Flipping in Boston suburbs with good school systems

11 Replies

Hi all,

For the past few weeks I've been researching cash flow properties near Boston and Providence (with the logic that I can't always be on site to do an extended flip or new build). 

Prior to that though I had been researching suburbs of Boston with good school systems, strong median income but somewhat (for Boston) affordable prices. Was thinking these might be good candidates for flips, whether intense ones or more modest cosmetic focused projects. The price increases in the city lately seem faster than in some suburbs. I think at a certain point young families will look at school systems in places like Sharon, Boxborough, Holliston and switch back into that way of living. 

I know there is so much press about the Millennials seeking city living, and I myself grew up in the city very happily and continue to live that way, but I think there may be a mispricing arising. Should the price per square foot be so much cheaper in these places than in the city? 

Does anyone agree? Are there profits in flips in these leafy towns with high rated school systems? If you agree I'd be interested in hearing how I might be able to partner up on flips.

I have learned from the bigger pockets podcasts: find partners if you need a piece of the puzzle. I understand we'd need a long period of getting to know each other and building trust, plus strong partnership agreements. But want to see if the idea has any legs in the first place.

Many thanks!

Jennifer

Hi Jennifer,

Boston suburbs have incredible demand still & very little supply. Lots of families are looking to move in. As for profits, there’s a lot of profits to be made even with quick rehabs (doesn’t have to be a ground up construction).
We’re rehabbing a property in Medfield, MA now and we’re anticipating record profits (for single family flips).
Feel free to PM if you have specific questions.

Thanks Joni! I'll Pm you later today when back at my laptop

@Jennifer Stillman My go-to resource for schools is www.greatschools.org.

I think you already know my point of view on the suburbs.  

I grew up in Boston and wouldn't move back for anything.

I like peace and quiet, not traffic and sirens - but there's a butt for every seat.  Boston is full of people who wouldn't live anywhere else.

I think certain parts of Boston are priced unreasonably high. Right now the average price for an MFR in Boston is $1,279M. If you take out the war zones, it's much higher - and even the the war zones are expensive.

For example, the average price for an MFR in Plymouth County is $508K and the average in Bristol County is $324K.

That's why I strongly prefer the south shore and south coast.

Hi Jennifer,
I am new to real estate investing, live South of Worcester and am trying to research the same information. Would you have any interest in talking further about your experience in doing rei market research?

Originally posted by @Meg Schlesman :

Hi Jennifer,
I am new to real estate investing, live South of Worcester and am trying to research the same information. Would you have any interest in talking further about your experience in doing rei market research?

@Meg Schlesman

Hi Meg,

Here's an export from a spreadsheet I built. I looked at household income and home cost and did a ratio, like a P/E. Then I added in schools. I struggled to download data on schools quickly (hadn't spent huge amounts of time on it before I paused on this research due to my location challenges!). If anyone knows a good trustworthy school source that can be downloaded for free to Excel let me know.

I cross referenced the top scorers on zillow/greatschools (can't seem to download the data from greatschools.org) and confirmed they were at least 8s.

As I continue to develop this sheet I'd like to check the income and home cost data (I'm sure the home cost info has problems, but this is just a first start). I downloaded the house price data in June 2017 so could be quite different now!

I also want to overlay commuting time to Boston, is there commuter rail,  info on local employers, house starts, etc.

There does seem to be a lot of high end building in some of these towns. Not sure whether it's a good sign for my project or not.

I realise some of these towns are far out but on the other hand some of the 495 ones are commutable to the 495 tech jobs. I think those exist but my knowledge is too vague, need to brush up.

Happy to stay in touch on this, send me a PM if you want. I'm new here so not sure all the protocols.

Lastly, there were some well scoring towns in Western Mass and near Worcester, in terms of having good income and reasonable housing price. I didn't dig into them because they are outside of my current focus list, but perhaps I will come back to them.

Normally I keep meticulous records of where I got my data from but I think I saved over the page that showed the source for household income and home cost. However these are kind of common stats that I know I can find again and the figures all looked reasonable. And again these were just a rough starting point.

If you are wondering where are certain towns with great school systems (e.g. Lexington, Wellesley), their House price / income ratio was too high for my filter. I think those towns are in a league of their own, with high finance cash buyers and biotech billionaires, etc. Out of my league for now, but maybe someday!

