All Forum Posts by: Kate Ziegler

Hey @Andrew Easterling, congrats! My partner (@Jack Romano) and I house hacked our first multi in JP near Egleston in 2013, and even though it was at the absolute top of our budget at the time (we used FHA, 8% down, inherited tenants in two units, lived in the third), we were able to force appreciation enough to refinance out of PMI and then leverage a HELOC to purchase another multi within four years, and the house carries itself. We're currently renovating a live-in fixer-upper duplex in Roslindale. I've also seen clients have great success with duplexes specifically in Malden in the past few years.

Long story short: it's feasible, if challenging. Inheriting tenants is a risk, but that income counts toward yours for loan approval purposes. FHA loans are a bureaucratic nightmare, but they work in gray areas if you're needing to get creative. Above all, trust your numbers, and be patient for the right spot. 

More than happy to chat online or off if you want to talk more about the neighborhoods you're looking at and how we managed there. (We lived in Roxbury for five years before buying the JP three-decker, so very familiar with that corridor of the city.) No matter what, good luck!

@Kendrick Prinston, hi! Agree with Charlie on short term in Boston - new regs make that less feasible in Boston proper - but I work with folks who have robust portfolios of short term rentals in Malden and Chelsea, with the transit access of Boston but fewer limitations. Still feasible!

Same goes for wholesaling here - unless you're in trades, hard to get good numbers on quick turnaround in Boston proper, but with some access to capital, more feasible in Malden, Chelsea, Everett, or in Dorchester, West Roxbury, even Norwood.

I know we connected off-forum also - happy to chat more if it helps!

@Jackson Kellogg Welcome! Whether this year's market or next, trust your numbers - there are deals no matter what, but it might take time to find something that works for you.

My first multi (JP three-decker) was also a house hack with FHA lending, and it took 18 months to find and win the right combination of condition (FHA has stricter rules on condition, no matter your trade experience), existing tenants, area rents, and location we wanted to live; be patient, be thorough, start looking soon, and trust your numbers. Find a lender and an agent who understand what you're trying to do and will be willing to work with your from square one to keep you moving in the right direction.

In the Boston area, for house hacking especially, cap rates and cash flow will look a bit different than other markets - but our rental market is also more expensive and more stable than elsewhere. For multis, the numbers of colleges and hospitals here really helps cushion from contraction for buy and hold investors, because demand for rentals is always high.

FHA in the Boston area IS possible, and your trade network will serve you well as an investor. Be patient, trust your numbers, find a team you trust as well. Good luck!

@James Mercure: To add to @Charlie MacPherson's good notes re: flips (avoid Boston proper unless you're buy and hold right now), be sure to look closely at your fair housing requirements as an agent versus a landlord when you get into rental investments. Specifically, for me as an investor, if I were NOT licensed there are some smaller multis (2-3 units, the most common type we've got) that have exemptions for protected classes in certain cases, but as an agent you waive all exemptions.

Obviously this isn't a big concern, but I've seen it trip people up and it's a hassle if you forget.

Good luck!

@Danielle Z. We did this (reappraised a three-decker in Boston to apply for a HELOC to fund investment down payment on another, also Boston) and though rates are variable on the product we have, they're fixed for a period of time first - so paying it back is a priority.

In terms of timing, it does take some time to get through the HELOC process, so you probably want to start sooner rather than later, but I would discuss with your mortgage lender as well. In our case, our usual lender recommended a different local bank for the HELOC based on rates and his experience, and we kept him in the loop so we had a sense of timing both sides. If your next investment is in Greater Boston, you need all of your ducks in a row sooner rather than later, so you can move fast when something is a good fit. The current standard closing timeline is too short to also get a HELOC approved in time, and the mortgage lender will usually need to see those funds available to underwrite your next mortgage (though I'm not a lending expert, and it's possible if you used the same lender for both products, this might condense a bit more).

In terms of strategy, we got the HELOC for as much as the lender would possibly give us, but only took out what we needed for the specific property when we found it. In our case, though, the HELOC required us to take out a minimum amount ($25k) right away, so approval started the clock and we were paying interest and needed to be ready in all other facets, to not waste time once down payments was out of the way.

Happy to chat more offline if it helps, or can send you lenders I worked with in this area. Good luck!

