What do fellow Boston Investors think of this address?

Question

I am considering purchasing just south of Mass Ave in the South End. Those of you who know the area know it is a warzone line. But when will it gentrify I guess is the question? Anyone think it could be a good play for hold and rent?

Here are couple recently sold addresses in the area I am interested in.
https://www.redfin.com/MA/Bost...
https://www.redfin.com/MA/Bost...

Any thoughts are welcomed!
Thanks.

Charlie MacPherson · Answer

@Gordon A. I'd personally avoid buying south of Mass Ave. That's a *very* rough area and the home of "methadone mile", (the vicinity of the intersection of Mass Ave and Melnia Cass Blvd) where there are streets lined with pan handlers, drug dealers and addicts shooting up and passed out on the sidewalks and in doorways. It's one of the very few places that I lock my car doors when passing through. The city has just launched a plan to clean it up. https://boston.cbslocal.com/2019/10/04/boston-methadone-mile-plan-drugs-homeless-crime/ Sorry to say that I'm not optimistic about the potential for success. There is a serious lack of detox facilities and those are only useful for addicts who want get clean. The vast majority don't. Unless there's a massive improvement in treatment options (voluntary and forced), I don't see any real hope. It's heartbreaking to see the human tragedy there and it's one of the reasons that I'd cheerfully support the death penalty upon the 2nd conviction for drug dealers.

Derreck Wells · Answer

Chances are your real estate agent didn't inform you of the lead laws (they rarely do). In MA, if the property isn't deleaded when you buy it, you are responsible for the past tenants that may have been lead poisoned while living there unless you delead within 90 days of closing. The state is trying to get every rental property in MA lead safe, and they figured this was the best way to do it. You can use this in your negotiations on any properties you look at. If it doesn't have a lead certificate on file, it IS going to cost you to delead, the state has pretty much made it mandatory at this point (at least if you want to avoid the liability of a lead paint lawsuit from a past tenant). Don't let that scare you though, I've had clients negotiate $20k off the selling price, and I only charged them $10k for the deleading, so it can actually work in your favor for it not to have been done yet. You also cannot rent to someone with a child under 6 unless you have a lead certificate on file with the state. If you rent to a couple with no kids and they have a baby, you are then required to delead the unit with the added expense of putting the tenants up in a hotel during the process. If a unit is a 2 or 3 bedroom, chances are you'll end up having a family apply. You cannot deny the family because of the lead paint either, that's considered discrimination (you're refusing them because they have a kid) and is against the anti-discrimination laws of the state. If there are kids under 6, you NEED to have the unit deleaded and have a lead certificate on file. If the unit has been inspected, but not deleaded, you also cannot do any construction or remodeling in the unit, they consider that unauthorized deleading and it will prevent you from ever getting a lead cert. The best you would be able to get is a Letter of Environmental Protection, which tells everyone you did illegal work then hired a licensed deleader in to fix it. It generally increases your insurance rate and decreases your tenant pool (who wants to rent from a shady landlord that does illegal work?). On the plus side, when you delead the property it will actually increase your tenant pool and the rent you'll be able to charge them. A deleaded unit is more valuable to a tenant then a non-deleaded unit, even if they don't have kids under 6, they still like to know they are safe from lead paint issues. Anyone can get high blood lead levels, the law only specifies under 6 because it affects the developing brain more severely then a it affects a fully developed brain. Good Luck on your future investment!

Charlie MacPherson · Answer

@Gordon A. I don't have the requisite crystal ball to predict that. I've lived in and around Boston for the last 63 years. I may be too old and cynical, but these have been high crime areas since before I was born, though I think the drug problem is far worse now. Methadone Mile didn't exist when I was a kid.I don't know that "affordable" housing has much to do with gentrification. As near as I can tell, gentrification is mainly driven by rising prices in the better areas. As prices there go up, people who can no longer afford to live there migrate outward in something like concentric circles.That's why prices here on the South Shore have been rising so quickly and steadily. For the price of one triple-decker in JP or Southie you can buy three in Plymouth.

