All Forum Posts by: Sean Kelly-Rand

@Scott Trench and @Russell Brazil - I appreciate the thoughts. I am uncertain if rent control will pass in Boston and what the exact rules will be regardless its always been a tough legal environment as a landlord. That said I believe that if the rules of the game change you just change your strategy. So the additional red-tape will create opportunities  -100%. 

Unregulated units will be gold, rents will spike. Also towns outside of Boston will do well (although I see many following on). Also the mix of owners will change - the additional red tape will keep some novices out - clear the playing field potentially.

The big risk is what happened in NYC - the rules changed dramatically for owners (further restrictions)- a large number will be handing back their properties. That worries me more than the initial regulations.

I don't see it having much impact on our short-term lending business (potentially more demand to convert buildings to condos ahead of the regulations) or and longer term shift more demand for flips/construction outside of Boston as you suggested. 

Interesting times all around!

@Andrew Goodpaster - I would check directly with a local closing attorney - the rules for lending very greatly from state to state and you'll need a full set of loan docs. I am a private lender (senior non-bank lending) in Boston (we have in-house legal). It's easy to send the money out but if the loan docs aren't great and collateral isn't properly secured than it's just living on a prayer to get the money back. (We invest via a fund so it has the diversification and it's senior only, so different risk return than a 2nd loan).

-Sean-

Hey BiggerPockets Crew - Rent Control proposals are big deal for many national multifamily markets as the trend trickles across the country: Rent control in one form or another seems to be on the horizon for Boston and many cities across the nation. The majority of the population in the majority of the big cities in the country are renters and rents have become, in many regards, unaffordable. So the pressure is on the politicians to 'do something' which rent control seems to be the most politically expedient. 

How are investors taking this into account as they are evaluating markets?

Do you expect major allocation changes? 

Are there hidden opportunities? 

I would love to hear expert voices from around the country.

I've already heard from a few developers that they are struggling to raise capital for new rental developments as investors wait to see if rent control goes through. 

Thoughts? 

@Scott Trench @Lien Vuong @Colin Kelly-Rand

@Frank Patalano - have you thought of lending instead of buying? 

I haven't been able to find a steady supply of good rental investments in Boston (or anywhere else to be fair) that I focused on the lending side. We earn a better cash on cash with less hassle. Don't have the same upside potential however also don't have the issue of falling values and rising costs either. 

@Joe Solari - you should check with @Lien Vuong she has a few in NH and Maine that were doing quite well last time I checked. 

I know Boston can be quite restrictive however that also means there isn't as much supply. A lot of the short-term rentals we've seen (and financed) have been for temp housing for traveling nurses which we've seen people do very well with.  If you do find something in Boston and need financing do let us know.

-Sean-

Useful info for Boston Multifamily investors! 

Take away is if your deal is large enough for a Fannie loan that you should be ok at a 6.5% cap?

@Lien Vuong - you should be all over this for your multifamily buyers. What rates are they locking up?

There were banks (First Republic being one) that were quoting 50bps under the implied rates however it came with a few stipulations on deposits.  Not sure those options are still out there.

Of course we're huge fans of the Greater Boston market (strong economy, constant shortage of supply, high incomes = high prices/rents, low vacancy and long term stability)

That said, we lend all over MA and have been a lender in other markets as well (OH, PA, FL, NY). Investors have done well across markets - the biggest factor is basis (buying right) and operations. The more focused and the better operator an investor has been the better they have performed - focus on execution. 

We've taken that onboard as part of our lending/investing - we primarily focus on a single market (Greater Boston) which makes us hyper efficient in the market and allows us to serve our clients better than the national lenders (both for our investors and borrowers). 

So my view, for investors, is that you can crush it in most markets - the key is focus! 

@Apoorva Paruchuri - I would wait to see if you can hit breakeven. To be fair you need to ask yourself is this an investment or a primary residence - if it's really a primary residence and it's just about having a little extra rent to help with the mortgage than breakeven matters less, more important is it a house/location that you want to live in - if this is your key stepping stone into buying more than you really need to buy the first one right.  

It's hard now with rates to make rental numbers work but I suspect that prices will soften later in the year (they are typically lower in winter regardless - seasonality etc...).

Hopefully it's useful thoughts,

-Sean-

 @Jason Merchey - I'm not sure we're quite at 5% for CDs but one bank is already paying me 4% on my money market. On our debt fund (real estate loans) we're targeting c. 10% total return and have a 5yr+ track record. Combined it should get you a blended 7.5% ROI. If you are interested message me and I'll share more with you.

To your point, I was around in 08 and we started this fund back in 2017 seeing the next downturn wasn't too far off in the horizon and we needed a safe place to ride out a storm while still earning a decent return.

Hey @Nicholas Olney - if you have transactions that require a quick close let me know. We can generally close in 10 days or less on loan amounts of $250K to $6M. 

Also I have 100+ contractor/investor clients across all of greater Boston. If you want to run a transaction by me I probably have an investor for it and can do the financing all in one.