All Forum Posts by: James S.

Ah OK. So well outside my purveyance (as a very very small-time investor of well less than 25 doors). Sounds like a good buy maybe for people who have a lot of money to toss around; I'm still going to keep advising us small guys pass on stuff in Rochester most of the time as it's not worth the headache at our scale.

Yes the outskirts are better than downtown usually. The area around the hospital climbing up towards Somersworth and down 108, Salmon Falls Road, new subdivisons away from downtown. Gonic is NOT a good part of town, in general, even with the country club. Yes, the houses immediately near the club on Church St (and some of the areas off 125) are fine, but as you get towards 'downtown' Gonic, which is where the Church, the Mill, and The Post Office are, are decidedly not good areas. In fact the reason the church down there is called First Baptist Church of Greater Rochester is intentional; it used to be First Baptist of Gonic (30+ years ago) and they change they name to avoid the negative association that the word Gonic has with it. Drive down Pickering, Church, and Sherman Streets and I think you'll see a little better what I mean. That's not to say it's not getting better, it is, because almost everywhere is getting better, but no one in Rochester will tell you Gonic is a nice area.

To my knowledge there are not any condos or townhouses in the Gonic area; the only apartment complex I can even think of is an old folks assisted living or rent controlled place on Felker St. To be fair, I mean the downtown-ish portion of Gonic; I'm sure they are putting in townhouses on some random street off of 125 somewhere or further down Pickering before it gets to Dover and becomes 6th St, but while those areas may encompass Gonic that's not what people think of when you say the word. Since there aren't a lot of rentals in Gonic, and the ones that are are mostly section 8, it's hard to say for sure. 1000 is what you would get for a townhouse/condo rental in many parts of Rochester; I don't know why someone would pay the same to live in Gonic.

Again, if you go further into the sticks, they are building lots of 3bd 2bth townhouses and renting them out for 2k, even in Rochester, but the 1bd condo/townhome areas aren't really that much of a thing here, and most that are are owned outright by the tenants, or have been bought up by big developers like Chinburg and the Mills.

Hi Matthew,

I'd love to get more information from you about what and where your clients are buying in Rochester. And are they local or out of state investors? 

I haven't seen a large climb in values there from my own searches, and I know that the perception of Rochester among renters hasn't changed. That said the best time to get into a market is a few years before that change is really noticed, so im not opposed to it per se.

Is it large companies just do better there vs individuals? Do you need to be a certain type of landlors (which I very much am not) to do well there?

anyway would appreciate any input you have that could help me understand that market better.

Thanks

James

Hi Mahdi,

Check my post history for a lot more in-depth information as i answer this questions about the seacoast 3 or 4 times a year.

In short, vacancies are less than 1% in seacoast nh. Portsmouth is outside of everyone's price range, Dover is bordering on unattainable for entry level but lots of opportunities for people will a few million to play with, and Rochester is very very situational and I generally discourage non-local investors from buying there as it is very easy to end up with D class tenants in a D area if you aren't careful. 

Would you mind sharing some details of the condo complex you are buying? I would like to start looking into that avenue as SFR and small multi are getting cost prohibitive here.

Also, dont sleep on the property tax. Mine just went up a grand this year on my primary home in Dover.

@Jon Proulx

The worst streets in Dover, to me, are Durrell, Pierce, the Lower end of Broadway and NY St. It was always common knowledge that NY was the worst, but I think Durrell edges it out now. This is true even as Dover's city council and planning board are doing everything in their power to squeeze every working class resident out of that entire area to put in more of the luxury apartments in the aforementioned buildings I complained about (like when they razed some buildings on Mechanic Street to squeeze in a bunch of townhouses).

As I find to be the case in just about every neighborhood in this country, the quality of the actual physical street you drive on and the sidewalks you walk on will be the best indicator of the quality of a neighborhood. Drive down Silver St in Dover (A grade neighborhood), which has a perfect newly-paved street, then go to the good side of 108 north of downtown (where I live, solid B+ Neighborhood), which has streets in good condition, but Unitil cut them up a few years ago and they haven't been resurfaced yet. Then drive across the street to the "bad" side of 108 and you'll see the numerous patch jobs, loose pavement, warped sidewalks etc. (B- to C neighborhood). Same city, same resources, all within a mile of one another, but the quality of the actual street is worlds apart. It's my 100% go to move to quickly analyze a neighborhood in a city I'm not familiar with. It's probably not right all the time, but I'd be shocked if I couldn't get 80+% accuracy on a neighborhood rating grade by just looking at the street itself.

Hey Jon, I've thought about mail campaigns as well. Though in this market everyone on the seacoast, even the most oblivious seller, is aware that everything in the area is through the roof.

