Thoughts on investing in the Worcester Ma market??

3 Replies

I was looking to start investing in real estate but don’t have enough cash for my area ( Boston Ma ) what do people think about Worcester. The prices are almost half and cash flow looks good . But I heard tenants can be a problem in the area. Thanks .

Ethan,

I would be glad to shed some light on things for you regarding Worcester.  First off you are correct, prices are lower in Worcester and returns are higher.  Rents in Worcester are creeping up and have gone up approximately 20-30% in the last 3 years, prices have followed.  As with any city, there are different sections which have different characteristics.  Geography plays a big role here due to the 7 hills and I 290 which cut its way through the city in the 60s.  Rents differ by neighborhood, parking situations and quality of units.  All of these can be explained to you by a solid multi family buyer's agent who does a lot of work in Worcester.  Do not get tricked by price without understanding the location you are buying, or the quality of the building.  Most of these places were built from 1890-1920 and it shows.  Time has not been kind to many of them, but others have been loved and maintained.  I have personally seen 1400 distinct properties in the last 3-4 years and I recommend you see at least 20 buildings before you make an offer so you can see the nuances of the market.  Best of luck, Worcester is a great city and has seen a renaissance over the past couple of years, most notably with Polar Park which opened this spring.

Worcester is a fantastic city. Easily the best market in New England right now for getting both appreciation and cash flow. @Brian J Allen 's advice above is 100% true. Are you looking for an investment property or an owner occupied property? That will have a major impact on your strategy.

The best deals right now are fully occupied properties with below-market rents, assuming you can carry the costs for the roll-over.  You need good cash reserves for this though as the cash flow won't be there for the first 12 months while you bring the units to market rent. I landed a great deal that is closing later this year with this strategy.

Strategy two is owner occupant investments, with a win being defined by living for free. You can also achieve some cash flow with this strategy, especially if you are comfortable with DIY and room rentals in your occupied unit. The market is very competitive for these owner occupant deals so the pricing keeps rising but you can easily make a deal work with an with the strategy above. I know because I've done it twice now! 

Feel free to reach out if you'd like to discuss either of these or the market in general!

I Echo Michael H. here.  The upside has been taken for properties with market rents.  Best way is to buy with below market rents and get the rents to market. That is the easiest strategy.  Owner occupant strategy is good as well, if you can find a place with a vacancy, as those tend to have the prices driven up.  Of the 18 we have closed so far this year in Worcester, we have done the best with low rents on solid properties in solid rental locations.

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