What is the best city to invest in within Massachusetts?

Question

I was asked this question on a facebook forum and it got me thinking about our Bigger Pockets community.

Here is my answer and I would love to see what you think.

1. Fall River

2. New Bedford

3. Worcester

This is based on the infrastructure of the inventory of Cashflow investing with Multifamilies.

The prominence of 3-6 unit multi families on record in these cities is higher than any other city in the state.

Also the low entry costs are a major player.

Although New Bedford has the LOWEST entry coast and Worcester has the HIGHEST entry cost.

Fall River is ranked first because it has a larger propensity for 3,6 unit buildings while the other 2 cities are primarily 2 families though New Bedford is a close second with it's nearly 600 (6) family structures.

The right question to ask when choosing your city to invest in is:

"Does building the marketing and management systems make sense to be in this citt for the long term"

Art Perkitny · Answer

@Gualter Amarelo

The three cities listed defiantly seem like decent choices based on the data.

As @Brian J Allen stated above, real estate is local and neighborhood selection is more important than city selection.

Nonetheless, it's helpful to filter down the number of cities by looking at the data

Here is a resource I put together that I think you will find interesting. Its a spreadsheet that lists all incorporated places in MA with populations over 10k. For each place I have included population, home value and rent figures, as well as the 5 year change for each of these. The last column shows the rent to price ratio (1% rule).

The color scale corresponds to the values for each respective metrics and indicated the desirability (green is better, red is worse)

Link to MA Cities Spreadsheet

Gualter Amarelo · Answer

@Art Perkitny thanks for sharing this spreadsheet! This is great detail work!

Ben Simon · Answer

@Gualter Amarelo and @Art Perkitny thanks for sharing!

I'm curious to hear more about you would analyze the risk of investing in these markets given the median household income in Fall River and New Bedford is less than half of the average for all of Massachusetts.  If/ when a recession comes do you think these areas will be disproportionately affected? Tenants lose their jobs and stop paying rent, the pool of good tenants will shrink, etc.

Brian J Allen · Answer

This is a great question.  I would chime in here that all real estate is local.  When you are buying older properties, you have to have a full fledged team.  Acquisition, maintenance, repair, rehab and property management.  It is much easier to make money and have success if you are closer.  I think all 3 have the ability to succeed.  I would add a couple more in there as well, Springfield, Lowell, Lawerence, Hoyloke as big ones.  The reality of it is you need to know your market or have people you can trust to get you fair pricing on all the work you are doing and make sure you are in the right neighborhoods and have the correct tenant mix who can pay and respect your property.  This is a great Thread to keep going.  For the record, I LIKE WORCESTER because I am local and know the market.

Brian J Allen · Answer

Art, Great stuff here.  Stats serve to validate what you see in the market, and also to open your eyes to places to invest.  AS you know they should not be the be all and end all.  What the data doesnt tell you is that people in metro Springfield, and metro worcester are willing to accept lesser rental conditions then in the more affluent areas.  the quality of the units in worcester pale in comparison to those in Boston.  You also find more TAW then Leases in the areas with the higher numbers so you need more active management to protect your investment.  Once again Great data

Justin Wilson · Answer

@Art Perkitny

That's a great spreadsheet!  Thanks for posting it.

Gualter Amarelo · Answer

@Ben Simon that is a great question and the answer may be counter intuitive.

We find that when there is a major disruption like in 08’ we had more people moving into the city from the SouthShore who are willing to commute to save money on rent.

The gateway cities tend to maintain the amount of people in them and subsidized housing does play a roll here as well.

Cheers to your success!

Gualter Amarelo · Answer

@Brian J Allen some really great points my friend! There are a bunch of great cities on the north shore and western Massachusetts.

Also good point on the amount of management involved and the quality of the units.

What is the best city to invest in within Massachusetts?

Most Popular Reply