Buying my first property (NEED ADVICE)

[Lorenzo L.]

Hello all,

I am trying to do my first deal/buy my first MF property but I haven't been able to move the needle.

I am focusing on Small MF (2-4 units), with a value-add strategy. I have been cold calling direct-to-seller and working with brokers to find deals.

I don't understand how properties, in East Boston, for example, are trading at around 5.3 cap when rates are around 6.5%. I was cold calling an off market property and the guy laughed at me because I asked if he would take somewhere around an 8 cap (obviously i didnt say this, I gave him a ballpark number) and he shared with me that these properties are trading at 5.3 cap. I just dont understand how people are buying at such low caps ? Aren't they losing money? Can someone please explain how transactions are being made? (other than the seller financing stuff because I've asked and nobody seems to be interested)

[Lorenzo L.]

Quote from @Tyler Munroe:

@Lorenzo L. good on you for getting into RE investing in college! I think a lot of us on here wish they got started that early, I sure do. Lot of great info on this thread so hopefully you can see how networking can supercharge your investing career (also something I wish I started earlier, ha). 

I've been investing in the immediate Boston area since 2013 and can verify that it is insanely hard to find deals that pencil. I find it hard to believe that investors are actually buying negative cash flow deals, but they are and then banking on appreciation. There are also a lot of foreign investors looking to park cash since US real estate is considered very safe on a global scale. Regardless, just because these properties are trading doesn't mean they're good investments for your aims, so just focus on the numbers you need and keep on keeping on.

One piece of advice is to maybe ease off direct to seller marketing and focus on networking with wholesalers and agents. That way when a deal is brought to you, you know the seller actually wants to sell. I've done a lot of DTS marketing and found that almost all my leads were either tire kickers or if they actually wanted to sell, the property had so many entanglements (multiple family members involved, tons of debt on it, municipal liens, etc.) it wouldn't even be worth it. Can waste a ton of time, money, and effort on this which could be used more effectively evaluating deals, strategies, and markets where you can find returns.

Good luck and feel free to connect if you'd like to chat more about it!

 Thank you for the feedback Tyler.

Where can I find wholesalers to work with?

Also how many should I aim to work with in terms of:
- How many brokers
- How many wholesalers
- And in terms of DTS , how many cold calls a day

Thanks again

[Tyler Munroe]

Quote from @Lorenzo L.:

Quote from @Tyler Munroe:

@Lorenzo L. good on you for getting into RE investing in college! I think a lot of us on here wish they got started that early, I sure do. Lot of great info on this thread so hopefully you can see how networking can supercharge your investing career (also something I wish I started earlier, ha). 

I've been investing in the immediate Boston area since 2013 and can verify that it is insanely hard to find deals that pencil. I find it hard to believe that investors are actually buying negative cash flow deals, but they are and then banking on appreciation. There are also a lot of foreign investors looking to park cash since US real estate is considered very safe on a global scale. Regardless, just because these properties are trading doesn't mean they're good investments for your aims, so just focus on the numbers you need and keep on keeping on.

One piece of advice is to maybe ease off direct to seller marketing and focus on networking with wholesalers and agents. That way when a deal is brought to you, you know the seller actually wants to sell. I've done a lot of DTS marketing and found that almost all my leads were either tire kickers or if they actually wanted to sell, the property had so many entanglements (multiple family members involved, tons of debt on it, municipal liens, etc.) it wouldn't even be worth it. Can waste a ton of time, money, and effort on this which could be used more effectively evaluating deals, strategies, and markets where you can find returns.

Good luck and feel free to connect if you'd like to chat more about it!

 Thank you for the feedback Tyler.

Where can I find wholesalers to work with?

Also how many should I aim to work with in terms of:
- How many brokers
- How many wholesalers
- And in terms of DTS , how many cold calls a day

Thanks again

Wholesalers are all over FB so try joining any "off market" type property groups. If you search for groups with "wholesale" or other keywords you'll see them, there's a lot. You'll see posts from wholesalers and agents with pocket listings so just reach out to them and try to get on their buyer's list so they send you future listings. It helps to try to build rapport with them to show them you're serious, which you may want to work on since you're relatively young and inexperienced. These deals are usually flips but these are the people finding deals so you never know what's going to come through the pipeline.

[Bud Gaffney]

Try making it PERSONAL :) Connect with the sellers.

[Tyler Tapley]

Good Luck!  We are based in Memphis and happy to provide any insight or feedback.  Make sure to stay on top of things and don't trust too many people (especially the so-called experts).  Let us know if we can help or assist.

