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Updated about 4 years ago, 11/27/2020
Projections on Markets in Manchester and Rochester NH or Others
I am looking at buying investment property in Manchester or Rochester, NH, and they are much lower cost than where I am (DC), and I hear they are expected to grow significantly. Does anyone have information about expected appreciation, best neighborhoods, etc.? Recommendations around either location or others in New Hampshire would be appreciated. I am looking at buying duplex/triplex and owner occupy the first year so I am able to buy with 5% down.
I don't know the Rochester area very well but I've lived near and in Manchester, NH my entire life so I know the Manchester and surrounding markets very well. Manchester can be "rough" in parts but exactly how rough depends on what you are used to. There are some neighborhoods on the east and west sides that I would avoid, but there are a lot of really nice neighborhoods in the city as well.
For the east side, I would primarily avoid the rectangular-ish area formed by Elm St, Cilley Rd, Belmont St, and Salmon St. With some areas in the northeast corner of this area that are nice.
On the west side I'd avoid most of the Rimmon heights area.
There are good deals to be had in this area but since you're going to owner occupy these are the areas where I personally would not want to live.
If you want my take on any specific property you're looking at please feel free to PM me. I'm happy to help.
I actively invest in Rochester, I’d be happy to answer any questions that I can. Feel free to msg me anytime.
I have commercial in Manchester. Manchester is very cheap. But I would not want to own residential in Manchester. Where I own commercial it is very rough. Not just rough NH standards. It reminds me of Lawrence MA where I own. Drugs are a huge issue and I do not see the area turning around. Rochester has similar pricing. It is priced that way because of the location. Manchester is 30 mins out of MA. Rochester is 1 hour. Berlin is the extreme of cheap NH real estate. You are not going to get murdered or bothered but where are you or your tenants going to work? Rochester people can work. Manchester they can work but would you want to live in that area?
@Adam Reeves and @Zachary Richards thanks so much ill reach out to you both!
@Zachary Richards I appreciate this advice Zach, this will help!
@Marielle Walter I'm in the same frame for the Manchester area. If you don't mind me asking, why are you also considering Rochester?
@Zachary Richards thanks for that information. Saw a property pop up across from Central High but figured the location wasn't the best from what I know of that area of the city.
Hi Marielle,
I am a local and have lived in Manchester NH I currently own a duplex in Salem NH its great and with current developments such as the Tuscan Village it is definitely making the southern new Hampshire area more desirable. I encourage you to do a little bit of digging on these large development projects as they can have an impact in future growth.
If I can be of any assistance please send me a message. Happy searching!
@Rudy Planter I have been hearing f good things from people I know who have bought in Rochester. One of them made over 100 k on there place in a few years. I hear it is changing and growing. But I think I am partial to Manchester based on location and amenities, airport, Whole Foods, restaurants (I am told there are a good amount of nice ones?). Maybe I am overestimating Manchester, but I am told there are very nice areas, as well as very rough areas
@Jonathan Ramos thanks! Are you aware of development in Manchester? Are there blogs or resources I could look to track that?
Originally posted by @Marielle Walter:
@Rudy Planter I have been hearing f good things from people I know who have bought in Rochester. One of them made over 100 k on there place in a few years. I hear it is changing and growing. But I think I am partial to Manchester based on location and amenities, airport, Whole Foods, restaurants (I am told there are a good amount of nice ones?). Maybe I am overestimating Manchester, but I am told there are very nice areas, as well as very rough areas
Interesting about Rochester....I Googled top places and Rochester did make a category or two on that list. So there's that but like David Greene says you need someone on your team to verify for best chance for good info. There is a good mix. The "rough" areas don't sneak up on you so from an investment view you can easily figure that out. What's your criteria? Asking because you mentioned owner-ocucupancy. Also have you considered right outside of Manchester? I'm currently looking for a multi keeping my family safety mind.
Manchester ... Tough area, you really need to know where you are buying. Properties are relatively cheap and can provide great cash flow, but there are significant risks. I'd look in surrounding towns first, like Hooksett, Bedford or Derry/Lodonderry. Much better schools, less risk. Better yet look closer to MA border. Like Nashua, Salem or Portsmouth.
