All Forum Posts by: Katherine Robbins

@Daniel Ortiz The reason your best bet/the movement is outwards from the city is because Boston proper is A) too saturated with other investors/buyers/people in general and B) way too expensive. You can't get anything in Boston for a good price unless you get into a not so nice neighborhood. It would be great if you had a million + to buy a multifamily in the city then you'll always have cash flow and would be making money on that place till the end. Not many people are able to do that and especially the newbies. Your best bet to get in the game is head somewhere like Chelsea or Everett where the movement to trending upwards and you can get in low and hold long enough for the appreciation to catch up and make you money. 

I'd recommend getting a 203k loan in one of those towns I mentioned, live there for a year or 2 and have your mortgage paid for by the other renters (thus save money every month) and sell the place - take that profit in a 1031 exchange and move it into another property tax free. You'll start to save money along the way and eventually be able to buy more properties or bigger and better ones. Buy/holds are a long term deal- if you're looking for short term, try flipping! 

Hi Daniel! Welcome to the world of MA real estate investing! It's quite a tough market to understand as every town is different and has it's own numbers and things to consider. 

I currently flips houses in the north shore and we're finding that we can acquire for less being as the homes are older and those selling the older homes tend to be owners who have lived there 30+ years, thus they're in need of some updating. The resale value is relatively high in the north shore as there are many more "higher end" neighborhoods and the access to the beaches and quiet from the city is ideal for some. You're usually able to get more backyard and not be so close to your neighbors too which tends to drive prices up. 

In terms of buy and hold, your best bet is to look around colleges/universities and the areas, like mentioned above, that are going to be "the next Somerville". It's hard to spot those areas if you're not familiar but just keep an eye out on market trends, new construction and rental availability/pricing. I'm also an agent and work with a lot of new investors who are looking to owner occupy their first property and either pay their mortgage that way or make some cash flow until they can buy another home to live in and keep the first as an income property. I find the best way to build equity is to consider a 203k loan for a multifamily. You'll have to put some elbow grease into it (not literally, you'll hire a contractor!) but it's a sure way to buy low and increase the value quickly. Plus it's easier to find mulitfams that need some updating then it is to find move-in ready at a decent price. I'd look in Chelsea, Revere, Malden, Everett and push up towards Saugus. Lynn hasn't quite reached it's upward trend yet but if you get into the north shore- Peabody, Salem and Beverly are nice. Salem State will always need rental properties!

I use Bruce Mcvittie out of Newton, MA. We flip houses and have a very complicated business and he's been wonderful to work with. He also does a lot of the finances for the Realtors in my Century 21 office. Shoot me a message if you're interested and want his contact information (or I assume you can google him!). 

Hope that helps some! 

Hi Edgar, 

My company flips houses, does design work and home staging. I'm the interior designer and home stager for all of our projects and have been staging other homes (virtually and vacant staging) for the past year. Virtual staging is a much cheaper option if you ever have a vacant property. My costs are a lot less than a larger company typically charges because I use a lot of my own items and just rent out larger pieces that are specific to the theme/design of the individual home that is being staged. My company is Peak Design & Development if you're interested in checking us out. I'm happy to send you more information on pricing etc. Shoot me a private message if you're interested! Thanks!

@Lonnie Hammond This isn't something I have actually done, I just have a close friend who was the contractor in the scenario I listed. Honestly, I think the best way is to have an attorney draft edits that express the verbiage you're looking for. Maybe you have an attorney you've used for other things that you can ask? Just make sure to list the timeline you're shooting for, that he needs to meet certain deadlines (i.e framing should be done by this date or a penalty will occur etc) and include the percentage in which you'll be splitting the profits. Put that he'll be receiving money once milestones have been met and that money will be withheld if he doesn't meet these timelines and that his percentage of the profit will go down if he's way over on time/money/etc. I can ask my contractor for a copy of his contract and get back to you if needed. 

@Nathan Smith In my example, the money guy funded the whole thing. I think with them, they knew each other and the money guy needed a licensed contractor to do the work. I believe that was his only project at the time and the contractor knew that the sooner he finished, the sooner he would get paid. 

