All Forum Posts by: Brendan Murphy

I need some advice.

Let me start by saying I found a condo in my area (Boston) that I was under contract to buy. It was a 1 bedroom, 1 bath, and I was excited to not have roommates any more. My mortgage, fees and budgeted maintenance expense was about $1,600 monthly. Rents for a similar apartment would be around $1,700-$2,000.

A few days from close, my attorney discovered the town had a lien on the condo association (80 units) for unpaid water bills of $86k. When I investigated that with the property management company, the president of the company claimed that when they first took over management of the property there was about $500k in debt and over the years they’ve slowly been crawling out of debt, and that $86k is actually really amazing considering where they came from. He also said they elected to not pay the water bill as part of their debt repayment plan and that by February 2021, they will finally be debt free. He claimed that they were under budget in a few areas and that with small special assessments (less then $1k per unit) the debt would be completely paid off. This made me feel better about the situation, considering it seemed under control, but I’m an accountant and I wanted to see the associations financial statements to corroborate his claim that the debt has been getting paid off over the years.

The president said that wouldn’t be a problem and then over the next several days he wouldn’t respond to us. Finally, the business day before we were supposed to close, he sent me budget-to-actuals. I followed up and requested the income statement and balance sheet. He then sent over the income statement but refused to send the balance sheet since that’s their policy that they won’t send the balance sheet until it’s been reviewed by a cpa. For those familiar with financial statements, you know that the balance sheet is what’s going to show me the balance in debt over the years, and so that was really the main statements I wanted to see. I asked who’s policy that was and explained that it was necessary as part of my due diligence and he said it was the property management company’s policy, not the home owners association. He has no right to do that. I know that I caught him in a lie and that he’s refusing to provide me documents that would expose him. I’ve also heard several people at the association complain about how bad the management company is. So, as of yesterday, I’m backing out of the deal.

My question is, however, my other alternative is renting. My current lease is ending 8/31 and I’ll likely be paying ~$2k per month in rent until I buy a place. And given my ideas on the current market, I’m probably not going to be looking to buy again until around next spring/summer. So my question is, is it worth renting for the next year and paying that kind of money into rent expense, or would it be worth negotiating perhaps a cheaper purchase price with the poorly managed condo? My thinking is that as long as I don’t lose more than $24k on the condo (equivalent of 1 year of rent), then maybe it would still be worth buying rather than renting.

Any advice would be appreciated.

With everyone working from home these days, where possible, and with the recent news that companies like Twitter are opting for a permanent remote workplace, I think it's clear that commercial real estate will be seriously impacted going forward.  But what about residential real estate?  The state of the economy is disrupting the housing market which might hurt some home owners and investors in the short-term.  But I'm curious what the market will look like when it inevitably recovers and, possibly, comes back stronger than ever.  On a local-scale, where will the market trend?

I live in Boston and I've been looking to jump into the real estate market lately.  I've been looking nearly exclusively at places that touch the MBTA (the subway system), as the past 30 years has shown these towns/neighborhoods that might be cheap to buy at one point might be worth quadruple their prior value within 10 years.  So, people, including myself, have been trying to time the market and jump into the town they believe is next to see that major face lift.

However, I'm starting to think that COVID-19 has permanently shifted the housing market and we won't be able to rely on prior trends.

With more workers being able to work remotely than ever before, will we still see people paying top dollar to live in smaller houses and apartments close to the city?  Or will they opt to move further from the city, where prices are cheaper and there is more room to spread out?  Will people value square-footage over the walkability of a neighborhood?  Will people feel safer buying cars rather than relying on public transportation?  If we're spending more time at home, will people prefer a bigger kitchen, some outdoor living space, a home office and a driveway?

I think eventually business in the heart of cities will return to semi-normal conditions, and that a lot of people will still place high value on being near all that for the social/entertainment aspect, especially young adults.  And there's also going to be the portion of the population that won't be able to work remotely, and will stay near the city for the convenience of getting to work.  And I also think the degree of impact will vary greatly, depending on the city you live.  However, in a general sense, I'm starting to think we might see a big migration of people out of city centers and into outer suburbs.  And with the migration of people, businesses will likely follow.  I think we could see smaller 'cities' popping up in more and more places, creating a more geographically decentralized economy.  