Rochester ... one of the lowest income, high poverty, drugs areas among major NH markets. Now that said, NH crime rates are generally among the lowest in the country, So for someone from St. Louis Rochester may seem like paradise. But there are definitely better places then that to invest in NH.
Portsmouth... Great area to be in, but got very expensive lately. Hard to find anything that makes any cash flow sense. Pricing getting very close to Boston.
Salem/Windham ... very good choice to invest in. Direct short from Boston on Interstate 93. You get all tax advantages of NH, with easy access to Boston Metro. (30 min to Boston proper) This area is experiencing high pressure from Massachusetts as people are getting priced out from Boston Area and with work from home its looking better and better.
Nashua... Second largest city in NH, right on the state line, as Salem. Easily one of the best areas to invest. Its also only 45 min from Boston proper on Route 3. Also experiencing massive pressure from Massachusetts residents moving to NH. Vacancy rates are below 1% ( For the whole state of NH vacancies are around 2%). Real estate pricing still makes sense, and you can find cash flowing properties. Very low crime rates. Manchester airport is only 15 min away too.
We all have different opinions and I do have to say I love reading the comments. I personally lump Rochester in the same group as Berlin and Claremont. Who’s the largest employer in Rochester? The small hospital and Market Basket? What’s the draw to living there, that is cheaper than Dover and the Seacoast? If your tenant pool are those that got pushed out of other towns because they couldn’t afford it to live else where sounds like a place I’m avoiding.
As for Manchester it’s the major center of employment for NH not that that’s saying much but it’s the largest employer and largest city. There’s a few smaller developments happening here but the city sucks to deal with and is total inept in my opinion. It appears developers would rather fight endless lawsuits to develop in Bedford and Londonderry than deal with Manchester’s current leadership.
I'll add my two cents about Rochester, again. In both Manchester and Rochester, buying blind is a very poor idea. Both have some of the roughest areas of NH in them (As pointed out by another commentator this is relative, nowhere in NH is East St. Louis). I can't comment on Manchester since I am not active in the central part of the state, but I have extensive experience with Rochester and the seacoast.
In Rochester, the areas that are multi-family, and the areas of Rochester where good tenants don't want to live, are almost mutually inclusive. As you mentioned owner-occupied, are those areas you want to live in? Yes you can get homes for under 200k (though even these are rarer in Rochester nowadays). I did a very quick scan of the MLS for multi-family in Rochester, there is exactly one for sale in a decent area, and its 379,000 and under contract. If you don't know what French town is in Rochester, or what East Rochester and Gonic entail or the area around City Hall, I would recommend you don't invest in Rochester. Most of the area around downtown is solid C territory or even worse when you get by the Fairgrounds. Do you want to live in a neighborhood, and this is an exact quote from the Rochester Police log 10 years ago "50 people fight on Lafayette St"?
I am sure there are a lot of people making a lot of money in Rochester...some of them may not even be slum lords. But like it or not, that's the majority of the tenant and landlord pool in that town. I know this because I've known, and have worked with, people investing in this area. Sure, it's better than it used to be. But as another comment said, the ONLY reason most people move to Rochester is that they cannot afford Dover anymore. That's your main reason renters move there. It has nothing that Dover does not have, which is why every morning the Turnpike is backed up with people from Rochester coming south for work. So your tenant pool will be people who can't afford to pay 1500 for a 2BD in Dover.
With 5% down, even a 200k home in Rochester will have you carrying a 1400+ mortgage thanks to property tax. This means your rental most likely won't cover your mortgage. If you just want to get a cheap/free living situation, then yes Rochester can work for you. But do you want to live with someone who moved there probably because they can't afford the rent somewhere else. People will keep telling you Rochester is "up and coming." They've been saying that for 15 years already. Go look at downtown redevelopment plans from the city council from, 2004 and then look at downtown Rochester again today; you will see no appreciable difference. No one is traveling to Rochester from the surrounding cities because it offers something the others don't. Somersworth will gentrify first before Rochester, and even Dover hasn't gotten rid of all of it's 'bad' areas downtown yet...so waiting for good appreciation in Rochester you better be prepared for a long wait. There is money to be made in Rochester, but I wouldn't recommend it for owner-occupiers.
