Just starting, looking at househacks in MA/NH

[Becky Marsh]

Hi everyone! I'm just starting out and hoping to get some advice. I love the idea of house hacking and since I'm a freelancer (with lots of tools!) doing the property management should fit into my schedule fine. My income varies a lot month by month though. It's about half from many w2 jobs and half from 1099 jobs. Does anyone have a lender to recommend? I'm not sure next steps and somewhat worried how a lender would make sense of all this. Fortunately I do have excellent credit. Since I would live there I could use an FHA loan.

I've been looking at Salem and Nashua, NH. Also seeing buildings that should cash flow in Lowell. Any big difference between land-lording in NH or MA? I work all around the Boston area so exact location isn't that critical. Either a duplex or big house with rooms I could rent out would work so I've been doing some practice deals analysis on those.

[Evan Lowry]

Hi Becky, 

In my opinion the biggest differences for landlording in MA and NH are taxes and regulations. I house hack in NH and manage a fourplex in MA, so I have experienced both markets from the landlord side.

Massachusetts has much more tenant friendly laws and protections for tenants than NH. It is common for courts to award tenants triple damages and attorneys fees for technical defaults by landlords in areas like security deposit disputes or other common mistakes. That risk can be managed by learning and following the rules of the road, but you should be aware of it. Granted, If your househack ends up being  an owner occupied duplex in either state, your risks are lower as some of the same rules don’t apply to you as an owner occupant, but it’s something to be aware of, especially if you plan to eventually move out and become a non occupant landlord. NH, and Nashua in particular, are generally much fairer to landlords and there is more freedom of contract to what you can put in your lease. Just one example: here in NH I believe you can usually charge a tenant application fee. In Massachusetts unless the property is represented by a broker, you usually can’t. Those kinds of nitpicky rules can be frustrating if you self manage. I don’t think they are make or break for your decision, I just think they are good things to know.

In NH, you also have the benefit of no personal income tax and no sales tax, but the property taxes are typically much higher than Massachusetts cities and towns. So your monthly payment will be higher on a similarly priced home in Nashua vs Lowell (in your example).

On the flip side, the Massachusetts markets tend to do better in downturns and recession, at least if 2008 is any indication…

Other than that I think markets like Lowell and Nashua have a lot in common, in the multi family space. I personally think they are both great places to live, especially with the Boston market pricing everyone out these days.

Those are just some quick thoughts I had. I’m sure others will have more to say on the subject.

Good luck on your investment!