Investor · Quincy, MA · Member since 2013 · 77 posts · 11 votes
Property: Duplex - wife and I live in upstairs apartment, tenants renting downstairs apartment
Issue: Noise – we can hear the TV downstairs, the tenants talking, and the noise/vibration of them walking
Concerns: future tenants complaining about the noise & tenant retention (breaking leases early) in the future once we move out and rent both apartments, also concerned about noisier tenants moving in downstairs if the current tenants leave (they are relatively quiet tenants)
Details about the property:
Located south of Boston (20 minute drive), 5 minute walk to a few restaurants and the commuter train into the city
Purchase price in July 2017: $536k
Updates: New roof ($7k), waterproof basement ($3k), tiling, painting, other cosmetic improvements
PITI: $2,700
Unit 1 Rent: $2,100, Unit 2 Rent Potential: $1,800
What would you do if you were in my shoes? Spend the money and have an acoustic engineer soundproof? Leave as is? Sell the property? What are my options here or am I just overthinking this as a new investor? Has anyone else had similar issues with rental properties? Any feedback is greatly appreciated.
I would do nothing until the downstairs tenants move out and then remove the ceiling and sound proof.
If you decide to move out and want to keep the property with happy tenants you are going to be forced to discriminate and violate fair housing laws. You will not be able to rent the upstairs to anyone with children if you want to retain tenants. Your up and down tenants will also need to be on the same sleep/work schedules.
Up/down units generally cause major tenant issues. You will need to be highly selective when screening.
Call in a sound engineer ? Lol geez man With 3900$ income and paying 536k for a duplex ..I’d be selling it while the market is hot and buy something that is actually profitable that cash flows
@Dennis M.@Thomas S. How is this not cash flowing? Am I calculating this wrong? The problem with selling now is that we would have to go back to renting. There isn't much inventory in the Boston area and everything is overpriced.
@Dennis M.@Thomas S. How is this not cash flowing? Am I calculating this wrong? The problem with selling now is that we would have to go back to renting. There isn't much inventory in the Boston area and everything is overpriced.
Income - $3,900
PITI - $2,700
CAPEX - $195
Vacancy - $312
Repairs - $195
Water/Sewer - $135
Cash Flow - $363
So I assume You guys don’t have to pay property taxes ? Or carry any insurance in Boston ?
You are way underestimating your long term expenses. Minimum on a property like that expenses will be in the 40% range ($1500/month)..
Depending on your level of equity your returnes are low now and will be negative long term. If the markets drop you it will be a long up hill battle to hopefully break even.
Although living there now may make it affordable if you ever decide to move out you will definatly need to sell.
Since you are living in the prop now, I guess the key is how bad the noise is to a potential tenant.
I know it is down the line, but when the time comes, you can have someone look at it, if its its not major I don't think it would benefit if you fix. I would consider leaving as is
@Dennis M. CapX and Repairs seem low as well as no budget for property management (for future of course). But great job getting your first investment property!
@Kelly Iannone Apparently it wasn't a great job getting my first investment property. I thought it would be, based on the area and the rental rates, but the noise issue (which i couldn't have known about when I put in an offer) is putting a damper on things. My wife will never let me invest in another rental property again!
@Max T. I can't imagine that any properties within such a close proximity to Boston are producing rents that are 1% of the purchase price. The upstairs is carpeted for the most part, so I don't think the footsteps have the same affect.
@Steve Bracero I've thought about leaving as is, but I'm just envisioning future tenants complaining about it and me having a hard time with tenant turnover. It sucks because the house is in a good area and I had no idea the sound transfer between units would be like this when I bought the house. The problem now is that if I were to sell, my wife and I would have to rent an apartment, and then our next move would most likely be to buy a single family (planning to have a baby in the very near future) which would mean my plan to build wealth through real estate would be gone. Tough spot I'm in.
@Michael Zack Hearing the neighbors is just part of living in a building with other families. Most tenants understand that and are used to apartment living, but every now and then you'll get complaints. Sound proofing is super difficult and expensive, like borderline impossible in my experience, so probably not worth it. Just always disclose the fact that it's a shared building and you can hear the neighbors, set those expectations up front, screen well in order to get respectful tenants in there, avoid pets and small children, and you'll be fine. My cousin had a SFH in Quincy which he sold recently and made a killing on. Not sure on your exact neighborhood but it seems like everything in that area has great appreciation potential, you just have to look at it that way. I do agree with others here that your expenses are probably estimated a little low, as I'm assuming it's an older building and you'll have some pricey upkeep. It's an appreciation play, so it might be negative cash flow or break even type scenario for a while until you can raise rent. But if you hold on long enough there's a good chance appreciation will make it all worthwhile and your wife will be pleased that your starter home where you had to listen to the neighbors arguments and love making ended up paying for nearly half a semester of your kid's Harvard tuition lol.
@Michael Zack First regarding your numbers, those are actually pretty solid. Any non-Boston is obviously going to scoff at our monthly cash flows here, but obviously if we buy around the Boston area it's because we see the long-term growth potential here. I underwrite my deals with similar numbers for capex, vacancy, and repairs. Your rent to purchase ratio is pretty solid for Quincy, and realistically you won't do much better if you buy within 5-6 miles of Boston.
As for the whole noise issue, honestly I would leave it as is. I actually have had a similar complaint in my property in Everett, so you have to make judgement call. I dont think I'm being a bad landlord when I make the decision not to spend potentially up to $5-$10K on something that adds very little value to the building. I also know that the tenants wont do better at other units, so from a competitive standpoint I'm not worried as well (plus I'm very responsive with maintenance calls, so if they want to wait for a week before issues are resolved they can be my guests). Long story short, unless a contractor/vendor can find a cheaper solution or it's truly a major, major issue, I probably wouldnt sweat it.
Plus I really hope this doesnt make you sell and go back to renting!
@Steve K. The house is in the next town over, Weymouth, but there has been a lot of development in the area (apartment buildings, retail space, restaurants).