As for surrounding towns, Somersworth is strongly dependent on location; I would aggressively avoid anything near downtown, especially in and around Green St. I have some great stories about tenants from Green St when I was a property manager there. Portsmouth is, if you're looking for cheaper than DC, effectively out of your price range. Duplexes there regularly go for 600k to over a million, and obviously having nothing approaching cash flow anywhere. A good duplex in Dover is 300-400k, which won't get you any cash flow, but will allow you to own something in a better town for less than a full mortgage. I have seen maybe a few cash flowing duplexes on the MLS the past few years in Dover, most are much better suited to owner-occupied "house hacking" scenarios. The towns west of the cities that border Maine are either out of your price range probably, or have no rental markets to speak of. Durham, Lee, Madbury, Greenland etc.
Anyway, that's my take. Again, money to be made anywhere for people who want to work a niche, but investing without knowing the area, I'd make a hard pass on almost all of Rochester.
@Oleg Mikhailov thanks for the feedback. I am curious, you mentioned tax benefits of NH, but coming from DC, the NH property tax is very high. What benefits re taxes does NH offer to real estate investors?
@Marielle Walter, there is no specific tax break for real estate investors, but NH is one of the only 2 states that don’t have both income tax and sales tax. So it’s very friendly to work from home environment. And since you plan on living here it will certainly add up overtime.
As an additional note, NH is very landlord friendly state, as opposed to neighboring Massachusetts, for example.
Originally posted by @Oleg Mikhailov:
@Marielle Walter, there is no specific tax break for real estate investors, but NH is one of the only 2 states that don’t have both income tax and sales tax. So it’s very friendly to work from home environment. And since you plan on living here it will certainly add up overtime.
As an additional note, NH is very landlord friendly state, as opposed to neighboring Massachusetts, for example.
On the business side/commercial side they do have programs for depressed areas. I do not know anything for residential
@James Smith, very nice breakdown of the Seacoast area. I'm curious what your thoughts are on the future of Dover, Portsmouth and Exeter. Everything on the MLS is outrageous, and I'm willing to start a direct mail campaign and I'm trying to nail down where I want to start. My plan is to analyze the leads, secure the really good deals that I want to BRRRR, and basically wholesale the rest/what I cannot finance.
Originally posted by @Jon Proulx:
@James Smith, very nice breakdown of the Seacoast area. I'm curious what your thoughts are on the future of Dover, Portsmouth and Exeter. Everything on the MLS is outrageous, and I'm willing to start a direct mail campaign and I'm trying to nail down where I want to start. My plan is to analyze the leads, secure the really good deals that I want to BRRRR, and basically wholesale the rest/what I cannot finance.
Hey Jon, I've thought about mail campaigns as well. Though in this market everyone on the seacoast, even the most oblivious seller, is aware that everything in the area is through the roof.
I've effectively written off Portsmouth as an individual investor. The only way to make money there anymore is to inherit a property, or be a developer. Since I refuse on personal conviction to every build one of those horrendous mixed-used eyesores that are becoming an every present blight on the character of Portsmouth (and now Dover), that means the area is out for me. It also helps that I don't have the money to do that anyway :)
Dover is fast becoming the next Portsmouth, as it's the most obvious overflow for the Portsmouth area. I live in Dover and love it, as it's Portsmouth without the ever present tourists clogging up downtown. It's the place I'd rather live in, even if I'd much rather visit Portsmouth, because everything is more accessible and cheaper here, and it's not, excuse my language, up it's own *** as much. I think there are four main ways to make money at retail prices in Dover still, based on my experiences, and those of my friends who invest.
The first and most obvious is house hack. There is, on any given day, not a single duplex in Dover that makes sense to buy for cash flow unless you are planning on living there. There hasn't been in years. There are of course notable exceptions, but everyone I know that got a "good deal" bought these places before 2017 at the latest. I still kill myself over not picking up a few buildings that I had the capital to buy at the time because I thought the prices were outrageous (As they had effectively doubled over what I was paying just 4 years earlier).
