New Hampshire investors - what do you think about Hillsboro NH?

Question

Where my NH investors at - what do you think about Hillsboro NH as buy and hold? Currently looking at a 4-unit MF in the area. List price $400K with rents $4100. I am an out of town investor so need your expertise and advice. Thank you!

Troy Zsofka · Answer

I live in Hillsborough and have owned multiple SFRs in town; still own several.

The Dominos is news to me. Walmart was going to develop and there was talk of a 55+ community with additional restaurants and retail, but none of it ever came to fruition.

Overall, my investments here have served me well. Strong rents, good tenants, solid appreciation.

Personally, I don't invest in small MFH due to higher turnover and generally lower tenant quality, but there is strong rental demand currently. Just make sure to screen prospective tenants well.

Lastly, $100K/unit for a small MFH in Hillsborough seems steep. Of course, we have seen significant cap rate compression even in tertiary markets so it's no real surprise that it's priced that high. At that price I would want the property to be in outstanding condition though. Also, depending on the size of the units, rents may be below market. There is almost nothing available and rents have increased tremendously over the past couple years.

Troy Zsofka · Answer

@Julie Williams -

Compression simply means declining Cap Rates; whereas expansion means rising.

Tertiary markets refers to smaller metros. Primary market examples would be Boston, Chicago, LA, NYC, San Fran, DFW, etc.

Secondary would be places like Austin, Nashville, Greenville, Charlotte, etc.

Technically, I would consider Concord to be tertiary, so calling Hillsborough tertiary might be a stretch, and rural would likely be more apropos.

Pankil P. Patel · Answer

@Shawn Clark

Thank you for sharing the news about dominos. It is always good to see a town adding more businesses that means that it is up and keeping. Wouldn’t it be nice to have Walmart as well. More jobs and more tenants to attract in the area.

Thanks for your feedback!

Pankil P. Patel · Answer

@Shane Moynihan

Hi Shane - yes I agree the rents are lower than other metro areas of NH but it definitely fits my strategy for now. Since current rents are lower for the area, I might be able to up my ROI potentially making it a great buy and hold. I have decided to purchase this property and it is under agreement!

I appreciate the feedback from fellow BPers.

Thanks again,

Pankil

Pankil P. Patel · Answer

@John Quiroz

Thank you for the advice. Yes this is part of our inspection check list!

John Quiroz · Answer

@Pankil P. Patel

Check the property taxes in NH. They are really high! Also NH requires all units have hard wired smoke alarms and fire extinguishers. Make sure to check these items along with the house heating system. Good luck!

Julie Williams · Answer

@Troy Zsofka "Significant cap rate compression even in tertiary markets". I know what a cap rate is but what does cap rate compression mean? What is a tertiary market?

Thanks!

Julie

Pankil P. Patel · Answer

@Troy Zsofka

Thank you for the advice and it is great to know that Hillsboro town has been good investment tool for you so far. Do you mind if I pick your brain for rents advice? I will send a private message and would appreciate your feedback.

As far as the property value, yes it is a bit steep at $100k per unit but there is a 5th unit that I could pull the permit, rehab and rent it out, potentially increasing my cash flow so I jumped into this and the property is under agreement at below asking!

I appreciate your feedback!

Pankil

Pankil P. Patel · Answer

@Jeremy Nault

Thank you for the advice. For an out of state investor like me, it is reassuring that NEC and Pats Peak are next town over so I can really target NEC students as potential tenants. I will deff keep that in mind!

I did get the property below asking now under agreement so we shall see how the inspection goes and how it appraises but so far looking good!

Thanks again,

Pankil

Shane Moynihan · Answer

Hi @Pankil P. Patel, I would say it could be a good purchase for a buy and hold area. But I will say you most likely will not be able to get as high of rents than other places in NH like Keene, Concord, Nashua, or Manchester. But as Jeremy mentioned it is right off of Route 9 which goes either towards Keene or Concord. Have you tried to look in Keene, NH? I know there are a few properties around that price range that could work. Let me know if you have any questions!