Investing in Lowell/Lynn MA - Question from Beginner

19 Replies

Hello all, 

I am a young/beginner investor living in Boston, MA. Within the past two years I graduated college and began work. I am nearing the point of looking to purchase a multifamily in areas near my work. I work just North of Boston and was thinking of looking to purchase in areas that I can afford (I have been researching in Lowell and Lynn). 

My plan was to House Hack with a duplex/multifamily in one of these areas. I would apply for an FHA loan, put down about 8-10%. A few concerns that I have are

1) I have been reading this forum and understand that prices are very high and therefore cash flow opportunities is very hard. 

2) I have no experience with renovating/fixing older properties, and have no real estate connections to help me find properties that are fair value. I am thinking I will have to go through a broker. 

3) I have heard that these places are probably "C" class neighborhoods, so the prospect of living in them is a bit intimidating. 

My questions are: 

1) Even if I cannot cash flow, should I not even consider buying? I am living at home now so soon I will have to move out, I figured it would be best to "House Hack" and get a negative cash flow as opposed to paying 800 to 900 in rent. 

2) Will I not be getting a good deal if I go through a broker, or buy a turn key property? 

3) Do I need a lot of experience to buy a run down property and renovate it? 

4) Does anyone have experience buying/renting/living in Lynn or Lowell? Any tips or advice?

Any advice would be awesome. I would love to speak with someone who has experience in these areas. Thank you.

Hi @Matt T. congratulations on starting the process! Prices generally around the Boston area are very high right now but there are still some good deals if you look further away from the city. 

"House hacking" is a great idea if you are looking to live and work close to the areas that you will be investing in as well. I have a few friends and clients who have bought in the Lowell area and have good things to say about it since the prices are relatively low and the commuter rail is close that goes right into Boston as well.

If you have any questions or need any help, feel free to reach out and I would be happy to answer any questions that you have.

Hey @Matt T.

If you are able to house hack, its a surefire way to get started. I started with a house hack myself. I also used FHA.

1. In the area, you are right, prices can be high and it can take time to find a deal that works for you 

2. The best experience you can get is seeing properties. Books/ Podcasts are great, but you taking a look a things first hand is where you will learn the most 

3. If they are C Class... you want to consider if you would like to live there. How are the schools and what are you comfortable with 

1. It is hard to cash flow when house hacking. I would look at your investment as if it was fully rented out. This will help you decide what works for you. You also have the loan paydown, equity build up and cash flow after moving out to look forward to 

2. It all depends. Turn key would mean it does not need work. If you want to force equity, you can buy a prop that needs some cosmetic repairs 

3. This depends on your comfort zone and once you go thru the process of seeing properties, you should have a feel for what you want to get into 

4. Stay consistent looking at deals. BP has a pretty nice calc you can look into ! 

@Michael Pallotta Thanks for the response Michael. The high prices for me make it a bit more challenging to find a deal, but I was also thinking that the interest rates and housing prices are inversely correlated. So I may be paying for a higher price of the house today, but I will have a lower interest rate. If housing prices drop in the future, I may have to sign on to a higher deal. 

I know you mentioned that your have friends and clients who have bought in Lowell, do you know anything about Lynn? Also, what are your personal thoughts on Lowell? I am open to any neighborhoods around Boston, I just figured those were good price points for their proximity to Boston. 

@Steve Bracero

Thank you for the response Steve. I  agree with your point on viewing a property first hand, I think I'm just in the stages of trying to identity towns and areas that work with my price range and needs. To the point about cash flow, I understand that using an House Hack strategy will not allow me to cash-flow on the property with me living in it, I was counting my rent towards the cash-flow as well.  Do you have any opinions on the towns Lowell or Lynn? Can you suggest another area that may be similar in price and proximity to Boston? (Preferably North Shore because I work just north of Boston). 

@Matt T.

Lowell will have a slightly lower price point then Lynn. A key question you want to ask yourself is how far do you want to be from your job? What are you comfortable with? This will help determine your price point. Also, it may be smart to talk to a lender to get an idea of what you can afford. Have you spoken with a lender yet? 

@Matt T.  I would also consider Lynn a C class or maybe lower depending on neighborhood. When you are looking for properties you should look at the crime around the area especially since you are considering living there. 

@Matt T. I think it depends on your goals and your situation. As Steve mentioned, you definitely want to look in to schools if you will be utilizing those or also the proximity to your job. It won't make sense to invest and live somewhere just because the price makes sense and then your commute takes up all of your time. 

