Advice for First Time Buyer in Metro North area

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Advice for First Time Buyer in Metro North area

Geoffrey Barlow
Member since 2019 · 1 post · 0 votes

Hey All,

Aspiring investor and life-long MA resident looking for some opinions and advice from more experienced investors in the area.

I work for a tech company in the Andover area, but grew up and currently live in the northern Central MA area. My goal is to have a house-hack duplex/multi or a single family with forced equity scenario as my first Real Estate purchase. I'd really like to find something within 15-20 miles of the Andover area as the commute from Central MA daily has taken it's toll on me over the years.

My budget is about $325k with about $10k down, although I have been approved for upwards of $400k on a single family, and most calculators online state I could afford $450ish, but I'm not sure i'm comfortable with a mortgage that high.

Anyone from this area will be aware that it's slim picking if at all in this area for those prices. It actually seems very tough to find a decent multi-family in any price range in this area. I'd be lucky even to find a single-family that needs a fair amount of work for $400k in most of the towns I'm interested in.

My question is where would you be looking and what would your strategy be if you were in my shoes? I have gone back and forth on looking more in this area or staying in the Central MA area as there are better opportunities for investment. I've also debated whether it makes sense to start out with a Condo. Should I stretch my budget as much as possible just to get into this area in hopes of an equity situation later?

Any advice or feedback is much appreciated.

thanks,

- Geoff

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Ann Bellamy
Lender · Tyngsboro, MA · Member since 2009 · 3k+ posts · 2k+ votes
6y

If you want to live in the Andover area for personal (commute) reasons, then take steps to do so, and don't stay straddled between Andover and Central MA.  The commute will suck the life out of you eventually.  In order to afford, consider a 3-4 family to live in.  While it may not cash flow, it will reduce your living expenses through the rent on the other 3 units, and will give you valuable experience in investing and landlording.  Lowell, Haverhill and Lawrence all provide lower cost opportunities.  You don't mention children, so I assume you don't have to worry yet about the quality of the school system.  If and when you do, then hopefully you will have saved for a downpayment on a house in a better area, and can convert your multi to an all-tenanted building. 

I don't suggest choosing a bad neighborhood to get costs down, as you will have trouble maintaining good tenants.  Rather choose a better neighborhood with deferred maintenance that you can partially do yourself. 
It will take time to find this property.

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  • David S.
    Investor · Boston, MA · Member since 2013 · 18 posts · 9 votes
    6y

    Indeed not easy. I own and am active in the Lynn area - might be something for you to consider. Today I saw a listing for a duplex in Lynn for $415k - address is 140 Cottage Street, Lynn, MA 01905 - might be a great start for you. Keep looking - there are always opportunities for determined investors!

    1Reply
  • Chace Fraser
    Realtor · Portland, OR · Member since 2017 · 357 posts · 259 votes
    6y

    Hi @Geoffrey Barlow

    Welcome to BP and best of luck in your real estate investing! House hacking is an incredible way to get into buy and hold real estate investing with a relatively low financial barrier to entry… plus the added benefit of reducing housing costs.

    Another thing to keep in mind is, if you're house hacking a multi-family property, that the bank will count 75 percent of the rental income towards your bottom line. This will help you qualify for more so you can get into that 2-4 unit and start your rental portfolio. 

    If you're uncomfortable with a high mortgage payment, one way to combat that is to have ample amounts of cash in reserves. My wife is VERY risk-averse while I'm the opposite. I'd be comfortable with 3-6 months of cash reserves where she wanted 12 months. We settled on having 8 months of cash reserves. We calculated the amount to have in reserves by multiplying the mortgage payment by 8 months. This money will be used to cover unexpected expenses and vacancies. 

    Think of it this way; we would be able to handle 8 months' worth of complete vacancies... that means it would be completely empty, including us, from now to the middle of August. When in the world would you even have two months of complete vacancy? Hardly ever.

    If you buy right and surround yourself with members of BP you're setting yourself up for success. 

