All Forum Posts by: Tyler L.

As of yesterday, I am officially the owner of a 3 family in Worcester, Massachusetts.

$525K purchase price, FHA loan with a payment just shy of $3,100. Market rent is $1,500/unit. First unit is rented at market, second unit at $1,350. Third unit I'll be staying in bedroom 1, bedroom 2 and 3 are rented for $500 each.

Jeffrey Torres represented me, with @Brian J Allen as the listing agent. The property is in a great location, with jobs, schools, and hospital all nearby. And, for a 140 year old building, it's in pretty good shape-it needs a little love but nothing major.

My third year of college I set the goal of buying a place as soon as I graduate. After renting dozens of apartments to other college students and working two internships to save up the downpayment, and a whole additional year of college because of covid, I graduated in May, had my first property under contract exactly 60 days later, and closed. I'm excited to see what the future holds. 

To me at least it's certainly a red flag. Consider the condition of the property-the current seller is losing out on a huge opportunity cost by not raising the rents-has he kept the property up to date or has he been neglecting upkeep? Worst case it needs a lot of work but it's selling at market rate-in which case the minute you try to bring the units up to market, the tenants will (probably rightly) leave to find a place in better condition for the same market rent-now you have to place a whole building of new tenants.

Best scenario is he has been keeping it up to date and keeping the rents low anyway-in which case you have to double the rent and, while the tenants are unlikely to leave, they won't be happy.

Either way, it causes trouble. It's fine to buy trouble properties, but you better be getting a good deal to compensate you for that trouble. If your paying as much for a trouble property as you are for a market property, it's overpriced. 

I’ve been trying to spin the current recession every which way, and to me it seems like it’s going to continue to accelerate already existing trends. Meaning the hot markets (Austin, Denver, North Carolina etc) are going to get hotter.

In the short to medium turn, I expect where I live (Boston) to cool down more than normal as this recession is uncharacteristically affecting healthcare and education, both of which are normally recession proof. I’m still bullish on Boston in the medium to long term, as well as the single family housing market.

That said, I can’t afford to invest in Boston, so would need to invest in secondary markets around Boston (Hartford, Worcester, etc.) that I expect to be either stagnant or moderately declining in the small to medium term. The closest comparison I can think of to what I’m expecting in these markets are parts of the midwest and rust belt-places like Philadelphia, Pittsburgh, and Buffalo, where growth is low.

I always wanted to invest for cash flow, and I know that’s the only way to invest in markets like this, but I’m concerned that in the event these local markets do not recover as all the capital and jobs flee to hotter markets (the same way the Rust Belt never totally recovered from losing manufacturing jobs) rents and property values will decrease.

Of course, I could always invest in an affordable but growing town long distance, but that would likely require a property manager, and at my size would probably kill my cash flow. I want to do everything I can to invest locally and manage myself for at least my first few properties so I can get the experience.

There’s a lot of us out there who are about to graduate, maybe we have some cash saved in the bank, but we’re all scared, looking for jobs, and not sure if we should be buying right now, or even if we could get a mortgage right now.

Do you have any advice for us?

So I was preparing to buy my first house hack this coming summer post graduation, I had the downpayment saved and strong credit.

I’ve decided I’ll have to push it back a few months so that I can A. Hopefully avoid the shutdown or B. Grow my emergency fund in case the shutdown lasts longer or has to come back.

My concern is I can find very little information on how FHA standards change during a recession. I know we can expect most traditional lending restrictions to tighten (as JP Morgan just did) but could not find much info on how FHA changes, onlu that in the last recession they raised the PMI rate.

Basically, I want to know if:

A. We can expect any changes to the qualification requirements (3.5% down, 580 credit score, 43% DTI)

B. If banks will even agree to take on these loans, or if it will turn into an exclusively 20% down requirement across the board regardless of FHA insuring them.

@Matthew Perimian thank you for the tip! I hadn't considered Fitchburg before, and had no clue about the UMASS plan. I will definitely look into that. Seems like an hour and a half commuter rail ride into Boston would be...unpleasant, but I'll brave it if I have to. 

@Howard Herrington I have spoken to a few lenders. The difficulty is I'm still interviewing for post graduation jobs, so we don't know exactly what my salary would be yet. We mostly just went off what I expect my salary to be, and we took some sample properties in the area and figured between the average rents in those areas and expected salary, $350-400k is a reasonable expectation of what I would be able to qualify for. I'm lucky that the cash investment won't be a problem. Thanks to NEU's co-op program, I've managed to save away a good amount of cash that should be able to cover the downpayment plus about 2 months of PITI+expenses, and with me getting back my commission, I feel I should be in a good position. The DTI would be what would hold me back from a more expensive property.

@Tyler Munroe thank you!

Unfortunately I can’t make any offers yet because I’m finishing up my undergrad still-I figure I’ll be making offers come September when I’ve started a full time job and have some paystubs going.

@Steve Smithy I’m not huge on the Boston market either, but for personal reasons I can’t move somewhere else, so I figure I need to try to get a househack going, even if it’s way south or north

Hi all,

I'm graduating from Northeastern this coming summer and am looking to househack sometime in the fall. It would be a standard FHA loan, shooting for the $400k range for a purchase price.

I recognize that that $400k won't go that far around here, but I'm willing to go a ways out as long as I can take the commuter rail into Boston. I've been taking a special interest in Attleboro and Lowell. The problem is, 6 months ago I had a much easier time finding rent ready triple deckers in Attleboro than I can now, and Lowell generally pushes my budget. 

I know part of this is because it's the winter right now and few list in the winter, but I also know the market is extremely tight now. Does anyone have any advice on these two areas, particularly if they think supply will be stronger in the summer or if the market is just really that tight? Are there any other places I should be looking at as well? I do have my real estate license, but I've been at it less than a year, and have only done rentals, so I'm by no means an expert in sales in the area. I'm mostly just planning to allow the commission from this sale to pay back some of my downpayment so I can have a reserve. 

I mostly prefer a triple decker or fourplex, but is there any other property type others would recommend? I've been looking into renting by the room as well, but am unsure if I could qualify for a SFR with just the income from my post graduation salaried job. I also am not sure I could qualify for a duplex with just my income and the income of one other unit.

I've also looked into the 203k loan, but I already have student loans so am weery of taking on so much debt at once, plus I'm told many contractors don't want to deal with 203k loans to begin with. If possible, I'd rather spend the money to get a rent ready property, or one that I can do the moderate repairs myself.