Buying a duplex in Boston area
Member since 2019 · 26 posts · 13 votes
Buying a duplex in Boston area
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China, ME · Member since 2014 · 3k+ posts · 4k+ votes
7y@Mohsin Mazhar Here's the advice I've given to a LOT of people looking at the Boston market:
1. Look at the map. RT 128 (aka RT I-93 in some parts and I-95 in others) circumscribes the city, roughly 10 miles from the center. Inside that zone, there are virtually no 1% deals. Gross monthly rents will typically be 0.5% - 0.8% of the acquisition price.
If you get a 3 or 4-plex, the rents will pay a good chunk of your mortgage payment and at a stretch might pay it all. Actual cash flow will probably only come with renovation of a dilapidated property or buying in a war zone.
2. I-495 circumscribes the city as well, but 25-30 miles out. In this zone, you'll find some astronomically high prices to the west, less so to the northwest and much more so to the southeast and south.
I strongly recommend looking in Bristol and Plymouth counties. There is good commuter rail access to Boston, which is important because coming into the city from any direction is a migraine headache in both rush hours. Worse for those west of the city as they commute directly into both sunrise and sunset.
3. If you want to remodel something, you're best off getting an FHA 203K (renovation) loan. Talk to any mortgage broker about these. You can borrow the amount required for acquisition and renovation - with only 3.5% down.
Now for the current market conditions:
I just looked at MLS. Right now there are 46 2-4-plexes for sale in Plymouth County at $680 or less, excluding short sales.
There are 151 in Bristol County, the vast majority being in Fall River and New Bedford. These towns can be challenging.
There are 7 in Boston, all of which are in Roxbury, Dorchester or Mattapan. These are also challenging areas from a crime perspective.
There are 66 in Middlesex County, many are in Lowell, again, might be challenging.
BTW - a note about Middlesex and Worcester counties. Much of these areas are in what we call the "Worcester Hills". They are roughly 1,000 feet in elevation. That means that while Plymouth, Bristol and Barnstable counties are getting a cold rain, the Worcester Hills are getting pounded with snow. If you buy there, be sure to double your snow removal budget.
Good luck in whatever you decide!
26 Replies
- China, ME · Member since 2014 · 3k+ posts · 4k+ votes7y
@Mohsin Mazhar Here's the advice I've given to a LOT of people looking at the Boston market:
1. Look at the map. RT 128 (aka RT I-93 in some parts and I-95 in others) circumscribes the city, roughly 10 miles from the center. Inside that zone, there are virtually no 1% deals. Gross monthly rents will typically be 0.5% - 0.8% of the acquisition price.
If you get a 3 or 4-plex, the rents will pay a good chunk of your mortgage payment and at a stretch might pay it all. Actual cash flow will probably only come with renovation of a dilapidated property or buying in a war zone.
2. I-495 circumscribes the city as well, but 25-30 miles out. In this zone, you'll find some astronomically high prices to the west, less so to the northwest and much more so to the southeast and south.
I strongly recommend looking in Bristol and Plymouth counties. There is good commuter rail access to Boston, which is important because coming into the city from any direction is a migraine headache in both rush hours. Worse for those west of the city as they commute directly into both sunrise and sunset.
3. If you want to remodel something, you're best off getting an FHA 203K (renovation) loan. Talk to any mortgage broker about these. You can borrow the amount required for acquisition and renovation - with only 3.5% down.
Now for the current market conditions:
I just looked at MLS. Right now there are 46 2-4-plexes for sale in Plymouth County at $680 or less, excluding short sales.
There are 151 in Bristol County, the vast majority being in Fall River and New Bedford. These towns can be challenging.
There are 7 in Boston, all of which are in Roxbury, Dorchester or Mattapan. These are also challenging areas from a crime perspective.
There are 66 in Middlesex County, many are in Lowell, again, might be challenging.
BTW - a note about Middlesex and Worcester counties. Much of these areas are in what we call the "Worcester Hills". They are roughly 1,000 feet in elevation. That means that while Plymouth, Bristol and Barnstable counties are getting a cold rain, the Worcester Hills are getting pounded with snow. If you buy there, be sure to double your snow removal budget.
Good luck in whatever you decide!
