How do I decide purchase price in Central Massachusetts?

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@Christy Crivellaro - There are definitely a lot of considerations. What I will say is the more bedrooms per unit and the more units in the multi, the higher likelihood your house hack will cash flow and you will live for free. Ultimately that is the goal since once you starting living for free, your saving rates jumps dramatically allowing you to expand your portfolio that much quicker. If the difference of getting a 2 unit vs. getting a 3 or 4 unit is that $100K difference, I say go for it. The more units you can get in the house hack, the better financial position you will be in the future. In addition, @Sabrina Sanchez and I host a real estate meet up once a month in Worcester. Our next meetup will be at the Hangover Pub on 9/22 from 6:30 pm - 8:30 pm. We have a bunch of great guest speakers lined up including a cost segregation expert (google it - it's a powerful strategy) and a successful local multifamily investor. Feel free to come on by, get a couple drinks and network with some investors. We hope to see you there. https://www.biggerpockets.com/forums/521/topics/981376-pints-and-properties-worcester

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it all depends on the condition of the property. There are places for $500k with lots of deferred maintenance and others that are in great shape. I would want to have $15k available on most places, but if the roof is older the roof alone is $15k. Older heating systems can be up to $10k per unit. The key is to get a place with good bones, so what you are addressing is cosmetics not electrical or plumbing upgrades

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If it's a few thousand to get you more qualified I would pull the trigger not only because your current purchase but it gives you a stronger debt to income ratio moving forward. You can still stay within the $400k purchase budget even if you qualify for $500, no one is going to force you to buy more than you're comfortable. You wont be thinking about the extra few thousand you're spending to get more qualified when you have additional write offs from your property and ability to purchase more properties moving forward. Hope that gives you a different perspective, good luck.

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I agree, do not chase COC. Look for something that has value long term, and incrementally raise your rents. If you spend all of your money fixing things, you will never win. Take a quick look at this.https://www.biggerpockets.com/...

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Christy,You have a lot of good advice in the responses thus far. I wouldn't look at a property "cahflowing" as a metric for criteria. ALL properties 3-4 units should be cash flowing without you occupying a unit in the central MA area. If they don't I would stay away because you would be floating all upkeep and repairs for the unforeseeable future. The question is what is your cashflow as a return on invest (ROI) when compared to the amount of your money invested into the property (downpayment). You might see it referred to as "cash on cash". Once you determine the cash on cash ROI you will be able to compare properties in different areas and then make a decision of what works best for you. Of course there are more factors to consider but this is a good screening tool. Having the option to borrow 500K instead of 400K will improve the number of potential investments which would be helpful in this competitive market. Purchasing a 500K vs 400K property will most likely result in more nominal cashflow but (sometimes) a lower cash on cash ROI. You are an investor now so the more cash you keep the more properties you can acquire. Use ROI as a comparison metric not nominal cashflow.That being said, I wouldn't deplete my reserves to a point of risk. Reserves are a very important part of investing. If you invest in real estate with a commitment to improve your knowledge and processes you will find success. Reserves allow you to STAY IN THE GAME. If you make a mistake or have an unforeseen issue and not enough reserves, you could be forced out of investing. The most important thing is to STAY IN THE GAME. Holding and acquiring properties over time will guarantee you a win.

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Personally I think you'll have to approach this case by case. I agree completely with what @Lien Vuong said, for a small investment of 3-5k you could be in a much better position as far as debt to income is concerned. The way I initially looked at it was - will that up front investment yield you anything as far as returns? If you're seeing the same cash flow numbers with 400k properties as 500k properties, then I don't see any real reason to eat the tax bill. On the other hand, if properties in the upper price bracket allow for $100 more in cash flow month, that's a pretty nice return on your money. There are certainly a number of different ways to look at this.Good Luck!

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@Christy Crivellaro it sounds like you just need to get access to mls and start running numbers daily. If you analyze 10 deals per week between now and your 10/15 extension date you’ll be able to answer your own questions. We can help you get comfortable running the numbers if you want? I help we’ll plenty of newbies and 1st time Househacker’s get started but at the end of the day it’s your money so you need to be comfortable with your numbers. No one on will run them for you but we can certainly provide guidance and answer questions. To @Jason Regan‘s point, 45 mins from Sudbury could open up cheaper markets than Worcester. But @Brian J Allen pulled the inventory in Worcester. I agree with him, I think finding a legal, turnkey 3 family with parking under $400k is going to be very difficult. Best,Jon

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It will be super hard to buy a cash flowing 3 family in Worcester within 45 minutes to Sudbury. This limits you to the East side of Worcester and there isn't much inventory. Currently there are 77 multi listings in Worcester and very few, 13 under $400k, and only 4 of them are 3 families. It is hard even under $450k but you have a shot if you are willing to do work. The best of these is 30 Esther St, which has NO PARKING, and steps to the first floor for $400k. at $450k things change a bit and at $500k things change dramatically. Keep in mind that the cost of borrowing $100k more is in the neighborhood of $500/month and your neighborhoods, parking and size of the property and building change as well which changes the $$$$ you can make.

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@Brian J Allen helpful thank you. back in town next week

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I err toward caution so I am curious: What minimum reserves would you all feel good about if it was a 3 fam selling for 500k and your FIRST investment?