@Adam Anderson: You're right, vacancy rates ARE extremely low in Boston (currently hovering just over 3%), but for this very specific target you've mentioned be careful about timing - it's much, much harder to rent a 3bd unit outside the standard 9/1 rental cycle, versus 1-2bd units, in my experience. We learned this the hard way in JP the first time we turned over a 3bd; left it offline for a month to gut bath and kitchen, ended up not renting it until February (only willing to drop rent so low - we were positioned to float it, just would rather have not - but feedback was all "I don't have roommates yet but I love it..." and we didn't want to match-make, either). Obviously not a concern for the unit you'll occupy, but keep it in mind as you're searching, and maybe consider inheriting existing tenants if you'll find yourself off-peak. Also, for this area, be sure to ask your lender about loan products and rates specifically for the neighborhood - since you'll be occupying, there are products available with exceptional terms for state-targeted areas in Suffolk County, and last I checked Dot was on the list.

@Ned Carey: Much of the multi-family housing stock in Boston was built during the city's peak population boom, 1890-1930 (brownstones and wood three-deckers alike), as an upper-middle class response to tenements to increase density. In the 30s, public opinion turned against anything over two units, so finding newer multis is a really binary search - either 1914 or 2014 (since the past decade as Boston approaches peak population again has turned favor back to housing density, and rents warrant the cost to build). Lots of quirky mixes of systems, especially in the parts of Dorchester Adam is referencing where full renos and condo conversions haven't swept through yet, and especially in the price point under $750k.

@Christian Nachtrieb Definitely find that out! In my experience dealing with the BHA is one headache, but it's much easier if the voucher tenants don't have any portion they're responsible for - just one check/deposit reliably six days late, instead of chasing a tenant for $25 also. Good luck at Chauncy St!

@Christian Nachtrieb I'm sure your team is already on it, but be sure to have the BHA contract transferred to you at closing/immediately after - the org is switching to direct deposit payments currently, and with wedding planning in the mix you definitely don't want to risk missed rent payments adding to your stress while you try to get BHA to chase them down if they send to the wrong owner. Do you know what rent portion (if any) your BHA tenant currently pays you directly?

Hi @Andrew Oram! Bit delayed finding this thread, but chiming in here to say it IS still possible to house hack Boston proper, and definitely in the surrounding areas, but it takes patience and creativity. My partner and I house-hacked our first three-decker in JP, and though it didn't cash flow immediately, it has been for years now. It took us 18 months of offering and searching to find this one, and we happened to catch it in mid-August in a price drop (MLS), and were willing to keep the existing tenants. (Most of our competition at the time was condo developers looking for quick turnover.) The process was a nightmare and the seller couldn't get out of his own way, but it was worth it and we leveraged that property for our next multi within four years.

The numbers for house hacking here will never look the same as in other markets, but the rental market is so strong that it buffers contractions to some extent if you're willing to hold long term. (And, if you're paying some ungodly amount in rent anyway, who cares if it fully cash flows immediately? If you're willing to live there, it just needs to fully carry itself if you leave, imho.) The down payment for this is the struggle, without a doubt. Happy to discuss our specifics more offline if it helps.

All of the advice above about finding off-market deals is excellent, and would have saved us some time if we had been that savvy at the start, but with condo inventory so low here multi owners WANT to get to market so they can get the most value out of it. Second what @Dan K. points out about inspections, especially when you can't throw more cash at the down payment/purchase price to compete.

Keep an eye on Chelsea, Everett, Malden, West Roxbury, Roslindale, Roxbury, and the Grove Hall side of Dorchester - there are still multis that haven't been converted to condos, all (to varying degrees) on transit and feasible with some patience.

@Matt McGuire I can't speak to specifically the market in TX, but in my local market, investment companies often bought older multi-family housing stock to hold during past market contractions, and they work to increase rents and hold until they're ready to cash out to reinvest in a new project (sometimes new acquisitions, sometimes new developments). There are a few investment companies locally that I would absolutely be wary of, because of their reputation and my experiences first hand; there are others that I would take at face value and assume they're looking to fund a new venture. Ask around and see what you can find out if you're wary.

Inheriting tenants can be a mixed bag! Make sure you request copies of any leases or tenant agreements, and written confirmation from tenants AND sellers of what if any deposits are held (that would be transferred to you in the sale). The downside in inheriting tenants is that you don't have a chance to vet them; the upside is immediate rental income, not needing to make major upgrades to get a unit on the market, and having tenants who know the building. Work hard to ease their anxieties once the sale is complete - it's stressful for tenants to go through the sale process when they have very little control over it. Ask up front what things they may have reported that the past ownership neglected or ignored, and set the tone of the relationship early. Good luck!