    Be careful with condo's. A lot of times the HOA's will have a cap on how many of the units can be used as rentals. And HOA's are a challenge to work with in general. They're made up of people who live in the condo complex who think they know what's best for everyone, they ususally don't have any experience with real estate, and they get to say how the members (condo owners) spend the HOA's money. Sometimes that means coming out of pocket for "special assessments" that can cost upwards of $40,000 or more (I had to pay one and it was rough).

    To wrap it up, I'd recommend house hacking either a SFR or 2-4 unit. Figure out how much you'd like your monthly housing cost to be, figure out how much you could collect in rent from the other rooms/units, and when you find a property that helps you achieve that, and your above location criteria, then go for it.

    Continue to post on and follow the forums... they won't let you down!

    Best of luck

    2Reply
  • Alex G.
    Eastern Mass & Central Maine · Member since 2009 · 252 posts · 135 votes
    6y

    You might want to check out Lowell, Chelmsford, Westford, Groton.

    0Reply
  • Jonathan BombaciBusiness Member
    Real Estate Agent · Lowell, MA · Member since 2019 · 1k+ posts · 1k+ votes
    6y

    Hi @Geoffrey Barlow congrats on making the decision to explore househacking! It is in my opinion the best way to get started in real estate. Thats how I started out and now we help many househackers in MA do the same thing. 

    With a budget of $325k we could find you a decent duplex in the Lowell area. Duplex’s will be tough to get to cashflow unless you’re open to living with roommates in your apartment. Is that something you’d consider? For $400k we could find a 3 family or $500k a 4 family. As people mentioned as you move up in # of units your preapproval will as well due to the rental income. If you’re approved for $400k on a single you could probably qualify for at least $600k on a 4 plex. Whether you're comfortable with that or not is a personal decision.

    If we go out to central MA you’ll get markets like fitchburg and Leominster we could find you a 3-4 family for less than $400k. 

    I specialize in Lowell but we have an agent on the team  @Matthew Perimian, he actually grew up in the Andover area, specializes in Fitchburg / Leominster and that area will cashflows well.

    When working with househackers we find the numbers just work a lot better when your looking at 3-4 family properties with 3+ bedrooms per unit. Property values are high but so are rents. I can get you $1900 for a decent 3 be in lowell. 4 of those at over $7k gross rent per month can cashflow even at the elevated values were seeing today. There are still good deals out there we just have to get a bit more creative. 

    I hope this helps. We host a monthly meetup in lowell and have plenty of househackers there. It could be worth checking out in January so you can network with people doing what you want to do in the same general area. Here is the link let me know if you have any questions or if there is anything we can do to help. 

    https://www.biggerpockets.com/...

    Best of luck and enjoy the journey. 

    Jon

    [email protected]978-710-8611
    Candor Realty4.760 Reviews
    WebsiteView Page
    1Reply
  • Ann Bellamy
    Lender · Tyngsboro, MA · Member since 2009 · 3k+ posts · 2k+ votes
    6y

    If you want to live in the Andover area for personal (commute) reasons, then take steps to do so, and don't stay straddled between Andover and Central MA.  The commute will suck the life out of you eventually.  In order to afford, consider a 3-4 family to live in.  While it may not cash flow, it will reduce your living expenses through the rent on the other 3 units, and will give you valuable experience in investing and landlording.  Lowell, Haverhill and Lawrence all provide lower cost opportunities.  You don't mention children, so I assume you don't have to worry yet about the quality of the school system.  If and when you do, then hopefully you will have saved for a downpayment on a house in a better area, and can convert your multi to an all-tenanted building. 

    I don't suggest choosing a bad neighborhood to get costs down, as you will have trouble maintaining good tenants.  Rather choose a better neighborhood with deferred maintenance that you can partially do yourself. 
    It will take time to find this property.

    2Reply
  • James E.
    Investor · Boston, MA · Member since 2014 · 232 posts · 165 votes
    6y

    I would look into Lowell or Haverhill - there's a good supply of small multi's that fit your criteria. I recommend reaching out to @Rob L. - he owns a large property management company based out of Haverhill and recently started a brokerage aimed at helping investors. 

    1Reply
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