John Joyce · Answer

Not sure if you're still looking in this area, but it hasn't changed. Still tons of drugs and related crime (stabbings, robberies etc...) and no expectations of it improving. The city puts on a show once in a while (when a politician complains) and pushes the herd of junkies a few blocks away. But they always come back. There's a shelter, methandone clinic, 24 hour gas stations and McDonanld's, foot traffic and vehicle traffic 24/7, BMC hospital, Fuller mental health building. This is a recipe for a bad neighborhood.Maybe you'll get renters, but you better make sure they understand the area if they're moving here for school/work. Boston rent is always good, but prices are a little insane lately. Someone mentioned 2-3 cap rates, which sounds about right from what I've seen.I work this area a couple nights a week, evening and overnight. The police can't effectively enforce any drug laws because the county District Attorney doesn't want to prosecute anyone. If you're in the area checking out properties, just keep in mind that almost every junkie carries a knife and every drug dealer carries a gun.I'm hopeful that you find a deal and it cashflows for you. Really not trying to talk you out of it, or ruin your day. But I feel the need to give you a heads up to keep you safe.

Michael Masters · Answer

I owned a condo at 549 Columbus Ave which I lived in and then rented out from 2003-17. This is just Northeast of Mass Ave near Wellington St. When I sold it in 2017, I was looking to roll the money into an entire apartment building in the South End. I found the cap rates were horrendous and eventually invested in the North End where better cap rates existed. The South End was expensive as I was competing with families looking to convert apartment buildings back into single family homes. Cap rates were like 2-3%, whereas the North End gave me around 4.5%.If I were to buy southwest of Mass Ave, I would stick very close to Mass Ave and not venture too far away. But consider other neighborhoods where the return is better.Just as an FYI, I bought in central Boston to get a safe investment. In the last two months, my 20 units in the North End have given me 100% of the rent due.

Russell Brazil · Answer

Full disclosure, I no longer own in the Boston area, and have no plans to buy back into it. Like @Charlie MacPherson said...I would avoid the area too close to the methadone mile. However, in general, this location I would totally buy into. These areas were 100s to 1000s times worse when I was a kid in the 80s and 90s and have come a long way. While I do not invest in class C/D shit, I would totally buy a nice property in a gentryfying area if it has easy access to downtown areas, hip areas, white collar employment areas....and Roxbury fits that bill.I did just sell off over the last couple years a couple houses in Chelsea, and I think thats infinitely worse than the area you are looking at. Roxburys housing stock is going to be much better built than what I had in Chelsea, and you will have the ability to draw a higher tenant base, if you make the units nice, than I did in Chelsea.Also with the lead stuff....yeah, Massachusetts with lead is a total bitch. I honestly just dont get it. In Maryland (not Baltimore) lead is not a big deal at all like it was on my MA properties.

Aaron Montague · Answer

Drugs and such aside, I'm not sure the numbers are going to work as a rental for you in that area of Boston.The second place you mentioned doesn't come anywhere close to the 1% rule. -Rentometer stats. -Craigslist 4+ bedroom places near-ish to the listing.It might not be a bad house hack place if you play the long game. I'm fairly sure it will be worth quite a bit more in 5 and 10 years from now.It does not strike me as a good rental area.

Gordon A. · Answer

@Charlie MacPherson Hate say I'd like to see you lose your cat...but I hope you do (only for selfish reasons here). I agree with you, drugs are not going anywhere and way more pervasive than many other forms of crime around that area. Its really tough to see every time you get off 93. I gotta say though Murderpan would be low on my list to buy in though. Thanks again!

Charlie MacPherson · Answer

@Gordon A. I definitely reserve the right to be wrong, but I just don't think the city's government has the determination or willpower to aggressively police that area, and I think that's what it would take. If they employed a serious zero-tolerance policy and started arresting and jailing every single addict and dealer and then forcing addicts into detox, I'd be a lot more optimistic. Without getting too political, I think the Mayor and City Council are far too liberal/leftist to even consider that as an option. I wouldn't bet the farm (but I'd bet the cat) that if it ever gentrifies at all, that area will be the very last part of the city to do so. I'd be a heck of a lot more optimistic about Mattapan and that's still a real war zone. It's the difference between plain old high crime rates and what amounts to an open air drug den. I think the drugs are a lot less amenable to change. I'll make a rare point of disagreement with the esteemed @Russell Brazil. I'd feel a whole lot safer walking through Chelsea than through Methadone Mile!

Gordon A. · Answer

@Charlie MacPherson 'As near as I can tell, gentrification is mainly driven by rising prices in the better areas. As prices there go up, people who can no longer afford to live there migrate outward in something like concentric circles.' - This is precisely my logic for this location. Although knowing the area well I still am heavily cautious hence the post. Thanks for all the insight!@Russell Brazil Totally what I was thinking re the walking distance to Northeastern, all the amazing South End Restaurants and a newly revitalized park. Rent comps seem good as well. Just out of curiosity why wont you touch Boston anymore?