Buying a duplex in Boston area

[Mohsin Mazhar]

Hi guys. I just wanted to ask people for advice. I am planning to move to the Boston area. As you know It’s an expensive area to live in. I am thinking about getting a 2 or 3 family home and do house hacking. Now the idea is to avoid getting a jumbo a loan because of the higher down payment, so my price range is under 680,000$. I am thinking maybe getting something on the cheaper side and remodel it, (although I have zero experience in doing that and I don’t think the bank will give me extra money to do the remodeling). What would you guys do if you had to move to an expensive city to live in long term.

Thanks.

[Charlie MacPherson]

@Mohsin Mazhar  Here's the advice I've given to a LOT of people looking at the Boston market:

1.  Look at the map.  RT 128 (aka RT I-93 in some parts and I-95 in others) circumscribes the city, roughly 10 miles from the center.  Inside that zone, there are virtually no 1% deals.  Gross monthly rents will typically be 0.5% - 0.8% of the acquisition price.  

If you get a 3 or 4-plex, the rents will pay a good chunk of your mortgage payment and at a stretch might pay it all.  Actual cash flow will probably only come with renovation of a dilapidated property or buying in a war zone.

2. I-495 circumscribes the city as well, but 25-30 miles out.  In this zone, you'll find some astronomically high prices to the west, less so to the northwest and much more so to the southeast and south.

I strongly recommend looking in Bristol and Plymouth counties.  There is good commuter rail access to Boston, which is important because coming into the city from any direction is a migraine headache in both rush hours.  Worse for those west of the city as they commute directly into both sunrise and sunset.

3. If you want to remodel something, you're best off getting an FHA 203K (renovation) loan. Talk to any mortgage broker about these. You can borrow the amount required for acquisition and renovation - with only 3.5% down.

Now for the current market conditions:

I just looked at MLS. Right now there are 46 2-4-plexes for sale in Plymouth County at $680 or less, excluding short sales.

There are 151 in Bristol County, the vast majority being in Fall River and New Bedford.  These towns can be challenging.

There are 7 in Boston, all of which are in Roxbury, Dorchester or Mattapan.  These are also challenging areas from a crime perspective.

There are 66 in Middlesex County, many are in Lowell, again, might be challenging.

BTW - a note about Middlesex and Worcester counties.  Much of these areas are in what we call the "Worcester Hills".  They are roughly 1,000 feet in elevation.  That means that while Plymouth, Bristol and Barnstable counties are getting a cold rain, the Worcester Hills are getting pounded with snow.  If you buy there, be sure to double your snow removal budget.

Good luck in whatever you decide!