Massachusetts multi-family locations

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Long time reader, first time poster. Happy to be here. This question is geographically specific. I’m looking at making my first multi-family purchase to hold and rent, and am looking specifically in Worcester Ma and Chelsea Ma. I’m looking at Worcester because Multi-families are cheap compared to the rest of the state and I feel like it is a decent rental market due to the many colleges, universities, hospitals, and commuter access into Boston. The lender at my bank also said he’s starting to see more money being invested in that area and I feel there is a lot of room for growth in that city. Chelsea is a rougher area but flanked by a budding East Boston and a new casino in Medford where people with a lot more money than me are investing in. It is very industrial but sits on Boston’s waterfront. Could it be prime for a renaissance? You’ll notice I use the term “I feel” multiple times here. My insights aren’t complete guesses but are there any real estate pros out there with Massachusetts knowledge that could give me more substantial insight? Thank you to all.

Ive owned properties in Chelsea, and Ive made a lot of money there.  Be cognizant of the fact that the city is a crap hole though and while you may have ok tenants, you also run the risk of having bad tenants.  Also the housing stock is generally in poor condition in the city, and you have the typical problems that come from low income areas like crime, drugs and violence.

Hey Chris,

Welcome to the Boston Area! The new casino you speak of is going up in Everett not Medford.

The best time to buy was a few years ago before the casino received their building permit but there a couple of deals that pop up every now and then. I purchase a three family in Everett in 2012 and a two family in Medford in 2016. Both cash flow very well and have appreciated significantly.

You're right about Chelsea and I would add Revere to that list as well if you didn't list it in your previous comment. I recommend these cities not because of the casino but because of the new silver line extension and major development within the Seaport region. 

I personally have been targeting Dorchester recently because there's a lot of value add projects in that area of Boston. Good luck on your search!

@Christopher Petrigno I suggest that you look to the south.

Plymouth and Bristol counties have much more reasonable acquisition costs than Suffolk and Middlesex.

We also aren't in the snow belt.  Those towns north of the MA Pike and west of 495 tend to get a lot more snow.  We tend to either dodge storms completely or to get much less accumulation.

Good target towns for MFRs include Kingston, Plymouth, Wareham, Taunton, Brockton, Attleboro, Fall River and New Bedford.

Chelsie is absolutely emerging as a "hot" place not the Southie and Eastie are being developed.

You do need to consider that an investment in Chelsie for appreciation is very different than Worcester. Worcester, like many other towns and cities have hard-working families and people renting apartments and investors that are looking for a reliable income stream. The closer you get to Boston, the more you are competing from an investor standpoint with investors who are seeking portfolio diversification and appreciation -- both of which increases costs.

In my opinion it comes down to you what you're looking for. If you want a great cash flow you could look at properties in cities like Fitchburg, however those properties are more management intensive.

Hi @Christopher Petrigno I can without any hesitation urge you to look at Worcester. The first place I ever bought real estate was Chelsea and I did extremely well there, but those days are over. I moved my business to Worcester a few years ago and it was the best financial decision I've ever made. The market is so hot and crazy right now, the only way to get decent cash flow is to look at a 7-10 cap market like Worcester. I also strongly feel that we are at or near(maybe even just past) the absolute peak of the market and that banking on appreciation is unwise at this point. Feel free to reach out if you'd like to chat a bit more about Worcester.

I agree with Mike, Worcester will allow you to get the CAP rate you want at a lower price point. There is a huge inventory of "3 Deckers" in Worcester that trade at around $300k. The most important thing about Worcester is to know the market and use a local realtor. An agent from Boston may be able to analyze the property and the financing, but you need to know the neighborhoods in Worcester and who the tenants are going to be and the benefits and detriments of where you buy. I have been in over 300 Multis in Worcester in 2018 and have walked most of the neighborhoods so i have an understanding street by street what you are getting into. Let me know if there is anything i can help you with. @worcestermulti