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Updated almost 10 years ago, 01/22/2015
Starting out in Massachusetts
Good Morning, ever since I have stumbled across BP I have spent countless hours reading and learning, and really stoking the fire. This is such an amazing community.
I am looking for some advice on which way to go, and was hoping some people either in my area (Eastern Massachusetts, or in a similar market ($$ wise) might be able to help focus my direction a bit.
A little background about me, I hold a full time day job (and make pretty decent money) which provides me with good health insurance (have an 8 month old at home) and also run a contracting business on the side (which makes pretty decent money as well), but am really looking to begin investing in real estate to provide me with the flexibility/reward for hard work, as I had when I owned another business 10 years ago. I have many years of property management experience which I know will come in handy.
So here is where I need a little advice...
As most of you know the real estate market in Mass is pretty high, and acquiring an owner occupied multifamily (2-4) property will be my first purchase, but then I am not sure whether to purchase another multifamily property (as an investment property), which typically go between 250k-600k or to go the single family rental route (could probably pick up some REOs or properties that need work for around 75k-95k? Maybe look for single family homes in some semi-distressed areas (Lynn, Lawrence, Brockton) that need a little fixing up (I will save huge labor costs by just using the guys who work for my contracting company) and then slowly build a portfolio that way.
One of my main contracting clients has also been really after me about going together on some properties where he basically just puts up the money and waits for his return (whether it be via flip, buy and hold, or cash flow), because he sees how quick, and efficient we are able to turn the work around, and we have built up quite a great relationship.
I know I am getting ahead of myself, because I havent even bought my first multifamily yet, but I like to always have a goal off in the distance that is just a bit further than the next.
Thank you and I look forward to your comments.
Khouri,
My two cents only:
One of the reasons to buy SFR's instead of multi's is that they sometimes need less management, since the tenants view them as a home instead of as a stopover. In Lynn, Brockton and Lawrence, I don't believe that is going to be the case. They are rough towns, and you'd need to be in the better parts of those towns, and at that point, finding something that will sell cheap enough that after rehab it would cash flow, is going to be a challenge. Understand plenty of people make good money in those rough areas, but as an example, we are much less likely to lend in those towns.
You sound like you have a good start into multi-family investing should you choose to go that route. My favorite book on this is "Real Estate Investments and How to Make Them" by Milt Tanzer. It may sway you toward multi's. And getting Multi's that cash flow in eastern Massachusetts is very difficult also. But I would still go to Multi's in MA rather than SFR's for buy and hold.
Thank you Ann Bellamy for your two cents, I appreciate your opinion and am really just looking as to what my best options are in Eastern Massachusetts, or maybe start thinking about investing in other areas where the numbers are more favorable.
Hey Khouri Rice. I agree with Ann - finding multi's in good areas that are cash flowing is very difficult. There is a lot of competition in our market which is pushing up prices. Have you thought about finding multi's and converting to condos? This is a good strategy for some areas and may enable you to purcahse the property at a high price than other investors who are looking to buy for cash flowing purposes.
I think you have a good skill set for either flipping or holding so it's up to your comfort level and accessibility to capital.
I actually have a deal I just closed on in Beverly this week. It's a 2 family that we are either going to wholetail or convert to condos. (Ann Bellamy - yes, we finally closed on this). I'm having an open house on Sunday to get all the contents out of the property that the previous owner left behind. If your interested in stopping by, PM me and I'll give you the address.
Khouri Rice I also live in Beverly, MA and have entered into real estate investing via condos. I purchase condos under $100k with low HOA fees (healthy reserves) and rent out. This is the short version as I have a longer checklist to qualify condos before purchasing. I would be happy to discuss further. Send me a PM.
Justin Silverio Where is the property in Beverly?
Hey Brian Ortins. It's right near the center of town. PM me if you want the address.
Thank you Justin and Brian, look forward to meeting you some time.
Welcome Kouri - With your skill set you can do well if you make some good basic financial decisions on your purchases & what direction you go. I do both buy and hold and flip and other states as well along with eastern ma. If you are limited financially on what you want to do and you have a money partner that values your skills and will put up the money then that is a great option to get started. You may want to consider borrowing money to do your deals with a bank for the lowest rate or a hard money lender like Ann Bellamy who commented here.
You can always go in with hard money and refi out but you will want to know if that will work first. You have some great options. Singel family rentals around here are like Ann said less to manage and most of the ones I have invested in have been all in at around $130,000 after capital improvements on the front end and total rehab which generates around $1600-1800 month rent range.
Thanks Mike LaCava, so those SFRs, what sorts of towns are the best to look in? Obviously patience is important in looking for the best deals but how have you found the market to be here lately? I do have a couple of money partners that value/trust what I do and am really looking to make the leap...
I just happen to buy in my own town because that is where I started but the #'s have to make sense for buy and holds and flips. If they don't in your town then you need to check other towns. Buying out of state as well now.
Great thread... Definitely difficult to find multi's in Eastern Mass that are cash flowing with the exception of some tough town such as Brockton, Lynn, and sort of Chelsea.
Flavio