Springfield MA Market

[Jeff Bousquet]

I see a lot of 2/3 family's in Springfield MA for good prices. Does anyone have experience in this area? 

[Dan K.]

Hi Jeff,

As Dick said, Springfield is a challenging location from a tenant perspective. For example, the unemployment rate, relatively low, is 6.5% versus MA's 3.5%

It's been a long time since I was more familiar with Springfield, so I'm not sure about the impact of the casino.

In general, similar to other working class cities like Fitchburg, in Springfield I'd imagine you'd fine the following conditions:

- Attractive Cap rates

- Medium vacancy

- You're paying a realtor or property management company to find tenants (in higher end cities the tenants pay the realtor fee)

- Section 8 tenants -- could be a negative or positive, depending on your view. Keep in mind you can't discriminate against them in MA

- The need to delead and if your certs are old there is a good chance a new inspection could come up positive.

- Monthly cash flow from day one

- More properties that are fully separated metered -- gas, electric, hot water all metered for individual units

- Significant increase in property management -- evictions, late rent not because somebody simply forgot to press "send," potential domestic issues, issues between tenants, etc. Of course these events can happen in A++ buildings and cities, but to me it seems more prevalent in cities like Springfield.

- Very low appreciation unless there is a large market shift -- major new employer, city takes many housing units offline via eminent domain, a college greatly expands without additional housing, etc.

The list goes on. As you can see there are pros and cons. It depends on your goals. My two cents summarize is that you can make some nice cash, especially for the northeast, but at the same time the units will be management intensive and given the landlord / tenant laws of MA, one troublesome tenant could wipe out many month's / year(s) of profit. You're not going to see much appreciation or rental increases. I am sure there are property owners just killing it in Springfield, so this is absolutely but my opinion.

Final thought -- In a city like Springfield I would go as big as possible and get into the commercial residential. Your risks in terms of a tenants is more spread-out. Additionally, the management of a bigger property does not linearly grow -- what I mean is that a 12-unit building doesn't require four times the management of a 4-unit building.