Where to start investing in Connecticut?

Question

Good morning,

I am a 21-year-old college senior interested in owning multi-family property for rental income in CT. I am currently located on the border of NJ near Manhatten. I am somewhat familiar with Fairfield County, but I haven't seen the rest of the state. Where do I start my journey to owning multi-family, especially with a smaller budget?

Thanks!

Ryan Twombly · Answer

@Victoria St. James

I'm currently househacking in Middletown, CT and own property in Meriden as well. I personally like these cities for their relatively high rent to purchase ratios and lower property taxes compared to cities like Waterbury or Hartford. I graduated college just last year and can definitely relate! I think househacking is an amazing way to get started if you can make it work for your situation. If you have any questions feel free to reach out!

Allan Smith · Answer

I agree with all of this. While it's important to avoid "steering" away or toward a specific town or geographic area, in terms of rental amounts and general public sentiment for these towns, @felipe is spot on.

Derek Labbie · Answer

Impressive rate of return for tenant security deposit during the 10/1/82-9/30/92 timeframe!

Your bank will help you set up a tenant escrow account for the security deposit, however you will first need to have your tenant submit a completed W9.

I am currently house-hacking in Burlington, CT, and have been dealing with Class B tenants which is the property class I focus my energy on, I invest, and am looking to continue investing in some or the surrounding towns as well. You won’t find a large amount of rentals available to purchase in this area however, when you do the value of having less of your tenants BS to deal with is priceless.

Filipe Pereira · Answer

@Victoria St. James here are my thoughts on the greater Hartford (Hartford county, really) rental market in the event that you come up this far. As a licensed real estate agent myself, I can get into trouble for "steering" you to an area, so please accept these as just some generally vague thoughts based on my experience of the area and property management industry.

Windsor is a great "small town" that generates good cashflow with moderate chances of appreciation (relative to the CT Market)

Granby even a smaller town feel than Windsor, rentals are in high demand and rent prices are high. Expect high prices too, though. Appreciation likely.

Enfield is better on cashflow, but has some rough parts of town that I personally avoid (Specifically T'ville). It does have a busy shopping area, and a mall that desperately needs attention. The proximity to MA is a benefit.

Manchester strong rents, but getting into the market can be tough, as multis are priced accordingly.

West Hartford if you're in this town you're probably banking on appreciation, not cashflow.

Glastonbury Strong rents, but expensive. Multis / rentals are not common, and in demand. Appreciation likely.

East Hartford Mostly a B/C class community. I like it. Rents are strong, proximity to downtown Hartford is a major plus. Prices have gone up steadily since 2015/2016. 

New Britain Still has quite a negative stigma, mostly due to crime. I hear it all the time when I'm showing tenants units in other towns and I get asked "Do you have any other units available." You can see the expressions if you say "Yes we have one in New Britain." We manage in town, but I don't feel comfortable enough to purchase in NB myself. That being said, prices can be attractive.

Bristol Strong rental market. Seems to always have demand given proximity to Hartford, Waterbury and Meriden.

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@Derek Labbie - yes, and interests rates for mortgages were also crazy. I think my parents' interest rate on their primary at the time was north of 10%. Nuts!

Victoria St. James · Answer

@Michael Noto @Filipe Pereira, I should've clarified that my budget would be $400k. I have enough for a 20% downpayment, and I would prefer a town without crime and gang violence. I am still trying to work out the kinks if I want to live in the rental unit. It really depends if I get offered a job in Stamford; if not, I still want to buy a rental unit in CT- as I will move up to the area in the next five years because of my fiance.

Filipe Pereira · Answer

@Victoria St. James I think we need some more information before making recommendations. Are you planning on living there? If so, what kind of neighborhood do you want to live in?  As an example, real estate in the North End of Hartford is more affordable, but it's also gang and crime-ridden.

As a whole, it's my opinion that the suburbs around Hartford are overall more desirable and safe than the typical Waterbury and Bridgeport neighborhood that will be recommended here.  You will not find a multi-family property on every corner in those towns, but the ones that do pop up generally tend to be better rental products.

Filipe Pereira · Answer

Yes, the banking commissioner of the state of Connecticut determines the rates @Heather Armoogam. You can view the information here: https://portal.ct.gov/DOB/Rent...

Michael Noto · Answer

@Victoria St. James When you say "smaller budget" what is the range we are talking about? That would help people with knowledge of the local CT markets guide you on where to narrow your search. Step 1 for any deal is figuring out how you are going to pay for it and assuming you will be obtaining a bank loan, sitting down with a mortgage broker might not be a bad idea.

Best way to learn the markets in the state is to drive them, you are an hour/hour and a half from most markets and it would help you put things in perspective. A lot of the markets mentioned in this thread are good for a buy and hold investor who's only metric is paper cash flow, but may not be good for those looking to house hack.

Heather Armoogam · Answer

@Filipe Pereira, thank you.

Heather Armoogam · Answer

@Filipe Pereira, does CT state law specify a certain interest bearing %?

Now-a-days, banks barely want to give customers a penny on the dollar.  Idk how the state believes tenants will make much interest on their security deposit.  Seems pointless to put security deposits in an interest bearing account.

Where to start investing in Connecticut?

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