at parts of eastern Mass that are served by commuter rail.  You can have easy access to Boston without having to slog through the morning commute - which is hellish from any direction.  

    Look at www.mbta.com.  You can enter your start and end addresses and it will give you transit options.  

    If you look south of the city, you'll get a LOT more for your money.  In fact, the further you go, the better the prices.  For example, I just looked at a duplex in Kingston - with easy access to the commuter rail.

    $369,900. 2,400 sq ft and 1/2 acre of land. About $2,600/month with an FHA 3.5% down loan. Rent out the other side at about $1,500/month. Live for about $1,100/month in a nice town without the noise, traffic and congestion in the Tufts area.

    2Reply
  • Mingze Wang
    OP
    Member since 2018 · 4 posts · 1 vote
    7y

    @Jim K.

    Thank you for your tips. I just finished listening to Craig Curelop's house-hacking tactic. I will also checkout the book you've mentioned as I know nearly nothing about house maintenance.

    @Charlie MacPherson

    Thank you for the tips. From your experiences, are the costs for most places purely PITI? I been running a deal with a 4 months of mortgage as an upkeep cost (fix ups, turn overs, vacancy). I'm not sure if that's accurate as well. What do people use?

    0Reply
  • Charlie MacPherson
    China, ME · Member since 2014 · 3k+ posts · 4k+ votes
    7y

    @Mingze Wang PITI and PMI are the main costs you'll encounter. Look around on BP and you'll find that MFR buyers will have their own formulas for set-asides.

    Typical costs are vacancy, advertising, CAPEX, landscaping, trash, any shared utilities, water & sewer, CAM, HOA fees.

    Look at the BP Calculator too:

    https://www.biggerpockets.com/buy-and-hold-calcula...

    0Reply
  • John Mainwaring
    Richland Center, WI · Member since 2017 · 49 posts · 16 votes
    7y

    We pretty much ran from that area after my wife finished up her degree a decade ago, even though it would have been a better opportunity to stay and slowly buy properties. I would say a fixer upper, but I personally don't have the tolerance to deal with the bureaucracy in that town. I handled a lot of rentals as a real estate agent when we lived there and everything being consistent, opportunity should still exist, just not on the MLS.

    0Reply
  • Bryan Devitt
    Contractor · Oxford, MA · Member since 2018 · 807 posts · 745 votes
    7y
    @Mingze Wang IMO the Cape isn't worth it. It takes a GIANT hit any time there is a downturn. The whole places is flooded with people who thought they would get rich owning a STR there. You also couldn't pay me enough to sit in traffic and drive over those bridges when something goes wrong. Why not look out west? Is your family still in the area? (Amherst?) It is a thriving area and I haven't researched the market there but it is worth looking into. Also, look up the new areas the federal government is investing in. I don't know of they're approved yet, but Baker submitted a list of towns needing improvement that will get federal money. Cross reference those to future rail expansions and bigger corporations moving I to the area. I know the area around Fort Devens is coming up in a big way right now thanks to the biotech expansions with high paying jobs there. That's all I have off the top of my head
    2Reply
  • Mingze Wang
    OP
    Member since 2018 · 4 posts · 1 vote
    7y

    @Bryan Devitt thank you very much for the tips. My folks are always keeping an eye out in Amherst, though the market there has been good due to the 5 colleges. 

    0Reply
  • Chris LumLee
    Investor · Honolulu, HI · Member since 2017 · 187 posts · 108 votes
    7y

    I would say look outside and look at (dollar-for-dollar) cheaper jurisdictions. I live in Hawaii so for me the only way to get into real estate with reasonable prices would be to invest outside.

    0Reply
  • Matthew Perry
    Developer · Boston, MA · Member since 2017 · 125 posts · 137 votes
    7y

    @Mingze Wang- reach out, lets talk. 

    0Reply
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