Talking to a lender is definitely the best first step to take and then start the search. I can always set you up to start receiving search results for a bunch of towns that you might be interested in to start getting a feel for the market and the different price ranges and then you can always refine the search or try new areas once you start making decisions.

Hi Matt, 

I am actually a UMASS Lowell graduate and lived in lowell for four years. One of my friends is actually working for an investor who primarily rents to college students in lowell and has had success. There are some pretty rough areas in Lowell so be sure to look up maps on which areas have less crime etc. With that said, there are also very nice areas to buy and rent in Lowell as well. 

I would suggest you analyze a property as if you were NOT going to live there as well as if you are going to live there, so when you move out of the house someday, you ensure that you are getting the cash flow that you desire. Keep your eye out for deals though because it is definitely possible to scoop up a multi and live "free" or pay very little each month.

Regardless of your choice, your mind set is in the right direction. Good luck and feel free to contact me with any questions about Lowell. 

Best Regards,

Ryan

@Matt T.

Hi,

I was in a very similar position to yours. I was living at home and searching for a multi in the Boston area as well. After relentless searching (primarily MLS) I narrowed down my only options to Dorchester/Mattapan or Lynn. Also I wasn't able to find any multi's that would qualify for conventional financing in my price range, so I went with a single family in Lynn. I'm 5 months into a live in flip which I plan to roll into a multi when I sell.

I want to give you a heads up this is my first deal so don’t take my words as gospel, I’m a beginner as well.  With that being said I’m a year ahead of you and I’ve learned a ton since I first started out.  A lot of what I’ve learned is very applicable to your situation so forgive my lengthy ness but it may help you out.

Here’s my thoughts on the market that I’ve formulated through observation and personal opinions, not real hardcore market research backed up by numbers.  I think Boston is blowing up and Lynn is going to be a different city in 10 years.  I’ve worked different construction industries all around the Boston area and there is no where for people to buy affordable houses anymore.  I think partly because of the hot market but also because the city of Boston is exploding.  Within the last year I am the 3rd “millennial” in my family to purchase a house in Lynn.  If you can find a good deal in Chelsea or Revere I would scoop it up but I was priced out of those areas.  I can't speak to the cash flow in those areas but more the demand for proximity to Boston.  I think demand for these locations will overcome market fluctuation in the long run.

In Lynn stay away from the Lynn commons in the center of the city.  I bought in Ward 1 on the North West side of town if you look on a map.  There are some nice neighborhoods up there and good proximity to route 95.  Lynn shore drive up by Swampscott is nice too but very expensive.  West Lynn has some good neighborhoods too.  I used to drive the neighbor hoods before I even asked my agent to schedule a viewing because there are some bad areas.

Something to look out for is down payment assistance in those cities.  I was able to squeeze into the "low income" category which qualified me for $5k towards my down payment from the city of Lynn.  After 5 years I don't have to pay it back.

Look into a Fannie Mae or Freddie Mac first time home buyers loan. A former broker who is now a first time home buyer counselor told me to do the same. You can avoid the $5000 start up premium which you have to pay for FHA's mortgage insurance. Also apparently the mortgage insurance is cheaper and goes away when you own 20% of the house, when with FHA you have to refinance to get rid of that PMI. The down side is you need a better debt to income ratio, which I didn't qualify for. If you do go FHA and you sell within 5 years then you get a portion of that $5000 premium returned to you, if you ask for it.

Good Luck!

@Matt T.

I grew up next to Lowell, rented in the highlands area and I currently am under contract for a 2 family house hack in south Lowell. The city has definitely improved a ton over the years and is still improving - that being said, every city still has it's bad areas, just do your research. I would say generally south of the Merrimack river and around UMass is fine. 

If you want to scoop up a house hack you have to be extremely vigilant. I really doubt you could positive cash flow unless you rent out rooms in the unit you'd be occupying but that's just been my experience with homes on the MLS. You can find some off market gems if you put in the work.

Calculate rent/expenses as if you weren't occupying to assess the deal then figure out what you would be paying out of pocket. For this 2 family I'm paying a LOT less per month what I would be paying to rent and have tons of extra space, freedom and am building equity.

Last bit of advice, if you're not handy yet you can learn. It's all on the internet. If you think you can handle it, go for it and save the cash. If it's something that should be done right, it's always worth it to dish out the cash to the professional. Use your best judgement.

Send me a message if you want to discuss more.

