Newbie - Southeastern Massachusetts (Cape Cod)

[Tom Colombo]

Hi everyone,

First post here on the BP forums. I am a newbie just getting started and currently reside in East Sandwich, MA (with family).

Like many others on here, I want to invest in real estate to achieve financial freedom and to generate long term wealth. I want to do this through a buy-and-hold approach. I have a decent paying job that I enjoy, very little debt and am currently in the learning/saving process. I do not own any real estate (yet).

Unfortunately, I am also in a bit of an "analysis paralysis" stage that I need to break by taking consistent action. I know that I want to start by investing in my local market, but with the high real estate prices in my area, I'm not sure what properties/ strategies will allow for a stable investment that will support itself after all expenses are accounted for (and preferably with at least 8% ROI). My idea of local is no more than 30 minutes, which would probably boil down to one of the following towns:

•Sandwich

•Barnstable

•Bourne

•Yarmouth

•Dennis

•Mashpee

I’d love to hear what any investors on/near Cape Cod are doing:

1. 1) What strategies do you find work best?
2. 2) Do you focus on year round rentals or vacation rentals? Why?
3. 3) Does anyone here rent by the room on Cape?
4. 4) Are there any Cape Cod meetups?
5. 5) Does anyone know any realtors who work with investors and/or invest in real estate?
6. 6) What are your favorite ways to find deals?

Feel free to answer whatever you can. Thank you everyone for your time and I look forward to the journey ahead!

Best Regards,

Tom Colombo

[Mason Hickman]

Hi @Tom Colombo

Welcome to the bigger pockets community. Tons of great information on here. 

I'm also right here in Sandwich so I would be happy to get together and talk in person. To answer a few of your questions:

1. The strategy I think that would work best for someone in your position is to purchase a multi-family and do a house hack. 

2. Currently I am focused on the short term rentals but have been considering making the switch to long term for my cape rental. There are a few reasons I am doing short term: 

a. high weekly rates in the summer are pretty good with high demand 

b. the vacancy in the off periods allows me to continue to improve the property and do repairs that will increase the value 

c. Older buildings and lead paint mitigation can be extremely costly for long term rentals

d. Massachusetts Landlord tenant laws are very tenant biased

e. Personal and family use of the property during slow periods or last minute cancellations makes it enjoyable for others I care about and they're supportive of investments

I am thinking about switching to long term because of the following: 

a. there is an extreme shortage of quality rentals here on the cape which is leading to an increase in rents

b. Less headache dealing with tenant complaints and management of turnover than Airbnb/Vrbo

c. Based on the higher rents, the breakeven between monthly rents and weekly rentals is getting compressed

d. Lower monthly expenses like heat, electric, that will be passed on to the tenant

3. I don't know anyone that is doing rent by the room as a business but have met a few people that do it under the table with friends. There are certain zoning and use ordinances you'll want to check into for each of the specific towns. 

4. There used to be a meetup that I have seen evidence of in the forums but I am unaware of an active meetup for Cape Cod investors. I would be interested in getting a group together. 

5. Yes, I am a Realtor and work with investors 

6. MLS is still a viable option for deals if you act fast. I am doing mailers and cold calls/door knocking to generate off-market deals, as well.

[Tom Colombo]

@Mason Hickman thank you for the warm welcome and all the great info!

I didn’t know paint remediation was a potential deal breaker around here, but I did promise myself that my first property would be new-ish (~1950 and later). I’m certainly not looking to get into a 17th century house like those found in downtown Sandwich.

For properties built before 1978, is it possible to negotiate the purchase price to account for lead paint remediation cost?

I am aware of MA being a tenant-biased state, however I’ve decided to bite the bullet (at least for my first investment). I do realize there is a shortage of long-term housing on the Cape and this might present some great opportunity.

I am definitely interested in getting together and talking about the local market/ strategies. I’ll send you a PM.

Tom

[Ned Carey]

@Tom Colombo Welcome to BP

I believe analysis paralysis is due to not having enough specific knowledge to be confident to move ahead. There are three types of knowledge you need in REI

1. The strategies, this is the easy fun part, you can learn that in depth here
2. How to evaluate deals, This too you can learn hear
3. Knowing your market. This is where most people fail. If you don't know your market you don't know what numbers to plug into the formulas. This requires looking at and evaluating many many deals. Look at all kinds of deals, listed properties, open houses, auctions (onsite not courthouse steps) wholesalers deals, and most importantly any deal of another investor. Pick their brain of how they found the deal and the numbers.
   

When you really know your market you become much more confident to pull off a deal. Good luck

[Tom Colombo]

Thank you @Ned Carey!

2) I think I have a decent understanding of how to evaluate the deals (at least enough to get me started). I have set up a couple basic analysis spreadsheets for evaluating deals, calculating mortgage payments and estimating rehab costs. I used examples from a couple real estate books as guidance for setting up these spreadsheets.

3) I definitely agree with you on getting to know the market. This is what I need to focus on the most. I have only analyzed a couple deals so far but I definitely need to start analyzing daily and gain a better understanding of typical CapEx numbers for my area, local rents and realistic price points. Reviewing analysis performed by other local investors will definitely provide some useful insight that should hopefully reinforce intuition gained from daily deal analysis.

[Mike Hoefling]

@Tom Colombo

Forget comparing MA to anything in the Midwest. I personally own a few 3 families and looking to expand. Cap rates are lower and some investors will buy for appreciation only. That doesn’t mean it’s the right way for you. Personally I like some cash flow and some appreciation upside.

Don’t overthink the property remember you don’t live there it doesn’t need to be perfect. Owning pre 1950s is common in MA and New England.

Anyways my 2 cents hope that helps!

Mike

[Tom Colombo]

Thanks @Mike!

Yea I have definitely accepted that the local Cape market probably isn’t a big cash flow play. And as you state, I am also fine with a mix of cash flow and appreciation (I’m not looking for cash flow to relieve me of my job) as long as the return is better than the stock market. I definitely do not want strictly appreciation (speculation).

I’ll look into considering older properties if the numbers make sense and if my initial criteria doesn’t produce a deal. I think for my first property I want to limit unpredictable problems that are more common in an older property and try to maximize the enjoyment.

[Evan Derby]

Hey Tom, I see this post is a few years old but how has you luck with real estate been since. I currently live in Mashpee. I purchased a multi family last June which I house hack and purchased a second LTR in Mashpee last September. I've definitely figured out a few things over the years if you wanted to ever meet and talk real estate. Definitely not a pro hahahah, just enjoy it. Looking to buy anywhere this summer and would love to bounce ideas around.