Is buying your first property in a major city much more "difficult" than in the suburbs?

Question

Hi all,

I live in Boston and am hoping to buy my first property next year - hopefully I have enough cash to cover a down payment and closing costs, or even enough knowledge by then to obtain private money. Ideally I find a multifamily I can live in, but at this point I'm just reading as much as possible about what my options are and what constitutes a good cash flow opportunity.

Anyway, I see so many threads and articles on here about people buying properties for around $75-125,000 around the country, and I'm just concerned that the info I read in those posts will just be a distraction, because no such homes or multi-families exist in Boston!

I am mentally "stuck" on Boston because it's the only market I've ever known and I am familiar with all the towns, but is it unwise to focus on such an expensive market for a first purchase?

Not exactly sure what type of answer I am looking for here, but any thoughts or advice would be appreciated. Thanks!

Gregory Jackson · Answer

@Patrick Cronin

Listen to Mike Hurney, he's the man, knows his stuff. This is the way to go to get started in Boston.

The other way is, "first, find two million dollars ..."

:)

Happy Holidays,

Greg

Patrick Cronin · Answer

Thanks all for the advice and optimism. I've downloaded a few calculators so I can start plugging numbers from properties currently listed, just to see what price point I'd be at.

Owner occupied will most likely be the only affordable option for me over the next year - especially given my current salary. My family is full of contractors/roofers/carpenters, so hopefully I can use that to my advantage in the market.

Mike Hurney · Answer

@Patrick Cronin Welcome.

Owner Occupied 3 family with 3% down. Get prequalified so you know what to look for, then setup a timetable.

Eric Taylor · Answer

I love the Boston market because of the incredible demand for rentals fueled by the universities, hospitals and other businesses.  Because of the prices it is much more difficult to purchase a unit and generate cash flow, but it can be done.  I now have 5 soon to be 6 properties that I rent out.  You really have to carefully do your math, realizing that only 1 to 5% of the properties listed can generate cash flow with 20 to 30% down.  Also, the management companies only charge 100$ per month.

Doug Shapiro · Answer

Hi Patrick,

Boston's real estate market is definitely very expensive compared to other cities around the US.  Don't get distracted with sales prices outside of your market.

It is unwise to put all your eggs in one basket because it is risky.  Let's assume that you end up buying an investment property in Boston that is at the top of your budget.  Would you be okay financially if your tenant stopped paying rent for 3 months?  Or what if you had to spend $15,000 for an unforeseen repair?

If you buy outside of Boston in a less expensive real estate market, you have to start thinking about how you will manage the property (will you drive 1+ hours to do repairs yourself?, will you hire someone else to do maintenance work? will you hire a management company to find/manage tenants?, etc.)  If you plan on living in the property, such as a multifamily unit, then those questions won't matter as much.

If you are completely stuck on investing in Boston, then that is fine, but just make sure that your investment makes you money (or covers your mortgage/expenses).  There are many different property investment calculators on this site that you can plug numbers into to see what your monthly cash flow will be.  I'm sure there are opportunities in Boston, but you should spend a significant amount of time doing calculations to see what is a good investment.  Change the down payment percentage to see how this effects your monthly payments.  Speak with several different realtors to see what you can charge for rent in particular neighborhoods for different types of properties.

Hope this helps.

Jay

Jeremy Tillotson · Answer

I think the bigger population leads to more opportunities to get creative deals together. You are there to solve there problem, make their pain go away and they will be happy. With that mentality to solve their problem unique situations can be crafted to make money and all parties be happy.