Delayed Introduction - Massachusetts REI

11 Replies

Good morning BP! 

I'm Adam and I've dipped in and out of these forums for the last few years with no serious intentions. Late last year I decided to buckle down and learn this stuff, so here we are. During the day I'm a full time Sales Manager for a domestic, independent manufacturer of plastic houseware products and on the side I'm a budding Real Estate Investor in north central Massachusetts.

Today my portfolio consists of zero doors. My intent is to add six over the next three years. My focus is on buying/holding 2-3 unit multi-family buildings in old New England mill towns that need minor or cosmetic repairs but not major reconstruction. I prefer buildings with units at or above 800 sq/ft, and a minimum of 2/1, ideally 3/1 or 3/2. I'm looking to connect with agents, attorneys, property managers and contractors local to north central Mass and of course, other like minded individuals in the greater BP community. 

Looking forward to the conversations!

@Adam Saball What Steve says has been true in my experience in the Leominster area -- tenants who've lived in a unit for 10, 15, or 20 years. I think people get comfortable and likely don't have the means to purchase a home of their own. This also means that those units haven't been updated in a loooong time. Perfect recipe for a value-add investor (pay attention to the deferred maintenance on the building as a whole). As for increasing rents, you'll want to match your increases to the increases in expenses (inflation) at a minimum, so think 3% or more. You can also raise rents if the property you purchase as M2M tenants, no leases. You'll want to strike a balance between what's fair for you and them if you want to keep them. If not, fix 'em up and raise rents to hit your numbers. Let me know if you'd like a referral to a broker/PM with extensive experience in the area, or if you're all set.

@Stace Caseria Great feedback, thank you. I'm glad there's been immediate consensus about what to expect from this area. Long term tenants mean less vacancy so maybe over time lost rents are somewhat mitigated by fewer vacancy expenses... or maybe that's naive. Thank you, I'd love references. Candidly I'm two years from doing my first deal. I'm not in RE by trade and I'm on the road a lot for my day job which means I'm going about getting started in REI the old fashioned way, slow and steady savings. I'd like to use that time wisely.

Adam, it's definitely a good area to begin in since buy in is lower than anything closer to Boston or Worcester. Usually decent inventory, and a solid base of tenants. I would not bank on appreciation, but I buy for cash flow anyway so the area fits my criteria. Even if you're a year or two out, attend some open houses, drive some neighborhoods so you build that knowledge base, attend meetups to meet people. I talked to a contractor recently who is from Leominster. He told me about the improvement in the city from 20 years ago until know. I wouldn't call it a transformation or gentrification, but it's decent working people looking for honest housing stock.

The broker I used for this is Brian Ortins -- he's here on BP from time to time. He also runs Ortins Property Management and they're on Park Street (so if you're looking for someone to manage for you while you're on the road for your job, you can put let them manage it)

With my lease agreements i do a 3% increase yearly. The tenants know prior if they want to sign for the upcoming year... and most will stay since moving is a pain... and 3% is not much of a rent increase.

@Stace Caseria Your contractor is right. A lot has changed in Fitchburg/Leominster and they're each improving but those changes are definitely not major transformations. With any luck, as Boston and the immediate burbs get more expensive, the area west of 495 will reap some benefit. I really appreciate the recommendation. I made a note with Brian's name and company info so I can reach out to have a conversation as the time gets closer.

@Steve Bracero  That's perfect, thanks for the tip.

@Jeremy Wirths   Thanks for the recommendation! Is Matthew a broker?

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