Why don't these properties sell?

[Carl Schmitt]

I've been reading through the deal analysis board and feel like I've come half way decent at deciding if a property makes sense. What I can't figure out is why so many properties in my market aren't selling. One thing I know is that it's a small area (~60k people) with not too many people moving to or away from. The county also has its own MLS separate from the rest of the state which limits "outsiders" from seeing what's going on. Here's a few properties for sale that have all been on the market 150+ days.

1. Property needs updating, all cosmetics. Landlord pays heat, tenants pay electric. It's a 4 family with all 2 beds that rent for 600. Taxes are 1412 a year. They're asking 59,900. Even if you go to 55% expenses due to the utilities being included, NOI of 12,960. At a 15 cap, you're at 86,400 less upfront expenses. Even if it takes 20k to update it, you're at 66,400 and they're asking 59.

2. I have been in this property before and the owner has taken very good care of it. It's a 6 family with gross rents of 4120. Tenants pay all utilities and taxes are 1833. 50% rule says NOI is 24,720. At the same 15 cap, you're at 164,800. He's asking 139k.

The town these two are in is not the greatest. Certainly not war zones, just low income areas. You would never buy in this town based on appreciation. Average property in my market sells at 86% of list.

So my question, why are these properties just sitting? Am I missing something?

[Aaron Mazzrillo]

Not the only person on BP who knows about the land of NA. I joined the Navy ON my 18th birthday to escape from that wretched pit of a town. I would have joined earlier, but my mother wouldn't sign the papers releasing me.

Unfortunately for me, I made the mistake of buying a triple decker there during my "mistake making phase" of investing. My suggestion, don't walk, RUN. North Adams is essentially the Detroit of Massachusetts. There is nothing there. There hasn't been anything there in 40 years or whenever it was that Sprague electric packed up and moved south. And there won't be anything there. Just like Time Magazine labeled it back in the 80's when it made the cover for one of the highest teenage pregnancy rates in the country, it is "a washed up mill town" and always will be. There is no employment. There are no prospects for employment. I'm watching this much talked about investor funded Heritage State Park development and thinking "someone is about to lose a cool million." North Adams is difficult to get to having only Rt. 2 in and out of it which is a treacherous winding road that is just about impassable during winter months. Even the start up tech companies all packed up and shipped out in the late 90's; Mindbranch (used to work there), Tripod.

It had it's boom days back in industrial revolution when factories needed fast moving rivers to create power and wash away waste. And don't believe the hype about Mass MOCA. Visitors to the museum don't stay in town to hang out with the local hill billy population and sprinkle their tourist dollars on the local businesses. They visit the museum, then hightail it back to south county. If you want to buy property, Pittsfield would be the furthest north I would even consider. Adams is so backward *** I wouldn't put my money in a parking meter there. The only change they'll ever accept is from a dollar. That resort project on Greylock Mountain would have been the best thing they could have done for that town and it aint never gonna happen.

I still visit the area quite regularly. I have lots of friends and family there and let's face it, it is absolutely beautiful once you get out into the nature. I landed a sweet deal on a 3 unit in Pittsfield over the summer. Got unbelievable seller financing terms on it too. Problem was that it needed work to get it rent ready. Well, the real problem was the lazy *** labor pool in northern Berkshire county. The best estimate I got was over $125K to rehab the building! The mentality of the people there, and seeing that your city is Pittsfield, I don't doubt you'll disagree, is that the majority of them would much rather ***** and complain about having no job while they are sitting in the basement smoking weed and playing Xbox. If you offer someone work, they expect to be paid a king's ransom to put the controller and bong down. I've been dealing with this for 10 years.

Heck, I'll make you a great deal on a 3 unit if your capital is really burning a hole in your pocket and you want to prove me wrong.

You want to make money in Berkshire County? I'd start a general contracting business. It's next to impossible to get anyone to do anything and if you do find someone, they'll stick their hand so deep in your pocket, they'll be fishing around in your sock for money. So, I'd go that route. Then, I'd focus on building up capital doing home improvement jobs. Once I had enough saved up, I'd start looking at those beat up shacks around the lakes. Some would make very nice vacation homes you can sell to out-of-staters who 'summer in the Berkshires.' There's lots of inexpensive first timer houses I'd go in and do Home Depot remodels on. Your inventory will be sitting on the market a while, but it'll sell eventually.

If you want to get into units, stay in Pittsfield and avoid the bad areas. They are not going to get good. They've been bad for decades and there isn't any economic angel looking to offer any financial windfall. Pittsfield's heyday was back in the GE days, but dem dayz is ovah.

If you really want my advice, move. I did. And now, I'm one of those out-of-staters who 'summers in the Berkshires' and I don't think I'd have it any other way. It truly is a wonderful place to visit in the summer, but I definitely wouldn't want to be there now.

Oh, and don't move to Florida. That's what everybody does in western MA. It's too close. When things get rough it's too easy to move back. If you've been there a while, I'm sure you know a few that fell into that trap. When I finally really escaped, after making the mistake of going back there after the military, I had a few tag sales and sold every non-essential I owned. Then, I loaded up a u-haul trailer with what I thought I needed and drove across country. When my truck broke down in AZ, the wife and I just left it there and hitched to California. I made sure I burned that 'going back bridge.' I'd figured I rather be homeless on the beach out here and struggling for success than gettin' by back there. My first job out here was driving forklifts on construction sites making just $2,000/month. I was sooo much happier. Living in different times now though. Life's a tad bit easier, but I do admit, driving those monster forklifts around was pretty fun!

Good luck to you and I hope you don't take my post the wrong way. I spent 18 years of my life in the Shire, hanging out in the Burger King parking lot at night and cruising North St. on the weekends. Great place to visit, but I wouldn't want to live there (again) and I certainly wouldn't invest there (again).