If the "money guy" splits the profit 50/50 on a deal, he's typically still getting a better return on investment then if he would lend his money out to other flippers at a 13%-15% interest rate like most hard money lenders. In this scenario, he needs a contractor and the only real way to get someone to go in on deals with you is to give them more incentive, i.e the 50/50 split. If you hire a regular GC to complete the work then you run the risk of things not being done on time among all the other things that can go wrong with unreliable contractors. In the interest of making a long term relationship, it might be beneficial for everyone to create this kind of partnership to ensure they're dedicated to you and to getting your projects done. The better the relationship, the greater likelihood that you'll use them again for other flips. 

At least in what I've seen in the flipping world, this is how a lot of investors get contractors on their team. It's really hard to find a reliable GC who has the time to dedicate all of his attention to you and your projects. You have to find one that will become your partner in all of this. It becomes more beneficial for a contractor to partner with an investor and work on all their projects than for them to go on taking regular GC work. They will make more money as part of an investment team. It's a win-win, you just have to find someone you trust. 

@Pearce G. then incentive should be to finish the project on time and for the best quality and lowest price point, they will make more money with a higher profit. BUT in my example the investor was paying the GC a monthly "paycheck". I suppose if you did that model, you could say the paychecks stop coming if the work isn't done properly or on time. You could also have a clause in your contract that says if he messes up or isn't done on time that you can lower his profit share. Depends on how well you trust this contractor to do a good job. 

Hope that helps everyone!! 

I've seen it done like this - you provide cash up front and he does all the work and you guys split the profit 50/50 in the end. Real example: Purchase price = $92,000, Reno = $75,000, Sale price = $290,000. Closing/Holding Costs, roughly = $15,000. Profits were give or take $108,000 and they split that in 50/50, so each side took home about $54,000. This particular project took about 6 months and I know the contractor got about $3000/month from the investor as a "paycheck". Everyone has incentive to finish and obviously you have contracts in place and milestones that need to be made on time but it worked out for these guys using this model. 

Chelsea, Everett, Revere Beach are good places to check out. Tons of new development in Chelsea and Revere Beach and Everett is getting the new casino in a few years. Try a hard money lender or a 203k loan if you're strapped for cash. 203k is a good alternative for investors, just refinance out of the loan once the reno is complete. I use Universal Capital for my hard money lender. They're great to work with and have decent rates. The north shore is a solid market too. Usually less expensive to get into because of the older homes but great ARVs if you're looking to flip. Message me if you have any questions!

Chelsea has a bad rep but is seriously up and coming. New development everywhere including a new FBI building off of Route 1. Get in now before everyone gets priced out. Everett is good too because of the new casino. Malden is tough when it comes to inventory, not much goes on and it's usually a little bit more expensive. East Boston has already gone up in price too unless you can find someone willing to sell you something off-market. North Shore is a fabulous place to start investing. Older, historical homes that need work and can sell a top dollar. Also check out Lynn/Revere Beach. Tons of new development there as well. Feel free to message me if you have any questions! 

I would recommend looking at the Chelsea market. I think East Boston has already hit the transition so you might be too late on getting in there for a lower price. Everett is a great place to look because once that casino hits, you're looking at people needing housing to work there or rent/Air bnb. Malden has some nice areas but I think you might have missed that market as well. The prices are already increasing. Chelsea has a bad rep but is really up and coming. I just flipped a 2 family there and from the time I listed last year to the time it sold, the prices went up every where. There are some areas of the town that aren't bad. 

Hi Michael, 

I'm a Certified Renovation Specialist through Annie Mac Mortgage. Basically means I'm a Realtor that understands 203k/renovation process and has a piece of paper to prove it. I also flip houses so I get the process from an investor stand point as well. Feel free to message me with any questions! 

We have a great relationship with Annie Mac and they really know what they're doing in the 203k department. I would highly recommend talking to Cory Parker who works out of my office. Message me for his email!