All Forum Posts by: Matt Lefebvre

Hi @Devin Miles, great to see other young guys looking to get started in real estate and analyzing deals!  Sometimes its a good thing when you post about random properties on the internet because smart NH investors like @James S. and @Daniel C. chime in to give you advice about how to approach (or not approach) a deal.  I would echo a lot of what has already been said and add some additional thoughts as follows:

1)  This is a nice house with a little bit of income potential.  This is not a great rental property.  Think about it this way... if you owner-occupy this property and you live in the 2BR and rent out the 6BR, no matter what type of tenant that you find, that's a LOT of people beating on your unit.  In a 2BR apartment you usually have 2 - 4 people living in the same space, using the same kitchen, the same bathroom, etc.  In a 6BR apartment you have anywhere from 5 - 12 people using the same kitchen, same bathroom, all causing significantly more wear and tear to your unit because of the number of people using it.  If you live in the 6BR and rent out the 2BR... well... why do you need a 6BR apartment?  You're 19 and probably single or with a partner (unless you have an extended family I don't know about you're hoping to move in) so that's a pretty big house for one or two people.  Yes... you could rent it by the room... but the bank won't count any of the room rental income towards your loan amount and also renting by the room is a beast of its own when it comes to investing.

2)  The location isn't great for Derry.  At a surface level, you're in downtown Derry which has definitely grown a lot over the last few years.  However, this property has a pizza shop on one side, a large strip mall abutting your backyard, a house on the other side, and a pharmacy across the street... and you're one door down from one of the busiest roads in downtown Derry.  Not exactly an ideal location for a family that's going to be living in a 6BR apartment (back to my earlier point).

3) Adding units is WAY more trouble than its worth. I'll admit, I'm not the most familiar with Derry building codes, but I know pretty well what the basic standard is for places like Manchester or Nashua and usually when you add a unit or take a unit away, that requires you to bring the ENTIRE building up to code; specifically fire code. Because you'll be increasing the density of the building, there's a strong possibility that the town of Derry will require you to sprinkler the building which will not come cheap. This would range from $30,000 - $50,000 in most 3,000 SF properties depending on the layout and need for water. You will end up losing out by attempting to convert this into more than 2 units. And if you did this under an FHA loan your note could be called by the bank if they find out because they definitely do not allow people to make substantial changes to buildings that they have loans on (and adding or removing units definitely fits that criteria).

At a surface level, a 3,000 SF two family in downtown Derry for $350,000 is a pretty decent price.  You'd be hard pressed to find a duplex in Manchester or Nashua for the same price point that's a nice property! But there's a reason for that asking price and I strongly advise against anyone jumping into a project that big or that quirky for your first deal (no matter if you have $10K in the bank or $1M in the bank).  Certainly don't give up... but maybe change your criteria and keep an eye out for something a little bit more safe for your first house-hack because having a stable foundation in a real estate portfolio is the real path to success in investment... risky purchases with big rewards might seem like a good way to start investing... but unless you have a lot of experience and cash in the bank, its just glorified gambling in my opinion.  

Hi there @An Duong, lots of questions to unpack your post here!  I'll try and provide some answers to your questions:

How are landlord/tenant laws?  Well that depends on where you compare them to... I see you're from Boston so you're probably looking for a comparison of NH / MA landlord-tenant laws.  NH tends to be much more of a balanced state and even leans a bit in favor of landlords.  By comparison, MA tends to lean much more in favor of tenants.  Even the way both states reacted to enacting eviction moratoriums show their true colors.  NH enacted one in March of 2020 and it expired by the end of June... our firm was filing and serving notices the very next day for all of the non-paying folks in NH.  In MA, the moratorium was enacted around the same time but is still in effect until October 17th!  One particular resident that is living in an apartment complex in MA I'm selling has not paid a penny's worth of rent since March and is over $9,000 in the hole. 

How are the cap rates?  These vary based on location.  Southern NH is where most of the larger apartment complexes are and most of the cap rates here hover between 6% - 7.5%.  We're selling an 18 unit right now with a cap rate just north of 6.0% and a 22 unit with a cap rate of 6.6%.  Sometimes they do go lower though as we've definitely seen some sub 6% cap rates on larger apartment complexes in recent months.  Overall, cap rates are stronger than Greater Boston but still they are getting squeezed a little bit.

