Investing in Cambridge, MA as a grad student?

[Elena C.]

Hello everyone, I am new to this forum. I became interested in REI about a year ago and started listening to the BP podcast. I hesitated before posting to this forum because I still do not know enough (no practical experience). However, I really want to get some advice on how to learn more this summer since I will be pretty much free.

I am moving to Cambridge, MA this fall to start graduate school in the area. My plan is to buy a multifamily, live in one unit, and rent out the rest and hope for a neutral or positive cash flow by end of 2018. 

Ideally, I would love to buy near Cambridge because of the high demand and the proximity to the universities. However, my goal is to be able to buy several multi-family in 5 years and create passive income from it. So here is my question: Assuming I have $200k cash. Should I buy somewhere further away from Cambridge with a $100k down and save the other half for a second multi-family or should I just go all-in on my first multi-family in a more desirable location?

I am currently looking for anything with 4bd+, 2bath+ in an area within 20min commute to Harvard/MIT (Somerville, Cambridge). Also open to Revere, Everett, Watertown, maybe even Dorchester. 

To gain some practical experience, I thought about moving to Cambridge a month prior to the start of the school year and work with someone who knows about the market in those areas. Not sure if it is a good idea.

Any suggestions would help.

Thanks, 

Elena

[Lior Rozhansky]

@Elena C. welcome! I think there were a lot of valid points, and for you it will be really important to figure what is an "acceptable commute". With regards to investing in Cambridge vs other cities, you need to see how each investment area coincides with your goals. In Cambridge you are unlikley to cash flow anything significant, while areas like Malden, Dorchester etc you should be able to make some nice extra money. 

But, the other side of the coin is buying in Cambridge is some of the ultimate wealth security there is. There's a famous quote from the Harvard Real Estate Professor William Poorvu that selling real estate in Cambridge was the biggest mistake of his career. That's the sort of generational asset that you keep in your portfolio and even hand down to your kids etc. But, just to put numbers in perspective, it's going to be very hard for you to find even something like a small two family for anything in the low 1 millions that doesn't need a lot (like a lot) of work. 

So it's really a financial and strategic decision of do I want basically a trophy asset that I know will likely forever be ok and stable versus do I try to buy some extra units in surrounding areas. Throw in the personal decision of your commute etc and you've got yourself an answer!