HouseHack in Boston area and/or invest in Hometown, St. Louis?

Question

Hi everyone!

Hope you're all well and staying safe.

I am an "aspiring investor," as many people are. I've ingested a ton of information on YouTube, BP, books, talking to folks, and I'm fairly deep into the process of purchasing my first property (I've already made 1 offer). I've been working with an amazing agent, after interviewing a few, and am looking for my first house hack (most likely a 3 fam North of Boston in like Everett, Revere, Malden, Chelsea). I qualify for a MassHousing conventional loan and am looking to take advantage of those nice first-time homebuyer, owner occupied rates, actually nice PMI, and other perks of MassHousing.

For background, I'm a new grad with a really nice job as a software engineer here in Boston. I'm originally from St. Louis, specifically the Tower Grove South neighborhood. I have been happily surprised to see that it's gotten a fair amount of attention on BP and I've been interested in investing in St. Louis myself. Does this semi-plan sound sensible at all? I haven't wanted to flesh it out, because I feel like it might be unreasonable (although I know, if I really want to do it, I can make it happen):  I purchase a small multi in Boston that I house hack for a few years. Whenever I next can, I purchase a property in St. Louis? And then look into expanding my St. Louis holdings, or other long-distance holdings (if I'm still living in the Boston area)?

I want to househack in the Boston area because:

•  Using a first time homebuyer, owner occupied loan would be great, and allow me to buy a property in Boston (which is just very expensive in general) 
•  I already pay a stupid amount in rent (not a lot for the area, but I think I can find a deal that will allow me to live for free, or close to it). 
•  I could build equity in this area that appreciates rather quickly.
•  I plan on being in the Boston area, at least for a few more years, possibly more
•  I would like to provide a nice living space for the couple of tenants I'd have

I want to buy properties in St. Louis because:

•  I am from there, want to invest in my hometown--i love the area and want to invest in the neighborhood, provide good housing, and be able to have that relationship with my hometown, even if i'm not living there. 
•  I know the streets there extremely well, know people on the ground, and feel like I can hold my own in long-distance investing in my actual hometown. 
•  It's much cheaper than Boston (for example, the properties I'm looking at in Boston are around 800K, while some overpriced multis in St. Louis might be 250K). I could theoretically buy more properties faster (I'd of course not take on more than I can handle), with just my income (I save a lot of my salary and live frugally).

I'm a bit worried that:

•  If I buy a househack out here in Boston, my DTI (debt-to-income ratio) would be too high for me to qualify for new loans to acquire other properties. But maybe that's not a valid concern, since you can incorporate rental income? I think this is my biggest concern.
•  I may spread myself thin, having a property in Boston, and other properties in St. Louis? But I know long-distance REI is definitely possible. 
•  The properties in Boston are so expensive, I don't know if I'd be able to buy more very quickly.

Thank you for any help or feedback on this "fork in the road"!

Stormer Santana · Answer

@Maddie Kirwin - Congrats on getting started! I am starting as well and closing on my first multi-family house hack in early December, in Malden!

Over the past 3 months, I have analyzed about 70 properties in the Boston area with the goal of house hacking. From what I found, it's going to be hard to live for free in Boston given the cost of entry. That being said, significantly reducing your living expenses is very possible with a househack. I am going through a Masshousing program as well and PMI still really eats your cashflow.

I have created a great excel sheet for tracking and viewing all of your house hack leads. Its a one-stop shop for viewing your prospects, while factoring reserves PMI taxes and what your move out return would look like. Feel free to dm me if you're interested in it.

Joe Rodriguez · Answer

@Maddie Kirwin Hi Maddie- congrats on getting started! Best of luck on any offers moving forward. I think house hacking is a great idea, especially in the Boston area since prices are so high. I did the same with a 2 family in Malden a few years back. It needed some work so I renovated it and with some appreciation, I was able to refi in about 6 months and get a conventional loan.

I understand your concerns but if you’re going to live here for at least another few years, you could have several options to buy the next one. Try to find a property that needs a little work, of course too much work might not qualify and completely renovated won’t allow for much value add. Maybe paint, flooring, fixture upgrade, etc. Also, simply raising rents and getting market value can help. So many properties out there have long term tenants and keep rents the same which can make a big difference in cash flow.

Hope that helps!

Avery Heilbron · Answer

@Maddie Kirwin Those markets in Boston are awesome places to househack and I would definitely pull the trigger if you can. It will also be a lot easier now to start off with the househack here and get some management skills and get to understand property in general.

I have a 2 family and 3 family in Everett and probably won't be living here next year, but still plan to self manage. I already have implemented how to "long distance manage" my duplex as I don't live in it. Lockboxes and good tenants help, but it isn't all that difficult.

Zac Ballin · Answer

I'm not aware of any better move someone starting out could make than using a MassHousing loan for a multi-family, and you're on the right track looking at 3-families.  There is no other leveraged investment the government is going to subsidize for you.  Lenders will off-set your debt with the rental income reducing your DTI facilitating you buying more properties wherever you decide when that time comes.

Erick Sembrano · Answer

I am definitely a big fan of house hacking and would go that route especially in the Boston area. If you can find a triplex of 4plex to house hack, eliminate your housing expense and if lucky cashflow even a little bit, then value add, there might be a chance you can refi to get some or your money invested back if done right. Then perhaps at that time you can reuse some of the cash out refi to look for an investment property in St Louis. Good luck!

Myriem Mhirit · Answer

Hi @Maddie Kirwin, I am a Software Engineer based in NYC. I have been investing in St. Louis for the past 3 years. Happy to answer questions on that, shoot me a message so we can connect.

Joe Rodriguez · Answer

Definitely! Shoot me a message and we can connect.

Maddie K. · Answer

Hey Joe,

During all my reading/research, I have gotten much more comfortable with the idea of BRRRR, and have realized it's a great method. I'm super interested in learning more about housing renovation, but I do worry that I lack experience. I'm quite handy and build bikes, computers, and in general love building stuff--but the cost of materials and the "air of seriousness" around housing projects can make me a bit nervous. Also, since I've always rented, or lived with family, I haven't had my own place I can try anything out on. So, I guess one reason I am not looking too much into things that need lots of cosmetic work (or other types), is my lack of experience. I know that taking a while to learn can cost me much more than materials, but also mortgage and vacancies.

Also, I'm curious about how folks get into rehabbing. As someone just starting and who mostly connected with agents and lenders more geared towards turn-key and nice deals, I wonder how people get into rehabbing. If you have time to talk, I can send you a PM :)

Maddie K. · Answer

Hi everyone!

It's great to read everyone's responses. I think I mostly needed to run my ideas by someone other than my partner. More than anything, this has helped me understand that I don't have to have everything figured out for the next deal. And all your input is a good signal I'm on the right track for my first property. Thanks again!!

Jon McCarron · Answer

hi @Maddie Kirwin,

Like many others on the thread, I would suggest house hacking first. Everyone needs a place to live, so why not eliminate that housing expense for yourself (or make some money while living for free!). House hacking will give you a perspective of what being a landlord and property owner is all about. Also, you will be able to save up more money faster which could be used to expand into the St. Louis market, or dive into other investments.

Good luck!

HouseHack in Boston area and/or invest in Hometown, St. Louis?

Most Popular Reply