- Realtor · Raleigh-Durham, NC · Member since 2018 · 324 posts · 218 votes7y
@Mohsin Mazhar Everett and Chelsea are in your price range and are rapidly becoming more valuable
- Member since 2019 · 26 posts · 13 votes7y
@Charlie MacPherson appreciate your reply Charlie and thank you for all the information. I am planning to work in the Middlesex County so buying in south east counties will be too much of a commute for me. But thanks for the advise.
- Rental Property Investor · Holbrook, MA · Member since 2017 · 36 posts · 3 votes7y
Great info Charlie. Mohsin at the 680k price range I would look at Brockton/Avon/Abington/Holbrook. You will find something.
- Member since 2019 · 26 posts · 13 votes7y
@Avery Heilbron thanks for your reply Avery. Yes Everet, Medford, Chelsea is where I am looking. From what I have seen so far, even if I do rent out one unit it will still not cover the full mortgage. So do you think it is still better to house hack or rent?
- 7ySeth RobertsonPro MemberRental Property Investor · Brockton, MA · Member since 2017 · 19 posts · 11 votes
@Mohsin Mazhar If you're looking for cash flow or have your entire housing expense paid in a house hack, the only areas north of Boston that really have a chance are in Lowell, Lawrence, and maybe Lynn; Unless you can find a rare deal requiring a ton of rehab (and another investor doesn't snatch it up from you). Each of these cities have their challenges (mostly with crime) and the homes do take a pounding every year from the extreme weather conditions. Keep in mind Massachusetts is HEAVILY tenant favored (I could tell you some of my own horror stories). There are areas in the state with places that cash flow but are likely too tough of a tough commute for you. But like @Charlie MacPherson stated, don't be too closed minded to the advantage of the commuter rail. I lived in the south shore and worked in the north shore for a few years using the commuter train to get to work. It takes some grit but well worth the sacrifice
With your price range you're looking at I would assume you have a strong earning potential in your profession. Maybe consider a good deal on renting a room/apartment for now and invest your earned income in some of the cash flowing markets in or out of state. Just a thought....
- Realtor · Raleigh-Durham, NC · Member since 2018 · 324 posts · 218 votes7y
@Mohsin Mazhar You are correct that the other unit will probably not cover the mortgage for a standard down payment. In my situation I did an FHA loan and have a roommate and girlfriend living in my unit and once the upstairs is rented out I will be cash positive in regards to the mortgage. Having the extra income from my unit helps immensely and if I did not have anyone I would be pay ~850/month just to the mortgage and not including any expenses.
- Flipper/Rehabber · New York, NY · Member since 2018 · 6 posts · 1 vote7y
@Mohsin Mazhar I have bought and sold in the Boston area a few times. Duplexes tend to be above your price point if you want to live close to Boston. However, Roxbury, Dorchester and parts of Jamaica Plain are excellent areas to buy in now if you want to rehab. Just scope out the neighborhood and surrounding areas and you can find amazing deals. Roslindale, Malden and Medford are possibilities too.
- Member since 2019 · 26 posts · 13 votes7y
@Seth Robertson thanks for your reply Seth. I am trying to figure out to what is financially more sound. To buy or to rent and invest some where else. Since I am planning to stay in MA long term I feel it’s a good idea to buy like this I can build equity and live for cheap (this is considering the house hack works and numbers make sense). With regards to tenants I guess that’s the risk we all have to take, I might be wrong but I’m guessing in places like lowell where the rent is cheaper the quality of the tenet maybe more unpredictable compared to closer to Boston, what do you think?
- Member since 2019 · 26 posts · 13 votes7y
@Avery Heilbron that’s great! To make money while living in such an expensive city I think is the ultimate goal. Honestly I am fine with paying under 1000$ for mortgage + income from the other unit. As long as I am not paying 3-4K in mortgage because that is just ridiculous and I won’t be able to afford it. I think its worth it to pay a bit extra considering you are essentially paying yourself.
- Lender · Boston, MA · Member since 2018 · 171 posts · 137 votes7y
@Mohsin Mazhar this is all great advice and it is certainly a challenge finding a house hack in Boston. I will say, I purchased a triplex last year in East Boston off market and the numbers work. East Boston, Mattapan, and Roxbury are all part of a pilot ADU program through the city of Boston which has potential to add upside to an owner occupied deal. It is not easy but if you look hard and get creative it can work.
Best of luck!
Nick
- Attorney · Attleboro, MA · Member since 2015 · 412 posts · 165 votes7y
@Moshin Mazhar You didn't say where you would be working in Middlesex County. That county stretches from just outside Boston to the New Hamphire border. If you are working in Cambridge thats next to Boston but Tewskbury is close to New Hampshire.
