Best Direction for Beginner House Hacking (Boston 25yr old)

Kyle Washburn · 2020-12-29T08:57:07-08:00

Hey BiggerPockets, this is my first post here so bear with me. I've been educating myself on real estate for the past few months reading and listening to podcasts, and have decided that my biggest goal for 2021 is to buy my first investment property. Before getting into my main question, here is some background on me. I'm a 25 year old living in the Boston area. I started my own business in college and ran that for 3 years before closing down and getting into SaaS sales. I will clear just over $100k for 2020 and have been living below my means while also investing (side business, BTC, the market). I am locked in to my current lease until August 31st, and plan to close on my first property before August 1st. Currently paying $1120/month and would prefer to own the property and collect from tenants rather than being the tenant! I am planning to have $30-$40k cash ready to invest. Ideally, I'd like to be cashflow positive in this first property while also living for free myself. Now, onto my thoughts/questions.The Boston area is very expensive, and I can't get a decent multi family for less than 600k or so. I have been looking in the Lowell and Worcester areas for cheaper units that would allow me to get in with a lower down payment and leave some room for improvements. I work in Cambridge and all of my friends/social life is in the Boston area, but I'm willing to sacrifice to purchase my first place and house hack in a different area (Lowell/Worcester). I guess my question to you guys is, would you recommend I start out with a home under $500k in the Lowell/Worcester area, live there for a year or two, and then move out and try for my second property? Or do you think it makes sense to look in the greater Boston area for a more expensive property that might have more appreciation over time/is closer to my work and social life? Again, willing to sacrifice location for a great investment.I'm trying to get started on this process early and appreciate any tips, advice, and or recommendations from anyone who started out house hacking. Also happy to answer any additional questions you may have. Thank you all in advanced!

Tommy Brant

Investor · Nashville, TN · Member since 2020 · 38 posts · 57 votes

5y

Hi @Kyle Washburn, and welcome to the community!

I'm a HUGE fan of house hacking. That's how I got started. I bought a single family home with multi bed, multi bath, and rented a bed+bath to a co worker while I was rehabbing. With COVID, maybe sharing spaces(living rm, kitchen) isn't the best idea at the moment, but you could still accomplish this with a duplex/tri/quad or even a home with a finished basement/mother-in-law suite.

Personally, I'd rather buy in suburbs than cities. Families rent too, and you can resell if you get in a pickle. If you need to resell and expensive city property, you're not going to have near as many buyers as a single family home in suburbs.

Couple comments:

- Like any investment, don't invest money you can't stand to lose
- Manage risk according to your comfort level. I'm paraphrasing someone's quote, but "better to go broke at 25 than at 35"
- For me, I'm looking to invest in 1) significant value-add plays(purchase distressed property, then rehab) or 2) buy and hold cash-flowing rentals. Not to say that you can't have 1) AND 2), but those are the typical investment opportunities I look for within residential real estate.

Hope this helps, and best of luck on your real estate journey!

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Michael H.

Rental Property Investor · Worcester, MA · Member since 2014 · 47 posts · 41 votes

5y

Thanks for posting and sharing your story! Congrats on being in your current position. I'm 24, house hacking in Worcester and working on other deals. Very familiar with the Lowell and Worcester markets. For you, working in Cambridge, Lowell works well as a trafficked but straight drive down Route 3 to get to work. At $500K, you can easily find a 3 or 4 family in Worcester, or a duplex, maybe a three family in Lowell.

Let me know if you would like to connect! Happy to share my experience in both markets.

3 Reply

Brian J Allen

Real Estate Agent · Worcester, MA · Member since 2018 · 518 posts · 410 votes

5y

Congrats Kyle on beginning your journey. There is a lot out here in Worcester that fits the bill for you. The key is to educate yourself to the neighborhoods and the market. I figure that takes about 3 months until you have a good feel for the quality you will see and what that commands in terms of pricing. I go out on Saturdays with a socially distanced group to get folks educated. Shoot me a PM if you are interested. Most of the good stuff trades off the MLS, so once you know what you are looking for, and have an understanding on price you are ready to jump when something comes up.

