First time investor in New Hampshire multifamily.

[Nate Wilson]

Hi my name is Nate, I am actively looking for an investment property in the Manchester and Concord area of New Hampshire. I feel that investing in the city would probably be my best bet over the surrounding towns, unless the right deal comes up. Judging by the market it is still very hot. I have seen a couple duplexes sell in under a week and after running the numbers (based on the 4 square method) with 5-7 cash on cash return with 20% dp.

My first question, is a 5-7 cash on cash return good for a multifamily in a decent neighborhood in the Manchester nh are. I would assume no because I could put that money in the stock market in get the same return. What classifies as a good deal? In my eyes a deal that I would jump on would need to be 9-10% or better.

My second question, what will happen when the market crashes? Will rents go down? I would like to consider as many outcomes possible.

My plan is to buy and hold enough properties to achieve financial independence. I would love to meet up or chat with people in the New Hampshire market, please feel free to comment below and say hi.

Thanks for reading, and happy investing!

[Axel Ragnarsson]

Hey @Nate Wilson, I invest in the Manchester, NH market and I think your assessment of the market is mostly correct. As is the case in almost every market, you aren't going to find good "deals" (properties selling for 20%+ below market value) on the MLS, you'll have to start looking for properties off-market. If you're looking to buy an investment property at slightly below market value that provides a stable return, you can find those deals on the MLS. With that being said, you're going to have a hard time finding properties that offer a 10% cash on cash return on the MLS - the vast majority of the deals you see are going to provide a COC return similar to what you've mentioned, 5-7%. That is just your cash on cash return though.. to really understand your ROI you'll need to look at your IRR (which is a sum of your return from cash flow, loan paydown, and factoring in a reasonable number for yearly appreciation). That return will most definitely be higher than what you would earn in the stock market.

As for what a market "crash" will look like, that is a question for someone much smarter than me. I can say that even after the last market crash, rents did not drop nearly as much as property values. When the market turns, multifamily properties have significantly lower foreclosure rates compared to residential properties. So long as you have adequate reserves to handle a slightly longer vacancy period and rents that are 10% lower than what you are expecting to receive now, you should be fine.