You may want to consider southern New Hampshire
- Member since 2019 · 26 posts · 13 votes7y
@Douglas Snook hey Douglas. Thanks for the reply. I am actually going to work in Lowell. But personally I don’t want to live there ( I haven’t seen much of the area but I would prefer to live In medfod, Malden, Somerville, Newton,Brighton area) I know that the properties in Lowell are much cheaper compared to the places where I prefer to live. So that’s something I have to weigh up.
- Realtor · Boston, MA · Member since 2017 · 187 posts · 40 votes7y
Hi @Mohsin Mazhar, glad to hear you are making the move to the area. While a lot of the properties are expensive and some might need work, there are still some good deals in the area. Medford prices are moving up pretty quickly but there are still some good options in Malden and the surrounding towns, depending on what you are looking for. I have lived in the area for over 25 years and know a lot of the towns in the Greater Boston area so if you have any specific questions, feel free to reach out. Best of luck!
- Investor · Somerville, MA · Member since 2017 · 191 posts · 204 votes7y
Hey, to be honest that price point might be tough in the areas that you're looking but you should be able to find something in parts of Medford, Malden, Everett although sub 700K 2 families are tough anywhere close to Boston. Also sounds like you might not have the capital for a major improvement if you buy something that needs work?
I think that house hacking in the area is 100% a great idea even if it doesn't cover your costs completely and will work out way better than renting in the long run unless you have some random great rental deal (that seems to happen from time to time in Boston where you have an old school landlord who doesn't realize that rents have drastically increased) You need to live somewhere. Rents will go up in the Boston area every year... even in 2008 nothing really dropped, maybe they stayed flat a bit but my point being that in a few years time you will get closer to covering the payment because they always rise. Also you can get creative with a 2 or 3 family to get even closer to covering the mortgage because there is such a housing demand/ shortage in the area. For example, I house hacked in Somerville- got lucky getting a place in 2013 before stuff was uber crazy. Our rental unit is about $800 short from covering our mortgage BUT we were just able to renovate the top floor to create an Airbnb unit (a legal one registered with the city too!) and that's going to more than cover it once its up and running. My point being that if you buy where there is demand even if it doesn't pencil in completely at first, creative options will open up later on because there is such demand. Try to look for a place with a larger lot so you could convert a 2 fam to a 3 later on? or try to add an in-law apt. in the basement later on? In ten years are you going to be glad you bought in Medford rather than rented? I'm guessing that's a big yes... now of course too as long as you can handle the payment, have some repair reserves etc. even if you're not cashflow positive. I would never say that its ok to not cashflow but for a house hack in an expensive market I think its ok because even a dumpy 1-2 bed in the area is going to start at 1,800-2,000 minimum if you go the renting route and that is just money totally out the window. If you're in Somerville or Cambridge it can be 2400-2800 plus for even just a 1 bed if you're coming in at market rates.
But, here's another thought... you're working in Lowell? Why not just live and buy there? I totally understand that you want to be in Boston but Lowell has come a long way. I actually have a number of friends who have moved up there because Boston is so much $ and they love it. Its close by commuter rail, its got a lot of potential in the downtown and its getting better, and it has a great underground music/ art scene because artists can actually afford to live there. Also, you can get a 3 family for 300-500K no problem. Its got a big state school so you can get college tenants if you want to go that route too... And I know a landlord there who says his places are always rented because its such a central location up north. Also, if your just moving here, 93 SUCKS! Try driving from Medford to Lowell and back during rush hour a few days in a row and see how that feels? I don't care if its a reverse commute you can get random traffic on 93 anytime anywhere. You could buy a condo right in the downtown or next to work AND a 3 family for less than a 2 family in Malden. And if you're out in Malden or Everett, yes its kinda close to Boston, but honestly downtown Lowell might have a better vibe than parts of Everett or Chelsea? Downtown Lowell feels more city like to me than Malden Center for sure. And I mentioned Malden because no way are you buying a sub 680K multi family in Newton, Brighton, probably not Medford, and def. not Somerville (which were the other areas that you mentioned). Just playing devil's advocate and I'm a fan of living as close to work as humanly possible so you can bike/ walk. Don't forget to calculate the cost of that much commuting into buying a property so far away from work too. Ok, hope these random thoughts were helpful?