[Jorge Vazquez]

Hi Lorenzo, 

Within my 20 years of experience, I’ve seen this play out many times, especially in competitive markets like East Boston. Properties with low cap rates (5.3%) often trade because investors prioritize appreciation over immediate cash flow. These buyers are playing the long game—betting on rising property values and rents, which offsets initial breakeven or negative cash flow.

If you’re starting out, I strongly recommend focusing on single-family homes in neighborhoods at the high end of the "low-end market" spectrum. These properties tend to hold value better and offer stronger appreciation compared to duplexes or small multifamily units. The idea of "economy of scale" on small properties like duplexes is largely a myth. They bring higher tenant turnover, limited cash flow, and attract traditional tenants who aren’t your ideal long-term buyers. True scale benefits only begin with properties of 50+ units.

When buying in a low cash flow scenario, make sure you’re in a desirable area where equity growth is likely. Appreciation will drive your returns, not cash flow. Duplexes or small multifamily properties, even with value-add strategies, rarely match the potential of single-family homes in the right neighborhoods.

In summary:

• Don’t be discouraged by low cap rates—they reflect market expectations of future growth.
• Focus on single-family homes with high equity potential in desirable areas.
• Avoid chasing the "economy of scale" myth with small multifamily properties—they often come with higher turnover and lower buyer appeal.
• Think long-term: prioritize properties that grow in value, even if cash flow is tight at first. Talk soon - Jorge 

[Allie McAlister]

Quote from @Lorenzo L.:

Hello all,

I am trying to do my first deal/buy my first MF property but I haven't been able to move the needle.

I am focusing on Small MF (2-4 units), with a value-add strategy. I have been cold calling direct-to-seller and working with brokers to find deals.

I don't understand how properties, in East Boston, for example, are trading at around 5.3 cap when rates are around 6.5%. I was cold calling an off market property and the guy laughed at me because I asked if he would take somewhere around an 8 cap (obviously i didnt say this, I gave him a ballpark number) and he shared with me that these properties are trading at 5.3 cap. I just dont understand how people are buying at such low caps ? Aren't they losing money? Can someone please explain how transactions are being made? (other than the seller financing stuff because I've asked and nobody seems to be interested)

 Hi, Lorenzo. 

What markets are you looking to buy a small MF in? 

Or, if you're unsure of what market, what are you looking for in these properties other than value-add opportunities? 

[Steve K.]

Hey Lorenzo,

I'm up in Maine, so not too far from Boston. I went through the same dilemma when I started investing a few years ago. I'd look at properties in Portland, Maine, which is also a mature and expensive market like Boston, and wondered why people would buy at such a low cap rate. I started looking in surrounding areas and found that the markets less established or still rebuilding had much higher cap rates. On paper some of these buildings had amazing metrics, excellent cash on cash returns, cap rates, etc, but when I looked at the buildings I found the neighborhoods were rough, there was poor management in place, there was lots of deferred maintenance to address. It would take a lot of work to get them up to par. While these buildings had great cash flow, there was more risk that went along with them. That's when it clicked for me - that cap rates are more just a measure of risk. The higher the cap rate, the more risk involved in the building. 

Another important thing to keep in mind is that markets with strong cashflow won't typically have as much appreciation. And markets with strong appreciation typically won't have much cashflow. A property in Boston will appreciate well, but with minimal cashflow. I've found that there are markets that have a balance of decent cashflow and decent appreciation and that's the type of market I eventually decided to invest in.

I'm not too familiar with the different markets down there but I'd highly recommend looking into Candor Realty. They are a group of investors and investor focused agents and put on several meetups a month. I'd personally recommend @Andrew Freed.

I think this will all start making more sense once you start analyzing deals and working with an agent that can provide some insight. 

Best of luck!

[Tyler Tapley]

Join some facebook groups, ask some agents, just get involved.  Make sure these agents know you are actually wanting to buy and aren't a wholesaler.

[Matt Kelly]

We make anywhere from 1500-3000 calls to get a viable lead. Then make 70-100 offers to get one accepted in MA. It’s numbers game.  But you need to know your rental rates before you offer. Most multis that are worth an offer are under valued in rent. Happy to chat more if interested 

[Colby Fryar]

@Lorenzo L 

There are many reasons that investors buy properties like this.  Some buy to park money, others do 1031 exchanges or they simply buy them for a tax write-off.  The important thing is that you do not get caught up in the frenzy and stick to your numbers.   The numbers have to work for your business plan or you will end up with a money pit.

[Erica Larence-Penna]

Have you looked into Rhode Island?  The price point is going to be lower than MA and there are still deals here.  Plus if you are in MA, you will be close enough that if you ever have any issues it's a short drive to the property.  I have two 4-unit properties in RI.  One I purchased in 2019 and the other in 2022 and both have had amazing returns.