First SFH for long term investment in MA (Middlesex County)?

Question

Hi BP,

It's been more than a year since I posted an intro and expressed interest in starting my REI journey. We are back on track now. This time, we are ready to dive in. My husband and I are planning to purchase our first SFH. We are planning to live in it for the most part and considering renting out/airbnb the attic or basement.

A little bit about our background, I am currently still a student in Cambridge with a student stipend. My husband (USAF) is moving to Boston in March to work in Hanscom AFB. As of now, renting a one-bedroom apartment cost around $2,400 Cambridge. It will be about the same for an entire house on base, however, I think it is better to just get a SFH with VA loan ($688,850 limit for Middlesex county, 0% down payment) and put that rent money into our mortgage instead. This way, we build up equity in a house and can resell it later on to "break even". Will still feel like we lived there for free if the property appreciate over the years, right?

I am currently looking at buying a SFH in Waltham, Malden, Melrose, Everett, or Revere. Considering house hacking, but we dont know much about it.

Would love to hear from experienced investor in the area. Is this a good way to start off? Any suggestions/advice?

Is there any meetup in the Boston area?

Thanks!

Philip Ganz · Answer

@Elena C. starting January 1,2020 No loan limits. Send me a direct message and I can help you.

Philip Ganz · Answer

@Elena C. As of Jan1  no more VA county loan limits. You got to climb the ladder, single-family homes are a good start, I strongly recommend @Lien Vuong

Elena C. · Answer

Thank you for the advice, @Jonathan R McLaughlin, @Lior Rozhansky, and @Son D.

I am currently looking at the multis in the Malden, Everett, and Revere area. Will probably house hack, but there are so many things about fixing a house up that I do not know. Not even sure how to estimate the cost for repairing and breaking down walls. I will try to do some math on the basic big items for now.

Son D. · Answer

I second @Lior Rozhansky in saying you should try to find multi family in those areas to house hack. I personally prefer Malden from your list for multis. Find a 2 family home with 3 floors for the possible conversion into 3 family. If that's not possible then rent out 1st floor while living on 2nd floor and find roommate(s) to rent out the bedroom(s) on the 3rd floor. Lots of single people without family here would rent it if it's within walkable distance to malden center so they could travel to boston. Malden has a good school system which may attract a nice family for your first floor if that's what you choose to do.If you're set on SFH then i would go with Melrose. It's a nice, better off town from your list with higher potential appreciation.

Lior Rozhansky · Answer

@Elena C. congrats on getting ready to make the move, it's a big step! In terms of house hacking strategies, you are going to need find a balance that you are comfortable with from a few perspectives, including location, condition of the property, and bed count/cashflow.

From location perspective, Malden/Everet/Revere are all great areas that are changing by the day with all the development that is going on. Areas like Waltham are a bit different, and you could call them more "established". This will also impact the type of tenants you can expect, and if you are going to house-hack a single family and rent out a bedroom or two, you'll want to take that into consideration.

The other thing to consider is condition of the property. You talked about breaking even if the area appreciates over the next few years from the equity gain. Very true, though the other thing to consider is do you want to force appreciation through taking something that needs a bit more work and creating sweat equity though upgrading the home.

Finally, I would say take a look at the market for 2 families. Though getting a 2 fam in these areas in the low/mid 600s is not easy, its not impossible, and the cash flows there would certainly be a lot better. Especially if you going to hunt over the next few months in the winter when everything is a bit slower, there's a good chance with enough offers you could land one.

Good luck!

Jonathan R McLaughlin · Answer

@Elena C. You might want to look at single families with an ADU (accessory dwelling unit) often called in-laws as your circumstances may be a great fit. Owner occupants get a good amount of leeway,  you can get some income, and if you decide it’s worth it you could bring the space into the main part of the house fairly cheaply.

Malden, Melrose and Everett are usually put in the “up and coming” bucket. I don’t know the markets

May want to look at Maynard too; I’ve heard good things. nice town, surrounded by more expensive towns some influx of younger couples yada yada

Elena C. · Answer

I don't think I can invest in Cambridge. It is way too expensive. I am looking at something less than $650k. I have been trying to find multi family in the areas but only found sfh. If you don't mind sharing, I would love to learn more on what strategies they did. I want this first one to enable me to go buy a second unit a few years later.

Thanks!

Elena C. · Answer

Hi David. Thanks for the comment. I have been trying to find multifamily but it is so difficult with our budget. I will take a look at Bedford.

Thanks!

Elena C. · Answer

Thanks, Philip. We called USAA and it seems like the max is $688k after that, we will be have to add down payment.

Lien Vuong · Answer

Hi Elena,

Thanks for sharing your story! I think there's a lot of different strategies where you can rent your SFR and still make good income from it. In Cambridge for example, you can rent the rooms for university professionals looking to stay in the area. It's not quite Airbnb but it is short term 3-6 month rentals. Alternatively, moving to the outskirts of the city, areas such as Revere for example, have a lot of ranches which have in law basement units that would be great for your investing strategy.

Let me know if you have any questions about the areas, would love to share with you on some successful strategies my clients and I have used in the past.

First SFH for long term investment in MA (Middlesex County)?

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