- 7yLien VuongBusiness MemberReal Estate Agent · Boston, MA · Member since 2018 · 2k+ posts · 1k+ votes
I think your price point and the areas you're looking for would be really doable for a 'house hack'. Of course the economics for a three or four family would be much better considering that it's mostly tenant occupied. Lynn is a great spot that you can find some real gems near the commuter rail. Everett/Malden there are two families in that price range with access to trains. Let me know how I can help you narrow down your search!
The Elle Group5153 Reviews - Rental Property Investor · Boston, MA · Member since 2016 · 82 posts · 27 votes7y
First off, you are miles ahead of the curve by considering house hacking and seeking advice on this forum.
As someone who has house hacked twice, here is my advice for you:
1) Target 3 and 4 family properties over 2 family. They tend to cash flow much better.
2) Take advantage of the FHA or Masshousing first time home buyer programs. This will allow to buy a 3 or 4 family for a reasonable down payment. Here are purchase price limits:
http://www.loanlimits.org/wp-content/uploads/2018/12/2019-between-floor-ceiling.pdf
https://www.masshousing.com/portal/server.pt/community/home_buyers/225/income_and_loan_limits
3) Value lower-priced properties that need work over higher-priced properties that are move-in ready. Your rehab will build you equity and you will be able to refinance out of your FHA / Masshousing mortgage to a conventional mortgage. Refinancing will lower your interest rate and/or remove PMI, which will lower your payment and improve your cash flow.
4) Value areas that have a high chance of appreciation. These are the markets that have easy access to Boston.
5) Request the seller pay all closing costs. This will leave you additional funds for your rehab.
Feel free to reach out with any questions.
Regards,
Eric
- Lender · Boston, MA · Member since 2019 · 417 posts · 150 votes7y
Might want to look in southern NH, more affordable & more for your money.
- Member since 2019 · 26 posts · 13 votes7y
@Adam Sankowski, really appreciate your input Adam! Everything that you said is exactly what I am thinking and debating in my head.
Personally I have never actually been in Medford or Malden. But I am thinking this area will appreciate in the coming years so that should be a plus. And like you said even if I am not cash flowing but still offsetting my mortgage payment by renting out one unit, that is such an advantage. Paying about 2k+ for rent after learning so much from everyone at BiggerPockets just doesn’t seem as a wise move.
Regarding living in Lowell I have been looking into that idea and financially it makes a lot of sense but from the emotional point of view I just want to live close to the city. I guess my plan will be to actually rent out a place in Lowell for the first few months while I’m housing hunting.
The commute is also an issue I totally agree the closer the better that’s why I also looking into the idea of living close to the commuter rail it’s still a good 45min ride but at least it’s consistent and you can get work done while traveling. I guess we will see. But I really agree with your thought process that’s exactly how I am thinking right now and I guess when I finally move in the summer I will have a better understanding of the logistic of things. Because it’s not just about finding an awesome deal it’s also the convenience of daily living.
Thanks Adam!
- Member since 2019 · 26 posts · 13 votes7y
@Eric Rosiello thanks for your reply Eric.
I guess what you are suggesting is kind of BRRR+House hack. Which I think is a great idea. But I feel like I am not ready to take on such a project. Rehab and all will take me into uncharted territory. Actually just buying a house is uncharted territory for me. So I'm a little scared of bitting more than I can chew and same thing for 3-4 unit family homes. I completely agree they will cash flow more compared to 2unit. But then it's more work with tenants and the biggest issue that I have is the price. Correct me if I'm wrong but 3-4unit house in the areas that I have been looking for will be above 1million and that's where my mortgage will be really high (of course if it's rented out then great) but if it's not rented out i will be bleeding money and working just to pay my mortgage and I feel the risk is too great in that sense. Please let me know what you think about this.
Thanks for the links! And thank you for replying it’s thanks to ppl like you and everyone else over here that I have been exposed to all these ideas. Otherwise I would be just be paying 3k a month to live and thinking this is just how it is and nothing can be done about it.
- Professional · Lowell, MA · Member since 2014 · 232 posts · 223 votes7y
@Mohsin Mazhar the wife and I relocated to Lowell from Quincy, and prior Jamaica Plain, 15 years ago and are extremely happy with the City. Live in Lowell, buy two houses, save time, energy, money on your commute, and embrace the arts scene and cultureS-- plural emphasized. Speaking as a resident, that's one of the things we love most about the city is the plurality and diversity in both demographics and in available arts/college scene/ historical values. Many great cultural roots here. Lowell's really got it all.
