Boston / Cambridge investing strategies

[Keith Anderson]

I'm really glad to see local sub-forums and wanted to kick off the discussion here. Hopefully some keyword alerts for Boston, MA and Cambridge, MA draw folks in.

I'm a new investor based in Cambridge. My wife and I want to build a portfolio of buy-and-hold rental properties.

We've spent about a year looking for a viable strategy in our own backyard and are almost convinced that we'll have to "trade up" to investing locally in 5-10 years after an out-of-state portfolio has been seasoned a bit. We just can't find single-family homes that pencil out, and the multi-families are at relatively prohibitive price points. 

If your focus is cash flow, it seems like East Boston and Chelsea have some potential. But as an inexperienced investor, I'm not eager to jump into a "C" neighborhood. Similarly, I see a few folks promoting Dorchester and Roxbury. 

And I've heard Malden and Medford mentioned too for their growth potential. I've looked as far away as the Portsmouth, NH and Salem, MA areas, but still haven't found much that fits our target of 10%+ cash-on-cash.

The local investors that seem to be most active (like @Shaun Reilly and @Justin Silverio) seem to be fix-and-flippers, which seems much more viable than our preferred buy-and-hold approach. When I recently met @Aaron Montague, he echoed my observation that it's tough to find viable buy and hold properties in Boston.

So -- are there local folks with a strategy I'm totally missing? I realize the market dynamic here may dictate that we get more flexible on our strategy, but we're likelier to invest out of state than try flipping, notes, etc. locally.

[Neil Gulden]

I closed on a 3 family in a tougher part of Dorchester in August. It was an MLS deal and was competitive, but even with that, I'm cash flowing almost 20% after all expenses are paid including the mortgage taxes etc. Two of the units are section 8 and I get a direct deposit form the government on the 1st of each month (amazing) and the other unit is a regular market tenant. I'm new to Dorchester and in the big picture, I'm a new investor as I only have two rental properties, but I'd say don't be afraid of the B/C neighborhoods. It's all about finding good tenants. Good tenants live in bad neighborhoods too, not all of them are bad, most just got themselves into unfortunate situations, divorces, had kids too young and got in over their head etc. there's slot of money to be made in these areas if you're smart about it and do enough research.