1 Reply

Paul Ireland

Realtor · Boston MA · Member since 2018 · 44 posts · 23 votes

5y

Hey Kyle. I am 26, in a similar spot. I own 3 multifamily properties in Worcester, but I live in the South End of Boston for the time being. Would love to connect. I did extensive research up and down the northeast before deciding to purchase properties in Worcester. It's an incredible market. I am very confident in the secondary cities for the future.

2 Reply

Kevin Kelly

Real Estate Agent · Boston, MA · Member since 2019 · 20 posts · 20 votes

5y

Hi Kyle,

I'm 26 and bought my first house hack last year on the South Shore and was in a very similar situation with regards to income and cash saved up. You mentioned you'd like to cashflow positive in your house hack. For that to be possible in the Boston area you'd most likely need to find a value add opportunity (Ex: Buy a duplex that has basement space to convert to a 3 family), then get creative with the financing for the rehab. Another route you could take is to look for a multifamily that needs a little work and utilize the FHA 203k loan which allows you to wrap the rehab costs into the loan (Although there are a few extra hoops to jump through taking that route). Both options will add sweat equity and allow you to potentially refinance, reduce your monthly payment, and then actually live for free or cashflow positive. I've helped a few clients with this and its been awesome to see the results!

If you go outside the city such as Lowell or Worcester, it is definitely easier to cashflow with a basic 5/10% down payment on a 2-4 unit property.

My duplex is in Bridgewater that I purchased for 460k and have a monthly payment of $2700. My bottom unit is rented out for $2100 per month and my spare bedroom in my unit is rented out at $650 allowing me to live for free and cashflow positive $50 per month. Some sweat equity to the property and the property's increase in value in the past 6+ months has allowed me to refinance from an FHA to a conventional loan and a new monthly payment of just under $2500 per month.

This has allowed me to save a significant amount of my income while living for free over the past year which has put me in a position to look for my next house hack in 2021 and repeat the process.

That is the power of House Hacking!!!

Shoot me a DM if you'd like to discuss further or have any questions as you begin the process.

1 Reply

Jonathan BombaciBusiness Member

Real Estate Agent · Lowell, MA · Member since 2019 · 1k+ posts · 1k+ votes

5y

@Kyle Washburn congrats on making the decision to Househack. Like many of the other posters I Househacked as well when I was 22 and it was the smartest thing I could have done. It sounds like you’re asking the right questions and are looking in the right places. One thing I suggest nit losing sight of is networking. It’s an important step to getting started and building your team and COVID has made it harder but there are still options out there. We were hosting 4 in person meetups a month in MA and NH but moved online in March. We host a monthly virtual meetup with lots of new and experienced investors. I know it’s not the same as I’m the in-person meetups but it’s better than nothing. There are other virtual meetup in greater Boston try to join a few and if you’re interested in ours it’s called Pints and Properties New England. PM me and I can send you the link.

Best of luck and welcome!

Jon

[email protected]978-710-8611

Candor Realty4.760 Reviews

Website View Page

1 Reply

Kyle Washburn

OP

Member since 2020 · 2 posts · 3 votes

5y

Thank you all for your replies, connections, and helpful tips! I will be active on the forums (somewhat) for the next few months as I continue to educate myself. So far, I think I'm set on a small multi family (2 Units, 2-4 bedrooms each), or a single family home with a convenient owner-occupied room to live in. You have all mentioned networking is important, and that is something I will be focusing on in the coming months as I'll need to get all mortgage docs submitted, and then will need a broker.

Another question for you guys - a lot of places in the Worcester/Lowell area seem to be 350k-450k, but might need some small work. Based on my research, it sounds like it would be smart to pay up a bit (500k-650k) for a turn-key, multi family where I can househack. I'd be curious to hear your opinions on this, and why you would recommend one or the other.

Thanks in advanced and Happy New Year!

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Best Direction for Beginner House Hacking (Boston 25yr old)

Best Direction for Beginner House Hacking (Boston 25yr old)

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