I've effectively written off Portsmouth as an individual investor. The only way to make money there anymore is to inherit a property, or be a developer. Since I refuse on personal conviction to every build one of those horrendous mixed-used eyesores that are becoming an every present blight on the character of Portsmouth (and now Dover), that means the area is out for me. It also helps that I don't have the money to do that anyway :)

Dover is fast becoming the next Portsmouth, as it's the most obvious overflow for the Portsmouth area. I live in Dover and love it, as it's Portsmouth without the ever present tourists clogging up downtown. It's the place I'd rather live in, even if I'd much rather visit Portsmouth, because everything is more accessible and cheaper here, and it's not, excuse my language, up it's own *** as much. I think there are four main ways to make money at retail prices in Dover still, based on my experiences, and those of my friends who invest.

The first and most obvious is house hack. There is, on any given day, not a single duplex in Dover that makes sense to buy for cash flow unless you are planning on living there. There hasn't been in years. There are of course notable exceptions, but everyone I know that got a "good deal" bought these places before 2017 at the latest. I still kill myself over not picking up a few buildings that I had the capital to buy at the time because I thought the prices were outrageous (As they had effectively doubled over what I was paying just 4 years earlier).

The second way is to be a commercial level developer. I know some of the people building those giant buildings downtown, and while I am not happy with the style of the buildings the city allowed them to build (I am extremely conservative when it comes to architecture styles, and would prefer they were 100% faced in brick and not these weird mishmash things everyone builds now a days), or what I perceive as a lack of parking and over reliance on a luxury market, they are going to do quite well for themselves, so on that front it is hard to argue. There are two pieces of proeprty for sale downtown currently, I think a million five a piece, that would both make someone a lot of money if they are willing to invest another two million into it. Way beyond my scope though.

The third honestly is flipping. This market is driven by people wanting to live in Dover more than it is investors buying up properties (there really aren't that many multi families in Dover and property taxes make buying SFR for buy and hold more tenuous). To me, this means buying homes that other homeowners won't touch; foundation problems, mold problems, full remodels. I recently bought an apartment building in Rollinsford this way; there was 100k in deferred maintenance that no homeowner would want to do, and it was a niche property so there was wiggle room to get a good deal. I have very little experience in flipping, but I have identified a few properties over the years, including convincing a few friends to buy some, and they've all made good money off of it. I've also missed out or been outbid on a few properties that probably netted at least 100-150k in town, so there's money there.

Lastly, and this I think is where I may be going next, is buy in the "bad" parts of town and wait it out 15 years. Dover is running out of affordable housing, and the only place to get it is the "bad" side of 108. I use quotes because the worst neighborhoods in Dover are relatively mild compared to rougher areas in Rochester or Somersworth, and even the bad parts of town here are fast approaching 1k for a 1BD. Then again there was a murder/suicide there last week, but I think that's an outlier. Buying the worst house on the best street there (closer to the hospital is better than closer to downtown) and fixing it up may be a recipe for success in the long run as appreciation drives that train. I do always, 100% of the time, tell people that my personal philosophy is to treat appreciation as the cherry on top of a sundae, and to never factor it into your calculations for whether to buy a property. Many others will disagree. But during boom times everyone thinks they are a genius. And everyone gets in on it, because they don't want to miss the party. But at midnight everyone turns into a pumpkin, and we're all partying in a room without any clocks. So I don't bet on appreciation, but on that side of 108, that's probably where most of your money can be made.

I know much less about Exeter, but from what I gather talking to people, it's in the same boat as Dover for all those points I made above, only on a smaller scale. I don't know what areas of Exeter, if any, are considered the bad ones, so I can't comment on that. That said, I am not opposed to buying in smaller (for NH) markets; as I mentioned before I bought a home in Rollinsford of all places.

Hope that helped some. If you have a different take I'd love to hear it.

I'll add my two cents about Rochester, again. In both Manchester and Rochester, buying blind is a very poor idea. Both have some of the roughest areas of NH in them (As pointed out by another commentator this is relative, nowhere in NH is East St. Louis). I can't comment on Manchester since I am not active in the central part of the state, but I have extensive experience with Rochester and the seacoast.

In Rochester, the areas that are multi-family, and the areas of Rochester where good tenants don't want to live, are almost mutually inclusive. As you mentioned owner-occupied, are those areas you want to live in? Yes you can get homes for under 200k (though even these are rarer in Rochester nowadays). I did a very quick scan of the MLS for multi-family in Rochester, there is exactly one for sale in a decent area, and its 379,000 and under contract. If you don't know what French town is in Rochester, or what East Rochester and Gonic entail or the area around City Hall, I would recommend you don't invest in Rochester. Most of the area around downtown is solid C territory or even worse when you get by the Fairgrounds. Do you want to live in a neighborhood, and this is an exact quote from the Rochester Police log 10 years ago "50 people fight on Lafayette St"?