The second way is to be a commercial level developer. I know some of the people building those giant buildings downtown, and while I am not happy with the style of the buildings the city allowed them to build (I am extremely conservative when it comes to architecture styles, and would prefer they were 100% faced in brick and not these weird mishmash things everyone builds now a days), or what I perceive as a lack of parking and over reliance on a luxury market, they are going to do quite well for themselves, so on that front it is hard to argue. There are two pieces of proeprty for sale downtown currently, I think a million five a piece, that would both make someone a lot of money if they are willing to invest another two million into it. Way beyond my scope though.
The third honestly is flipping. This market is driven by people wanting to live in Dover more than it is investors buying up properties (there really aren't that many multi families in Dover and property taxes make buying SFR for buy and hold more tenuous). To me, this means buying homes that other homeowners won't touch; foundation problems, mold problems, full remodels. I recently bought an apartment building in Rollinsford this way; there was 100k in deferred maintenance that no homeowner would want to do, and it was a niche property so there was wiggle room to get a good deal. I have very little experience in flipping, but I have identified a few properties over the years, including convincing a few friends to buy some, and they've all made good money off of it. I've also missed out or been outbid on a few properties that probably netted at least 100-150k in town, so there's money there.
Lastly, and this I think is where I may be going next, is buy in the "bad" parts of town and wait it out 15 years. Dover is running out of affordable housing, and the only place to get it is the "bad" side of 108. I use quotes because the worst neighborhoods in Dover are relatively mild compared to rougher areas in Rochester or Somersworth, and even the bad parts of town here are fast approaching 1k for a 1BD. Then again there was a murder/suicide there last week, but I think that's an outlier. Buying the worst house on the best street there (closer to the hospital is better than closer to downtown) and fixing it up may be a recipe for success in the long run as appreciation drives that train. I do always, 100% of the time, tell people that my personal philosophy is to treat appreciation as the cherry on top of a sundae, and to never factor it into your calculations for whether to buy a property. Many others will disagree. But during boom times everyone thinks they are a genius. And everyone gets in on it, because they don't want to miss the party. But at midnight everyone turns into a pumpkin, and we're all partying in a room without any clocks. So I don't bet on appreciation, but on that side of 108, that's probably where most of your money can be made.
I know much less about Exeter, but from what I gather talking to people, it's in the same boat as Dover for all those points I made above, only on a smaller scale. I don't know what areas of Exeter, if any, are considered the bad ones, so I can't comment on that. That said, I am not opposed to buying in smaller (for NH) markets; as I mentioned before I bought a home in Rollinsford of all places.
Hope that helped some. If you have a different take I'd love to hear it.
@James Smith
I cannot believe how much some of these properties are being listed for right now in Dover. That's the one thing that worries me about trying direct mail. But then again I'd rather fail trying than never get started and miss out on any potential opportunities. I think I'm better of trying to BRRRR SFHs from direct mail than purchase a multi family and attempt to cash flow given this market.
I’ve considered house hacking in Dover. I’m currently house hacking in Lee (just renting to friends) and I planned to stay here for a few years while I pick up other investment properties. As I’m just getting started, commercial is probably out of the question. That leaves flipping and investing in the “bad” area of Dover or looking in other town. I’ll start by taking a ride though the neighborhoods to get a feel for the different streets at least.
We’re on the same page as far as appreciation. I don’t factor it into any of my calculations as I’m really focused on positive cash flow. If I can make a decent profit when I sell the property down the road then that’s great, too.
I’ll have to make another post about Exeter. I’m interested to see if anyone else invests there. I’m not sold on Dover, I just see it as you said, the next Portsmouth, so I do believe there is potential to make money within the coming years. I just don’t want to try to make bad deals work based on that assumption.
Originally posted by @Oleg Mikhailov:
Manchester ... Tough area, you really need to know where you are buying. Properties are relatively cheap and can provide great cash flow, but there are significant risks. I'd look in surrounding towns first, like Hooksett, Bedford or Derry/Lodonderry. Much better schools, less risk. Better yet look closer to MA border. Like Nashua, Salem or Portsmouth.
Rochester ... one of the lowest income, high poverty, drugs areas among major NH markets. Now that said, NH crime rates are generally among the lowest in the country, So for someone from St. Louis Rochester may seem like paradise. But there are definitely better places then that to invest in NH.