Other people also mentioned Southern NH, and Nashua and Salem are great cities with a reasonably easy commute to Lowell.
Definitely do your research for two reasons: 1) NH residents get killed in property taxes but there are no sales or income taxes.
2) because of that lesser tax base, NH residents get significantly fewer benefits, including unemployment in the event of layoffs, etc. The fact that you're working in Mass should temper the second point for you, fortunately, and the first point, unfortunately-- you'd still need to pay income taxes to Mass. None of this may be quite relevant to you, but no Mass V NH analysis should be complete without reviewing these variables.
Am I bullish on Medford? Absolutely not but as others have already stated, deals are VERY hard to come by in that turf. Newton is even worse, but will almost never lose value.
- Contractor · Dover, NH · Member since 2019 · 28 posts · 11 votes7y
@Mohsin southern NH isn’t a bad area to look at also. Do your homework on taxes however. Property taxes in NH hav a tendency to be higher because there is no sales or income tax in the state.
- Investor · Somerville, MA · Member since 2017 · 191 posts · 204 votes7y
Hey not a bad idea to check out Lowell, live there and see what you think and then make the call between Lowell and Medford/ Malden. I love Medford and Malden but they do have a touch more of non city feel although by bike you can get into the city super fast. Also, I like Everett for the future. The only reason that its not way more $ considering how close it is is that there is a highway that divides it AND the schools are horrible, like active gang activity in the highschool bad, but if you don't have kids and even if you're planning on them a few years out, the schools there will get better, its just going to take a bit. I LOVE the neighborhood by Nightshift brewery. Its a small random pocket of Everett that doesn't feel like the rest of the city. Look up that place and check out that mini neighborhood. :) Also West Medford is beautiful but more $
Also, I hate to be a NH hater cause its a beautiful state to be in nature but its "cities" aren't any better or bigger than Lowell. If you want to be as close as possible to a big modern city, then Medford/ Everett/ Malden (I think Lynn is way undervalued too in parts) is your route. If you want to be closer to work and have a smaller city feel then just live in Lowell. I don't think Manchester or Southern NH is going to give you anything more than Lowell and the price to rent ratios will be close to the same.
- Rental Property Investor · Boston, MA · Member since 2016 · 82 posts · 27 votes7y
That makes sense - the right move is what's best for your situation. My suggestion definitely requires more work and additional management. With my current lifestyle I don't know if I could go back to BRRR / house hacking . . . so it's all about your own personal goals and life situation.
If it helps, I had no rehab experience going into my first project. I shopped around for contractors for the things I wasn't comfortable with and did work with my parents on the weekends. I learned from BiggerPockets which rehab items were worthwhile and the expected costs.
You'd be surprised how much of a difference you can make yourself through cosmetic updates learned from YouTube videos (paint, flooring, cabinets, countertops, vanities, mirrors, & lighting). In less than two months I had a fully renovated and rented property, was in a position to refinance, and had gained valuable experience for the future (knowing how much things cost, knowing how much time it takes to complete a rehab task).
In regards to management, it is definitely true that managing 2-3 tenants is more work than just 1, so it's really dependent on how much time you have and how you value your time. If your time is better spent at your day job, you can always higher a property manager. You should factor management costs into your numbers anyways even if you plan to self-manage. For instance, I self-managed while living in the property, but found it more difficult once I moved out so I hired a PM and couldn't be happier with the decision.
Lastly, I don't think you need to spend over $1m for a 3 / 4 family. I just picked up a 4,200 sq ft 3-family in an appreciating area in Boston that needed no rehab for $800k. Stay patient and analyze a lot of deals. I can recommend an investor friendly agent that has helped me a ton if you'd like. I'd also be happy to share how I run my numbers.
Hope this helps,
Eric
- 7yMichael WallimannPro MemberRental Property Investor · Western Washington · Member since 2018 · 151 posts · 60 votes
@Charlie MacPherson what a great response! Thank you for all the very detailed info. @Mohsin Mazhar there seems to be a wealth of great advice here on areas to target. I will just add on to this thread with the down payment side of things. I would definitely look into getting an FHA loan so you can get into your small multi family property for 3.5% down. My cousin just did this in the North Shore area outside of Boston and it went really smooth. An FHA loan+house hack = A great way to get started in an expensive area. Best of luck to you moving forward!
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