All Forum Posts by: Chris Suharlim

Quote from @Jonathan Bombaci:

I know this post is centralized around out of state investing but with $70k you have plenty of options here in MA or other parts of New England. There is something to be said about being able to drive by your properties if you need to without having to hop on a plane first. 

You should be able to find a nice small multi-family in Worcester county within your budget and it should cashflow nicely. We just submitted an offer for a client on a relatively turnkey 5 unit at $235k and it’ll cashflow well on day 1.

Either way congrats on deciding to get started in real estate and don’t downplay the $70k you saved up for this. That’s plenty of money to get your foot in the door.

Best,

Jon

Agree with Jon here. I also live in Boston and closed my first multi in Worcester last year. There’s a feeling of safety knowing that you can see, touch, care for you first investment property. Its an hour drive, which we do 1-2x/mo but I cant imagine investing long distance and not being able to keep my finger on the pulse of my investment. Maybe for others but not for me :)

Investment Info:

Small multi-family (2-4 units) buy & hold investment in Worcester.

Purchase price: $560,000
Cash invested: $150,000

Triple-decker Worcester property (3-family) with huge backyard. Purchased October 2021, did cosmetic rehab over the next 6 months, now in keeping with fair market rental rates 20% above what was initially estimated.

What made you interested in investing in this type of deal?

I like the multifamily approach for efficiency. I have a property manager for issues/repairs. But I like to be hands-on: writing welcome notes, preparing welcome gift package, monitoring the property regularly, and keeping it in good shape. But I'm very much busy with the 9-5 grind (often it's 9-9) and only have the weekends. And so a small multi like this allows me to still be in touch with the pulse of the investment, make decisions on tenants, while only spending a limited amount of time

How did you find this deal and how did you negotiate it?

My agent, Brian Allen, found this property on the market. We waived inspection as Brian was quite confident in the limited issues it has structurally. We'll need to upgrade the roof and driveway at some point, but otherwise quite intact. Just look outdated. We put 10k above asking but the seller went with a better offer. One month later we got a call that the first buyer fell through and we jumped back in.

How did you finance this deal?

25% down on investment property, with a local credit union. My agent (Brian) also connected me with a few lenders and property managers. I relied a lot on Brian for his connection and expertise

How did you add value to the deal?

I can be very particular in terms of cosmetics and the look-and-feel. After purchase, we put new flooring and fresh paint for the units, put in new appliances, take professional photos that will then be professionally edited and virtually staged. Probably overkill for the Worcester market, but I do it because I like it. I also got insurance that will allow small pets, so we can attract the tenants who want to enjoy the huge backyard and nearby dog park. Also got HomeGoods decor for common areas

What was the outcome?

6 months in the process of stabilizing, a few disastrous contractor/agent deals, and tons of phone calls later, rentals are 20% higher. Student roommates are often the situation. I was an international student myself, and so am familiar and comfortable with their condition (no socials, no US assets, etc)

Lessons learned? Challenges?

Having a knowledgeable agent is definitely crucial. I've experienced a lot that's more of a 'door opener' or one that just accompanies you to open houses. Brian Allen is the real deal. He goes out to open houses every weekend and is very generous with his opinion. A few that stuck with me were "The layout is funky, may be useful for a boarding house, I don't like it", "The basement is a mess, I won't buy this". "This is a Frankenstein house, I'd rather spent my money in the triple-decker before"

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

A big shoutout to Brian Allen (Worcester multi), see his youtube. His weekly educational 'tours' helps you gain confidence in making the big move. This was my first big deal, you know. And it's scary taking all your savings away from the comfort of an index fund that ticks up and down, towards a deal that's less liquid. I didn't want to make the wrong move. I doubt I'll have the confidence to get into MultiFamily Real Estate if it's not for Brian. Now on to my next deal!

Quote from @Andrew Freed:

@John Semioli - I personally like the HELOC approach. I used this approach to purchase my last 4 deals.

When it comes to HELOCS, the magical thing about them is they are interest only. Hence, from a lender perspective, your DTI is only affected by the interest only payment and not principal + interests. This allows you to borrow more conventionally while still leveraging most of the equity in your home, which can go up to 100% LTV. HELOC's also don't have any closing costs and are super easy to grab from.

The caveat I would like to mention is, in this high inflationary period, it is probably best to pay off a variable line of credit as soon as possible. Given the extraordinary rise in interest rates in the short term, interest rates are only expected to rise. Don't plan on holding onto a large balance on the HELOC for a long period of time b/c those interest only payments could creep up depending on the landscape of the market.

 Andrew, any recommendations for HELOCs that go up to 100%? I’m also in worcester area like you, and all people I called are up to 75%. Thanks!

Hi fellow investor. A newbie here has only been lurking so far. I’m working off of a buy-and-hold strategy for cashflowing (or at least break even) multifamily.

Five months ago I closed on my first property: triplex in worcester $560k, with 25% down at 3.5% 30y fixed. @BrianAllen is my agent - very knowledgeable, generous with teaching newbies, and patient - fully recommend. Did small rehab, and placed new tenants. Brought up rental income from 4400/mo to 5200/mo. I haven’t had a new appraisal, but comps in the area sold for 660-670 now. Going well so far, and excited to get into my second deal.

In a dilemma now: refinancing seems expensive. A few lenders I called quoted 5.25% for 70% LTV, but the BP podcasts seem to indicate the rates will keep going up. Probably still somewhat cashflow, but less. Should I bite the bullet and tap into this 45-50k equity so I have enough for my next deal? (Another investment triplex in the area)

Second alternative is to continue saving and wait 6-8 months - then getting back into the market late-fall. Market activities in New England would’ve slowed down then. Plus we’ve seen the huge increase in price in the last 6 months — properties might’ve gone up even more

Third option is to explore doing duplexes, or SFH instead, so its more affordable today, but i'll lose the economies of scale of triplexes (which i like)

Would love your thoughts on this. Thank you!

Chris