Posted almost 3 years ago

Buying a Multifamily in the current environment

This is a reprint from 5.13.2019 to show that nothing has changed in worcester. So this BULL MARKET for MULTIS has been going on for at least 2.5 years. All the advice is the same.

Buying a Multi in Worcester in the Current Environment 5.13.2019

Many people are saying they are having difficulty purchasing a Multi-Family home in Worcester from the MLS. Here is the problem

First off there are 5 different types of buyers

FHA 3% down who need the rents to be high to qualify with the 75% rule, they also need the house to appraise higher to wrap their closing costs into the deal
Mass Housing 5% down also need the house to appraise high to wrap in closing costs
25% Down Investors who need Move in Ready or Rented properties
25% Down investors who have the ability to fix things up
Cash Buyers

It is difficult to see the properties because they have tenants so a fully tenanted building typically goes through this process:

House is listed on Wednesday or Thursday on the MLS
This gets lots of people to drive by the property and many walk around the house which is problematic since the tenants may not even know it is for sale
OH is scheduled for Saturday of that week
Tons of buyers show up because they know that it may be the only time they get to see the house
This activity drives offers and multiple offer situations
Buyers are given a deadline to submit offers
Seller has to go through multiple offers and try to figure out if the buyers can actually complete the deal with financing which creates pitfalls in itself
Do they pick the highest offer which is often FHA or Mass Housing?
Do they pick the Cash?
Since the buyers are forced to make a quick decision sometimes they have buyer’s remorse and back out of the deal
The key is to pick an offer you know is going to go through even if it isn’t the highest price

How do you win?

Make sure you have your financing in place and your lender is aware you are offering, get as solid a letter as possible
Make sure you really want the property and bid accordingly
Do not expect to renegotiate at home inspection and make it clear to the sellers you are not looking to do so
Waive the Home inspection
Waive the appraisal contingency if you can
Or buy properties that are not on the MLS so you can have a conversation

This is why Worcester Multi does almost 50% of its transactions not on the MLS

Brian Allen