The data I'd really like but haven't compiled yet is the house price flip premium. I was just trying to proxy for good starting points.

City Median_Household_Income home_cost House price/income Niche 2017 Niche 2018 rank public schools Zillow/greatschools.org
tyngsborough $ 104,888 $ 312,800 3.0 22   8
medway $ 108,181 $ 361,100 3.3 15   8
ashland $ 95,296 $ 321,100 3.4     9
boxborough $ 106,597 $ 376,800 3.5 2 11 9
holliston $ 107,192 $ 380,900 3.6 12   9
littleton $ 107,518 $ 388,000 3.6 27   9
sharon $ 123,942 $ 450,400 3.6 6 26 9
westford $ 121,136 $ 445,400 3.7 7 12 8
stow $ 112,375 $ 429,600 3.8 8   8
chelmsford $ 92,549 $ 356,700 3.9 16   9
Originally posted by @Charlie MacPherson :

@Jennifer Stillman My go-to resource for schools is www.greatschools.org.

I think you already know my point of view on the suburbs.  

I grew up in Boston and wouldn't move back for anything.

I like peace and quiet, not traffic and sirens - but there's a butt for every seat.  Boston is full of people who wouldn't live anywhere else.

I think certain parts of Boston are priced unreasonably high. Right now the average price for an MFR in Boston is $1,279M. If you take out the war zones, it's much higher - and even the the war zones are expensive.

For example, the average price for an MFR in Plymouth County is $508K and the average in Bristol County is $324K.

That's why I strongly prefer the south shore and south coast.

Hi Charlie,

@Charlie MacPherson

I have 2 separate research projects: cash flowing multi family and flips of SFR. For SFR the school systems are super important. I am not sure if my data is off but even the wealthy towns on the South Shore don't score as well as some Metro West towns. I'm sure people do just fine growing up in these places but it's strange how many of their high schools don't feature in the top 30 lists or manage higher than 6s or 7s. Perhaps people are sending kids to private school more than in Metro West. I know that numbers also don't tell the whole story.

For cash flowing multi family I'm interested in the income stream, and whether there are good cafes, restaurants, etc nearby enough. I'm paying less attention to schools there. 

Maybe I am taking the wrong framework but that's my current thinking. Of course if I find a good schools system and cafes, that will be the jackpot!

I actually really love the South Shore myself and had many glorious beach days at Nantasket, Humarock and Green Harbor growing up. I do worry though about the commute outside of commuter rail towns. I had a short time in the late 90s commuting on the Southeast Expressway by car and I'm still in a bit of PTSD. So that's why trying to understand for these further out towns, how are people managing to commute. Do they work from home? Work close to their home somehow? Etc

@Jennifer Stillman Well, there are almost 500,000 people living in Plymouth County.  Somehow, we all manage!

There is a lot of commuter rail access here, as well as P&B bus, commuter boats from Hingham and Quincy and the ever popular RT 3.

I suspect that most people going into Boston just leave early enough to account for traffic.

When you compare Middlesex County to Plymouth County, you'll find far higher prices.

In the last 2 weeks, homes sold in Middlesex County averaged $636K while Plymouth County averaged $424K.

That tells you that not only will you have a higher acquisition cost for your flips in Middlesex County, you'll have to rehab them to a higher standard of finishes.  Think Thermador vs Samsung.  Silestone vs granite.  Imported hardwood floors vs oak.

My opinion is that as long as homes are in demand, as long as the schools aren't truly sub-standard, you shouldn't shy away from investing there.  

You have to differentiate the places that you would most want to live from the places that offer a good return on your flips.

@Charlie MacPherson

Great advice, I will definitely consider it. I didn't want to offend any of the 500k there, like I say I love the south shore had just assumed traffic got worse since I was there but the commuter rail and boats have been expanded so very happy to stand corrected! 

I have found in the DC area that the areas with good schools are much harder to flip in. The demand for the areas with good schools creates a much higher demand that pushes up the price point on non-rehabbed homes so that the price spread is much much tighter than in the areas with bad schools.

Hi Jennifer,

I live in the Boxborough area and have lived in the area for about 15 years. Also, I'm a real estate agent. If you have any questions about Boxborough or the surrounding towns, pm me. I'd be happy to share my insight.

Thanks for the replies. Carol, I'll PM you. Russell, thanks for the insight! 

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