Central CT Buy and Hold

[Jay Hassey]

Hi,

I've come across a few Connecticut threads already, but none really hit on what I'm looking for so I figured I'd start one on my own. I'm looking to buy my first rental property at some point this summer. I'm hoping to find a 3-family somewhere, and to live in one of the units. I'm just having trouble finding cities/towns where the numbers will work. I live in West Hartford (which is definitely off the table, way too expensive). I'm not opposed to living in a less than desirable town (i.e. New Britain) as long as the area is safe. Does anyone here invest in this area? Any suggestions?

Also, I was thinking about doing an FHA loan. I don't have much to put down, so it seems like the best option. Is there anything that should make me think twice about going this route?

Jay

[Frank Luongo]

Hi Everyone,  I am looking to employ the same buy & hold strategy as @Jay Hassey in the following target markets in Central CT (in order of desirability):

1. Cromwell

2. Newington

3. Rocky Hill

4. Plainville

5. Middletown

6. Manchester

I am using data I have collected from Neighborhood Scout.com on target markets within a 30 minute commute of Hartford, CT.  My market analysis focuses primarily on 3 criteria: Median Rentals / Median Home Values (assessing the highest rents for my buck ratio), Vacancy Rates, and Property Taxes (using mill rates x median home values).  I have also noted the percentage of the market population below the Poverty Level, the Crime Index Value, and percentage of College Graduates in the area (as social-economic indicators that help me determine where I would want to live and invest).  

So far my analysis has only covered 16 markets (towns and cities in the Central CT area).

Only three (3) out of the 16 market analyzed, Cromwell, Manchester, and New Britain, had Rent to Home Value Ratios above 0.6%, which I am using a indicator of best value for multifamily investing (the higher the % the better the value of the investment). 

My ranking above is a combination of investment and personal criteria.  For example, I like Manchester as an investment market, but I am not a fan of commuting over the river to work in Hartford.  I have decided not to invest in New Britain at the moment due to the combination of higher vacancy rates (10.8% - the highest of the 16 markets I analyzed), % of the population below the poverty level (22% - also highest of the 16 analyzed), and property taxes (Mill Rate = 49).  I was born and raised in New Britain and do believe this market could make a turnaround (especially with the current mayor in office), but I will need to see the data improve before I am willing invest.

Personally, my next challenge will be finding a 3 to 4 unit multifamily residential property that I can finance with a first-time home buyer CHFA (CT Housing Finance Authority) or FHA loan. Since I am not in rush to move, like @Jay Hassey, I would also consider a 203K in additional to the property loan.  

Do any of the local investors have concerns with the market criteria I am using to evaluate target markets for multi-family buy & hold properties? 

Also, if any of the investors have any recommendations/ referrals for banks/ mortgage broker/ loan officers who have experience with the CHFA and/or FHA loan process that would be willing to work with a first home-buyer & investor like myself I would greatly appreciate the help.

Another question I wanted to ask if anyone knows how to figure out the typical/ expected CAP rates for markets in Central Connecticut. It would be great if I could find those by market (town/ city). I have tried looking at larger commercial listing on LoopNet and other commercial brokerages but was not sure if this was most effective way to find this information.

Thank you all for you insights and advice in advance!