Would you recommend NH for larger multifamily investing? I might be a little biased here because I've lived in NH my whole life but I believe the answer is yes.  I'd strongly recommend investing here.  Rents are continuing to go up, landlord/tenant laws are balanced, property prices are high right now but not outrageous... there are a lot of positives to investing here. 

We have a few opportunities on the market right now and a couple coming up.  Would always be happy to chat about what's available and give you my opinion on specific properties you may be looking at.  Happy investing!

Thanks for the mention @Alexander Crocker and happy we were able to assist with that purchase! 

@Syed Zafar - let me know if there's anything I can do to help :)

@Drew Cameron while every situation is different because quality of life always plays a role in someone's housing choices, I think the best options you could have are as follows:

1) Analyze the cost-benefit of fixing up the house and selling it versus selling the house as-is.  If the difference in value between the house fixed up and the house as-is doesn't vary by too much, it might not be worthwhile to even jump into a project.  Go with the path of least resistance here... we are in a seller's market so there's a good chance you can do some light work and still squeeze a lot of dollars out of the house.

2) Look at having your mom buy an owner-occupied multifamily.  While the market for purchasing these types of properties is very competitive right now, this is probably the best solution for housing.  This should produce the lowest monthly living cost by having other tenants paying the majority if not all of your monthly payment. 

3)  Sit on the rest of the money until you can properly invest it.  As you said, there's a strong chance that she won't qualify for two mortgages... so don't bother trying right now.  When purchasing a multifamily in the 2nd point, work with as little money down as possible and take advantage of whatever program you can.  Sit on the rest of the cash either in the bank, a CD, or some other low-risk investment source that is reasonably liquid until you can co-sign and afford to buy another property in a couple years.

It's probably not the most exciting set of choices, but with limited options to secure a loan and a limited amount of funds to work with, you can only do so much.  And you certainly don't want to be taking any big risks with your mom's retirement money... 

Hi @Jordyn Tetler, welcome to BiggerPockets!  There are a handful of in-person (which have mostly converted to virtual) networking events where you can meet some other folks local to NH and get an idea of their business model.  Would certainly encourage you to check them all out!

My opinion on the market here revolves around what your goals are as an investor. There are opportunities to make money in any market and having realistic expectations on the types of returns you can achieve in each market are important. For instance, we have a much lower price per unit and a better ROI than someone looking to buy a similarly sized property in Boston where you work. Oftentimes we have to counsel people from the Boston area to not buy a property that looks like a good deal compared against their market but is actually a bad deal in this market. 

It all boils down to having a realistic expectation on your returns and being disciplined in the types of properties you purchase.  A good deal is a good deal and a bad deal is a bad deal.  Make sure not to over-analyze and accidentally switch the two around. 

Happy investing!  Reach out if you have any questions!

Hi @Steve Shirk - we'll probably be hosting our next general meeting (May 13th) on Zoom!  We actually have an informal networking meeting coming up on Zoom this Wednesday evening if you're interested in joining in.  

@Ryan Corcoran commercial lenders don't offer 30YR fixed rates. Your most likely terms from a local bank that you'll get are 25YR amortization, 75% - 80% LTV, 5YR fixed. The only times you might be able to get 30YR fixed financing would be with a Fannie Mae direct loan or a HUD loan... both of which really need to be a $2M+ loan size with an intention of holding onto for 10+ years to make it economical.

@Nicholas Flanders - welcome to BP and good to hear you're getting started on your investing journey already!  Prices in the Southern NH market are on the higher side right now depending on what part of the state you're looking in, and so it can make it challenging to cash flow positively with a house-hack.  Single family rentals are very tough to make cash flow because home prices are so high compared against what they can rent for. 

If you ever want a second opinion on running numbers on these properties, happy to lend advice

I do most of my legal work and real estate work with Frasca & Frasca out of Nashua.  I also echo Richard's recommendations, those are some great attorneys as well!  Give me a shout if you need contact info

Just started a thread elsewhere and didn't see this post until now.  I surveyed a variety of owners and property managers in NH and of the 1,605 units that I received data for, 1,308 of those paid rent in full by April 6th.  This ends up breaking down to a rent collection in April of about 81.5%.  This sample size was limited to property owners who have 20 units or more or property managers who manage 100 units or more.  Rent concessions offered were limited to $50 if rent was paid in full by the 5th but only about half of the property managers I surveyed offered this. 

My one building had 3 out of 4 tenants pay rent... which is exactly in line with my property manager's rent collection for the month of April across their whole portfolio!