I am sure there are a lot of people making a lot of money in Rochester...some of them may not even be slum lords. But like it or not, that's the majority of the tenant and landlord pool in that town. I know this because I've known, and have worked with, people investing in this area. Sure, it's better than it used to be. But as another comment said, the ONLY reason most people move to Rochester is that they cannot afford Dover anymore. That's your main reason renters move there. It has nothing that Dover does not have, which is why every morning the Turnpike is backed up with people from Rochester coming south for work. So your tenant pool will be people who can't afford to pay 1500 for a 2BD in Dover.

With 5% down, even a 200k home in Rochester will have you carrying a 1400+ mortgage thanks to property tax. This means your rental most likely won't cover your mortgage. If you just want to get a cheap/free living situation, then yes Rochester can work for you. But do you want to live with someone who moved there probably because they can't afford the rent somewhere else. People will keep telling you Rochester is "up and coming." They've been saying that for 15 years already. Go look at downtown redevelopment plans from the city council from, 2004 and then look at downtown Rochester again today; you will see no appreciable difference. No one is traveling to Rochester from the surrounding cities because it offers something the others don't. Somersworth will gentrify first before Rochester, and even Dover hasn't gotten rid of all of it's 'bad' areas downtown yet...so waiting for good appreciation in Rochester you better be prepared for a long wait. There is money to be made in Rochester, but I wouldn't recommend it for owner-occupiers.

As for surrounding towns, Somersworth is strongly dependent on location; I would aggressively avoid anything near downtown, especially in and around Green St. I have some great stories about tenants from Green St when I was a property manager there. Portsmouth is, if you're looking for cheaper than DC, effectively out of your price range. Duplexes there regularly go for 600k to over a million, and obviously having nothing approaching cash flow anywhere. A good duplex in Dover is 300-400k, which won't get you any cash flow, but will allow you to own something in a better town for less than a full mortgage. I have seen maybe a few cash flowing duplexes on the MLS the past few years in Dover, most are much better suited to owner-occupied "house hacking" scenarios. The towns west of the cities that border Maine are either out of your price range probably, or have no rental markets to speak of. Durham, Lee, Madbury, Greenland etc.

Anyway, that's my take. Again, money to be made anywhere for people who want to work a niche, but investing without knowing the area, I'd make a hard pass on almost all of Rochester.

@Matt Herbert Cool site, but I'd recommend just using the official NH page at:
https://www.revenue.nh.gov/mun-prop/municipal/property-tax-rates.htm



@Paul Cullen. I think good points are raised by everyone above, and you need to answer them for yourself before a real clear answer can be formed. That notwithstanding, NH is often cheaper, and the tenant laws are more landlord friendly; NH has struck a good balance there, I believe. 

@Blaise Doremus You are not going to find a triplex (or likely even a decent duplex) in Portsmouth for under 500k. Currently the cheapest MLS duplex in Portsmouth is 500k flat, and it offers two ONE bedroom units. If 500k is your max I would divorce yourself from the idea of owning investment property in Portsmouth at all.

Dover will net you a duplex in good shape for 350k, a tri for 400+. 500k can currently net you a quadplex in Dover, depending on location and condition. Spillage into Somersworth is currently happening, as good investments in Dover are becoming scarce, but that is a whole level down in terms of tenant quality, so you would want to really be careful about where in Somersworth you buy. 

Other towns are going to have cheaper rental properties possibly, but the market is much less strong than in the Rochester to Portsmouth corridor. If you have a real strong stomach, there is money to be made in Rochester as well, as I know some people do very well slum lording it up there. 

I can't speak to anything in Mass as I don't invest there. You should also look into the Maine towns that border the area, i.e Kittery and the Berwicks. There may be money to be made there, and they are generally nice towns. Much higher tax burden than NH though. 

@Christopher Freeman

Durham has essentially done the same; I think they are down to 3 unrelated persons or some other such nonsense. These towns hate the only thing that makes them exist, which irks me to no end, but that's not relevant to investing. UNH housing has exploded in recent years, and gutted a vibrant market of individuals and small business owners. With these apartment complexes that have gone in, the wealth of student revenue has now shrunk into just a few hands, and removed many students from the neighborhoods and into a few large buildings. It appears Durham's residents have managed to have their cake and eat it too. 

There is still some money to be made by existing owners,but I'd strongly caution against anyone buying in a university town now. That said, buying in the bigger towns next door (Portsmouth or Dover in UNHs case) can still be very profitable, but I think there is consensus that the market is less lucrative than it was.