-NE

Originally posted by @Steve Bracero :

@Matt Ty

Lowell will have a slightly lower price point then Lynn. A key question you want to ask yourself is how far do you want to be from your job? What are you comfortable with? This will help determine your price point. Also, it may be smart to talk to a lender to get an idea of what you can afford. Have you spoken with a lender yet? 

 Those are good questions, Lynn and Lowell are nearly equidistant to my job, but I am looking at places North of Boston but close-by. I have not spoken to a lender yet since I am still a ways off of getting more serious into this process, but I have a good estimate of what they would give me using numbers my friends have received. I believe I will be around the 350k range. 

Originally posted by @Emiel Barbosa :

@Matt Ty I would also consider Lynn a C class or maybe lower depending on neighborhood. When you are looking for properties you should look at the crime around the area especially since you are considering living there. 

 Good point, thanks Emiel. I am definitely considering crime rates when moving to an area, but given my budget I think I will have to select a C class neighborhood. 

Originally posted by @Michael Pallotta :

@Matt Ty I think it depends on your goals and your situation. As Steve mentioned, you definitely want to look in to schools if you will be utilizing those or also the proximity to your job. It won't make sense to invest and live somewhere just because the price makes sense and then your commute takes up all of your time. 

Talking to a lender is definitely the best first step to take and then start the search. I can always set you up to start receiving search results for a bunch of towns that you might be interested in to start getting a feel for the market and the different price ranges and then you can always refine the search or try new areas once you start making decisions.

 Thanks for the reply Michael you made some great points. Schools are really not a major concern of mine, I am 24 right now and would not be living in this area permanently. The commute is actually why I am searching North of Boston, I work North of Boston so both Lynn and Lowell are roughly 30 minutes from where I work. 

Originally posted by @Ryan Corcoran :

Hi Matt, 

I am actually a UMASS Lowell graduate and lived in lowell for four years. One of my friends is actually working for an investor who primarily rents to college students in lowell and has had success. There are some pretty rough areas in Lowell so be sure to look up maps on which areas have less crime etc. With that said, there are also very nice areas to buy and rent in Lowell as well. 

I would suggest you analyze a property as if you were NOT going to live there as well as if you are going to live there, so when you move out of the house someday, you ensure that you are getting the cash flow that you desire. Keep your eye out for deals though because it is definitely possible to scoop up a multi and live "free" or pay very little each month.

Regardless of your choice, your mind set is in the right direction. Good luck and feel free to contact me with any questions about Lowell. 

Best Regards,

Ryan

Thanks for the reply, Ryan. I agree that I should be analyzing the deals both assuming im living there and after I move out. My plan would be to get an FHA loan for a mutli, house hack and move out 2 years later, rent out the full unit refinance and get another FHA loan for a different multi. That is interesting about Lowell, I heard that it is a big college town but I have also read renting to college students can be a headache. I definitely will reach out to you if I end up further considering Lowell, thanks again!

Originally posted by @Christopher Leslie :

@Matt Ty

Hi,

I was in a very similar position to yours. I was living at home and searching for a multi in the Boston area as well. After relentless searching (primarily MLS) I narrowed down my only options to Dorchester/Mattapan or Lynn. Also I wasn't able to find any multi's that would qualify for conventional financing in my price range, so I went with a single family in Lynn. I'm 5 months into a live in flip which I plan to roll into a multi when I sell.

I want to give you a heads up this is my first deal so don’t take my words as gospel, I’m a beginner as well.  With that being said I’m a year ahead of you and I’ve learned a ton since I first started out.  A lot of what I’ve learned is very applicable to your situation so forgive my lengthy ness but it may help you out.

Here’s my thoughts on the market that I’ve formulated through observation and personal opinions, not real hardcore market research backed up by numbers.  I think Boston is blowing up and Lynn is going to be a different city in 10 years.  I’ve worked different construction industries all around the Boston area and there is no where for people to buy affordable houses anymore.  I think partly because of the hot market but also because the city of Boston is exploding.  Within the last year I am the 3rd “millennial” in my family to purchase a house in Lynn.  If you can find a good deal in Chelsea or Revere I would scoop it up but I was priced out of those areas.  I can't speak to the cash flow in those areas but more the demand for proximity to Boston.  I think demand for these locations will overcome market fluctuation in the long run.

In Lynn stay away from the Lynn commons in the center of the city.  I bought in Ward 1 on the North West side of town if you look on a map.  There are some nice neighborhoods up there and good proximity to route 95.  Lynn shore drive up by Swampscott is nice too but very expensive.  West Lynn has some good neighborhoods too.  I used to drive the neighbor hoods before I even asked my agent to schedule a viewing because there are some bad areas.

