New Investor Worcester, MA

[Samuel North]

Hi BP,

My name is Sam. I am a 25 year old born and raised in the greater boston area. I'm just getting started and I’ve been trying to absorb as much information as possible, books, podcasts, blogs etc. 

My plan is to start with a buy and hold method with small multi family properties. I have spent some time scanning through the Worcester, MA market, and think it may be a good fit for me.

I have been analyzing deals, but seem to be stuck on this hypothetical situation. Currently I am renting, but have ~$30k of my own money to work with. I am not sure whether or not I should wait until my lease is up (in 10 months) to purchase a property and house hack with a low down payment using a FHA loan, or use a higher down payment and a conventional loan in the meantime and rent out the all units. Any advice would be greatly appreciated!

Are there certain Worcester neighborhoods/suburbs that you prefer or avoid investing in?

Would love to talk to anyone about their story or any pros and cons they have come across investing in this area!

[Steven Caligaris]

@Samuel North

I’m fairly new and am currently buying my first property (duplex in Worcester). A few points that haven’t been mentioned yet that you can take with a grain of salt based on my experience:

1. A two family that needs less than 30k rehab in Worcester is going to be 350k+ easily in a good neighborhood. Keep in mind that $30k will need to cover closing costs as well.

2. The Worcester multi family market is incredibly competitive and most homes go to cash buyers - so getting there fast and/or finding off market deals is more advantageous.

3. Depending on your income, I'd HIGHLY suggest looking at the Masshousing loans. In Worcester you can qualify for first time home buyers loan if you make less than $101k or the Masshousing conventional loan which has an income limit of $128k I believe. Both are so much cheaper than FHA as FHA has so many fees.

4. I went the more extreme route for my first property and am doing a Masshousing rehab loan. I would recommend that as an alternative way to get into the Worcester market as you’ll be able to broaden your scope of properties to more distressed ones. Note: Itll be very hard to make a profit as the homes will be pretty well priced and not leaving much room. But if you plan to live and rent the other unit(s), I think it’s way better than spending $1200+ on rent and setting yourself up for capitalizing on the appreciation.

5. There are a plethora of people in the Worcester community that are incredibly nice and are willing to take the time to teach/guide you. (Even those that have already posted in this thread) Take advantage of that. Also, join the FB Group "Black Diamond REI Insiders" if you haven't already. It's a FB group for MA folks.

Best of luck!