Portsmouth... Great area to be in, but got very expensive lately. Hard to find anything that makes any cash flow sense. Pricing getting very close to Boston.
Salem/Windham ... very good choice to invest in. Direct short from Boston on Interstate 93. You get all tax advantages of NH, with easy access to Boston Metro. (30 min to Boston proper) This area is experiencing high pressure from Massachusetts as people are getting priced out from Boston Area and with work from home its looking better and better.
Nashua... Second largest city in NH, right on the state line, as Salem. Easily one of the best areas to invest. Its also only 45 min from Boston proper on Route 3. Also experiencing massive pressure from Massachusetts residents moving to NH. Vacancy rates are below 1% ( For the whole state of NH vacancies are around 2%). Real estate pricing still makes sense, and you can find cash flowing properties. Very low crime rates. Manchester airport is only 15 min away too.
Adding my 0.02 here too as a NH and Mass investor:
100% agree one needs to really know Manchester in order to invest since multi's there are still under-taxed in my honest opinion - this will eventually catch up as the city gentrifies.
Rochester is VERY tricky and I can't really make any additional comments there with the exception of for those local folks, there is definitely money to be made. For a remote investor, it would be VERY sketchy.
Portsmouth is a phenomenal town but impossible to cash flow unless one finds a truly unicorn deal.
Salem is a great town and the proximity with Mass helps tremendously with tenant quality and interest. Not a lot of multi's available though and cash flow would still be a challenge.
Windham has high taxes and unless you are looking for flipping, remodel, etc. nothing much to invest there.
Nashua on the other hand is the very best bet from my experience. Yes, there are some folks that will say not to buy anything if a street is named after a tree (Pine, Chestnut, Laurel, etc) but that is not necessarily the case as there are some parts of the city (downtown even) that cash flows greatly and the tenant base is not terrible.
At the end of the day, you get what you pay for. For the most part, the tenant base is better in and around Boston, but cash flow suffers and there is always a challenge in the event one needs to evict (thanks to Mass tenant super friendly laws).
Good luck investing folks!
Flavio
@Jon Proulx
The worst streets in Dover, to me, are Durrell, Pierce, the Lower end of Broadway and NY St. It was always common knowledge that NY was the worst, but I think Durrell edges it out now. This is true even as Dover's city council and planning board are doing everything in their power to squeeze every working class resident out of that entire area to put in more of the luxury apartments in the aforementioned buildings I complained about (like when they razed some buildings on Mechanic Street to squeeze in a bunch of townhouses).
As I find to be the case in just about every neighborhood in this country, the quality of the actual physical street you drive on and the sidewalks you walk on will be the best indicator of the quality of a neighborhood. Drive down Silver St in Dover (A grade neighborhood), which has a perfect newly-paved street, then go to the good side of 108 north of downtown (where I live, solid B+ Neighborhood), which has streets in good condition, but Unitil cut them up a few years ago and they haven't been resurfaced yet. Then drive across the street to the "bad" side of 108 and you'll see the numerous patch jobs, loose pavement, warped sidewalks etc. (B- to C neighborhood). Same city, same resources, all within a mile of one another, but the quality of the actual street is worlds apart. It's my 100% go to move to quickly analyze a neighborhood in a city I'm not familiar with. It's probably not right all the time, but I'd be shocked if I couldn't get 80+% accuracy on a neighborhood rating grade by just looking at the street itself.
I completely agree! Dover, Portsmouth, Nashua, even down to the condition of streets and sidewalks. This solely on market research and upcoming move to the Upper Valley region.
I fear it's going to be hard to relocate my family and actually purchase a smart investment since the College owns the town. I'm excited for all the opportunities, the natural beauty, and top notch education but it's looking like a small 3BR/2BA condo towards the lake region for a buy and hold may be the best option. That for the short term until I can find a "forever" home with hopes at seasonal rental after the fact.
If you have knowledge or can connect me with resources in the Upper Valley region, I'd be obliged. I have a good 6 months before move. Summer 2021 is the target.
Thanks for the information. It sounds spot on!