Something to look out for is down payment assistance in those cities.  I was able to squeeze into the "low income" category which qualified me for $5k towards my down payment from the city of Lynn.  After 5 years I don't have to pay it back.

Look into a Fannie Mae or Freddie Mac first time home buyers loan. A former broker who is now a first time home buyer counselor told me to do the same. You can avoid the $5000 start up premium which you have to pay for FHA's mortgage insurance. Also apparently the mortgage insurance is cheaper and goes away when you own 20% of the house, when with FHA you have to refinance to get rid of that PMI. The down side is you need a better debt to income ratio, which I didn't qualify for. If you do go FHA and you sell within 5 years then you get a portion of that $5000 premium returned to you, if you ask for it.

Good Luck!

Christopher, really appreciate the response here. You're right, it seems you had a very similar situation to mine. I would love to speak to you sometime about Lynn and your experience. Did you end up going with SFH because multis are too expensive? What would a duplex or triplex price range be in Lynn?

Originally posted by @Nathan Estochen :

@Matt Ty

I grew up next to Lowell, rented in the highlands area and I currently am under contract for a 2 family house hack in south Lowell. The city has definitely improved a ton over the years and is still improving - that being said, every city still has it's bad areas, just do your research. I would say generally south of the Merrimack river and around UMass is fine. 

If you want to scoop up a house hack you have to be extremely vigilant. I really doubt you could positive cash flow unless you rent out rooms in the unit you'd be occupying but that's just been my experience with homes on the MLS. You can find some off market gems if you put in the work.

Calculate rent/expenses as if you weren't occupying to assess the deal then figure out what you would be paying out of pocket. For this 2 family I'm paying a LOT less per month what I would be paying to rent and have tons of extra space, freedom and am building equity.

Last bit of advice, if you're not handy yet you can learn. It's all on the internet. If you think you can handle it, go for it and save the cash. If it's something that should be done right, it's always worth it to dish out the cash to the professional. Use your best judgement.

Send me a message if you want to discuss more.

-NE

 Nathan, thanks for the response. I would love to discuss sometime with you your thoughts on Lowell. I will send you a message. 

How's the search going? Did you buy? To echo what Christopher said most people in my age group are moving to Lynn because it's all we can afford on our median income salaries. As far as Lynn goes, Diamond District is the hottest area right now, West Lynn by Saugus is good, as is Swampscott line, or up by Lynnfield. 
I agree that Lynn will be different in 10 years. Most of the city is a dump now but it's got things you can't just add in - namely a lot of ocean shoreline, lots of ponds, and the Lynn woods. The city center is a bad area now but I think it has the right bones for a really good town center down the road. 
The thing about Boston is that it's not artificial prices. The city has blown up over the last 10 years. Keep in mind places like Seaport, Southie, Charlestown, etc all used to be considered dumps at one point and now they are premium areas. The city of Boston is going from the small big city that is was in the 90s and transforming into a metropolis. The schools aren't going anywhere, the hospitals aren't going anywhere, there's a casino thats almost finished. Lots of big companies coming here too. I think Lynn is worth the risk. I think that even if you can't cash flow - which you probably won't especially with a 3.5% down payment - the negative cashflow is worth the appreciation and it will improve when you move out / refinance. Rents also catch up. It's important to be looking at what's going on in the now but also be thinking about 5 or 10+ years down the line. 
Good luck!

Hello! @Matt T.

Welcome to BP, and congratulations on making the decision to invest in your future via real estate.

I have written a few blog posts that may help you get started here on BP, and with your investing. Please click on the links, give them a read, and share your thoughts in the comments.

First is a post that I feel will help not get overwhelmed with the amount of info that is here on BP:

https://www.biggerpockets.com/blogs/5868/52761-the-simple-guide-to-getting-started-on-bp

The second is a post that will help get you focused with your real estate investing goals:

https://www.biggerpockets.com/blogs/5868/52743-im-new-to-bp-any-advice-would-be-appriciated

The last one is a post that will help you choose an “investor friendly” real estate agent.

There are many agents out there, but it’s important to choose the right one.

https://www.biggerpockets.com/blogs/5868/52724-im-new-to-investing-how-do-i-find-an-investor-friendly-agent

I love answering questions if you have any! Good Luck :)

Hey guys, piggybacking on this post. I’m looking for the same thing here and also looking for recommendation on contractor, lenders, inspectors in the Lynn area. Appreciate the insight! :)

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