All Forum Posts by: Andrew Albert

• Thanks for contributing @Phil K. This particular opportunity was in upper Grafton. Thanks for confirming the rents. I have found a site for water/sewer but only shows open balances (https://unipaygold.unibank.com/default.aspx) do you have a better resource to get a sense of cost estimates? This one isn't as reliable when properties have vacancies for a few months before listing... always looking for better tools. And appreciate the regulation plug, i read it as... if a SFH, and outlined in lease, can have snow removal tenant responsible. SMF - not so much, with the "not shared with other occupants" - is that true? What do you estimate for snow removal?
• Thanks for following up @Jaysen Medhurst. Understood on the estimate and appreciate adding the buffer. I have seen the rest of their fee schedule - essentially 100% pass through cost on maintenance etc. We decided not to use a PM on this first investment so didn't pursue further but if that worries you, i suppose it should worry me. And fair point on the tenants being responsible for snow removal, I'll be reconsidering that on future analyses. Nice thing about that property was that the pocket doors and closets were already there so conversion to 3br i don't would have been an issue. I'd love to find opportunities with more cash flow (particular since I posted this all I've done is add expenses!) - it's been challenging. Not sure if i'm looking in the wrong places or if my calcs are off. 

Adjustments not looking quite at rosy... Bumped up rent a bit to be more closely aligned with market rents in close proximity. 

https://www.biggerpockets.com/calculators/shared/1172735/662799f4-5ecb-43d0-8fac-8bf94bb5a725

@Jaysen Medhurst Thanks for responding! A ton of great feedback here and thank you for being diligent. 

A few thoughts:

• This is a 3 unit property, traditional Worcester style with 5 room units. Units list as 2br1ba but can be converted to 3brs with pocket doors for the front room.
• The analysis represents once the property is a pure investment property after about a year. Incorporating the 1st year while living there is pretty tough with this calculator and not representative of the vast majority of our ownership.

Expenses

• Fair on the CapEx. The only major items to replace i figured are included in the rehab but will bump up the Repair/Maintenance/Capex to 15% as you suggest for the long term analysis. Good call.
• I was thinking the same at first re: vacancy but this is a very desirable area of town and my agent has suggested the 6% figure - I'll bump it up to 8% to be more conservative. 
• Completely agree on the water/sewer but over the last few months of analyzing properties - more and more are in this range on a monthly basis. I suppose having in-unit laundry is a big factor to consider and is perhaps why those other properties were so high. Is your $40/unit/month estimate considering in-unit laundry?
• We'll be doing management ourselves but I know we should be planning for that expense anyway. Believe it or not, we've had a couple quotes in the area from PM's that are 5-6% depending on the level of our passivity. 
• We are planning to take care of the very limited lawn care while snow removal would be the tenants responsibility per the lease. Is that reasonable do you think?
• A few quotes from lenders have yielded rates this low in the area but I suppose it can change day-to-day.
• Ah and the 17k is pretty low but we are *leaning* on the Father in Law to help out a bit here :-) while doing a lot of the work ourselves. So it is mostly materials of which the cabinets and island come with the house (just need to be installed... hi Dad!). Not to mention MA having programs to drastically reduce the cost of replacing heating systems. I'll bump it up to 20k for some buffer.

I would love a lower price! The market is tough out here with property values rising quickly. 320k is about 20 under asking. Rents are rising as well so I think given the area, the potential for the units to be leveraged as 3BR, with some improvements we could bring the rents higher than $1200 avg/unit with 5room 3BR1BA rentals going for as high as $1500 in close proximity. $3600 total per month being pretty conservative. 

I'll run another calc. Do you think these numbers are too tight even if they are better looking than the majority of the local market? Goal being $100/month/door.

Thanks again!

View report

*This link comes directly from our calculators, based on information input by the member who posted.

@Heather Fuller. Interesting note on areas west of Worcester. I haven't researched down 90 past Worcester but will take a look. Thanks for the tip!

Fair points, @Lisa Kattenhorn & @Anthony Thompson. We were researching the RI area at first since we have a decent network having lived there in the past. Woonsocket seemed to have plenty of properties coming onto the market. 

However, I see Worcester as a bit more established with better pockets of neighborhoods and more upside than Woonsocket. I was at the Black Diamond REI group meeting on 4/16 as well and learned/confirmed of a LOT of investment being pumped into Worcester over the next decade. With universities, hospitals, Biotech R&D park (potentially some Biotech mfg), the Woosox and investment going into the central part of the city... there's upside if we can get into right area before prices get even higher.

I agree @Colleen F.. And completely understand when looking at comparable rents. I try to be diligent about only comparing to similar buildings, similar size units and condition, and of course neighborhood. Using Zillow and Craigslist to review rental listings. Curious if there are better tools out there. I've heard of rentometer but am not sold...

Something I've noticed... almost all the properties I've reviewed currently have below market rents; sometimes well below. Conservatively bringing estimated potential rents to within range of nearby rentals has yielded a lot more opportunities in the 1-1.25% proforma range and between $50-$115 in per door cash flow with Repair & Maint. at 10% + prop. mngmt. etc. 

Sounds like I would be going against the grain based on this discussion if I take that lower cash flow upfront... even knowing I'll be holding for the long term. On the flip side, if we were committed to Worcester, is it worth waiting 1,2,3 (maybe?) years until the market corrects?

Thanks everyone for contributing!

Thanks everyone. Likewise, @Ryan Severance. We are looking for a solid Multi to hold onto for a long time as well. I've seen a couple 4-unit properties but they were in the roughest of areas. 

I'm seeing around 1.1-1.4% 3-unit properties with around $90-120 per door monthly cash flow, but that is only with the assumption rents are brought up to market and it is not owner occ. Currently looking to leverage a 95% LTV first home buyer's mortgage as I've gathered FHA rarely wins in the Worcester market... with the additional hoops to jump through sellers are more likely to reach for a conventional or of course cash.

Good point, @David Markey. It is ALL about the area. I'm not sure I've seen a single property listed showing current market rents - even in areas that could pull $200+ more per unit a month. Thanks for the tip on Cap Rates. 

Agreed @Phil K.. And I don't presume to find any property in Worcester that will cash flow with owner occupied. I'm running numbers as though we will not be living in the property since that will be the long term status quo. While occupying the property for the first year, we'll likely have the mortgage paid for with the other two rents and have to shell out for expenses and whatever is left - saving one way or another when you factor in the equity gain & tax deductions.

Hi @Daniel Lopez - good luck on your search. I've seen a few triplexes that could definitely be candidates for some rehab... but "some" was looking more like $150k in rehab costs or more :-). 

I figured 2% would be a stretch but I feel a little better knowing it wasn't just me seeing so many >1% listings. Sounds like ~1 and >1% opportunities are what we'll find in the Worcester market - at least on the MLS.

@Account Closed Fair! I don't think we are giving up on Worcester yet but we'll keep the South Coast in mind as well. Thanks!

My wife and I have been researching and visiting small multi-family properties in the Worcester, MA area. We're finding opportunities in the lower income areas but it seems most, if not all, barely meet the 1% rule... leaving very little wiggle room to reach positive cash flow. Not to mention the majority will require some updating and rehab.

Is that something to be expected in this area or are we not finding the right properties?

We are interested in connecting with multi-family investors in Worcester - coffee is on me. Love to pick your brain about the Worcester market and any advice or suggestions you might have for new investors. Please let me know!

Thank you, @Ann Bellamy! Looks like a great topic. Plugging it into our calendars - hope to make it there in a couple weeks. Thanks for sharing!

Thanks, @Lien Vuong! Southern New Hampshire and Northern Mass were on our radar earlier on as well. We'll keep an open mind as we progress and perhaps reach out if Worcester proves more challenging that expected.