Considering we're in the middle of a pandemic that is impacting the world as we know it, relying on norms and trends set prior to the pandemic might be a huge risk, because nothing is really 'normal' any more.  And it's making me rethink my whole strategy.

@Matthew Porcaro This is amazing.  That's exactly what I want to do.  I'll check out Mortgage Possible.  Thanks for the tips.

@Odie Ayaga I'm planning on living in the property most likely. I think it depends on the property type, but in an ideal situation, I'll be buying a duplex and living in one of the units. Sounds like FHA is the way to go in that case. Thanks!

@Daniel Kong These are awesome suggestions.  I never thought about taking out personal lines of credit.  How difficult are these to get?  My debt-to-income ratio is pretty high with student loans, so I'm wondering if they'd be willing to give me unsecured lines of credit, especially if I just took out a mortgage.  Also, I'd assume the rates are pretty high right?  

@Brad Bellstedt Very helpful.  Thanks Brad.

When a property is listed as 'cash only', does that actually mean I need to have the full purchase price and closing costs in cash in the bank?  Or are there other ways to acquire this property?

Also, as a side note, I have no properties yet in my name, so home equity loans on existing properties are out of the question.

One other question related to this.  Why do sellers require cash only?  I understand that it can speed up the process, but there's one house in my market that's 'cash only' and it's been listed for almost 3 months.  So I'm not sure timeliness of the sale is their greatest concern.  My dad seems to think it's a scam, but I see far too many houses listed as 'cash only' for them all to be a scam.

I'm just getting started into real estate and I want to BRRRR a multifamily property. I have a foundational understanding of how it all works, but I have a hang-up on the first step: Buying.

I live in Boston, so being able to pay cash is pretty much out of the question for me.  So how do people get the financing to fund the purchase AND the rehab?  Conventional financing will only lend the purchase price of the home.  How do I go about getting the extra $50K on top of that or whatever it costs to renovate?

I've heard of FHA 203k loans and Fannie Mae Homestyle Renovation Loans. However, I haven't been able to find any lenders that have those programs. Does anyone know of any banks that do do these types of financings? Is that something you recommend?

I've also heard of hard money lending, but I'm fairly unfamiliar with this.  Is that a good tactic for a first time home buyer?  How would one even get started in getting that lending?

Any suggestions would be greatly appreciated.

Thanks guys!

@Raisa Penney, wow!  Thanks for all that.  It sounds like what you did is pretty much exactly what I want to do.  I'd love to find a place close enough to Boston to be able to rent to commuters easily, so Melrose, Wakefield, Reading and Stoneham have been on my list as well.  But those towns are really expensive too, so it really needs to be the right deal.  Also, I'd love to get a duplex in my name so that I can live in one of the units.  I think duplexes in those areas are a little harder to find as well.

Thanks for the insight!

@Lien Vuong Thanks for the insights.  I wouldn't mind investing on the outskirts of Boston, but if I'm house hacking, I'd prefer to stay closer to the city.  Since my office is downtown and most of my network is near the city, it'd be a lot easier for me to live there and find roommates that I already know.  But, in my eyes, anywhere that touches the T is fair game for me.  

Hi @Raisa Penney.  I'm new to Bigger Pockets too, and currently rent in Malden.  I'm looking for my first property.  I've been looking to buy in Malden too, but the prices are pretty high.  I still think there are deals to be found here, though.  I just need to be patient.  I'm also looking at Revere.  I have a feeling that that's one market that's still pretty low right now, but I think will be booming in a few years.  I'd be curious to get your thoughts on that. 

Also, how did you get started investing in this area?  Any tips, tricks and suggestions would be greatly appreciated!

Hi guys.  I grew up and currently live on the north shore of Boston.  I'm in the accounting/consulting field and have finally saved up some money to try to jump into the Boston market.  I've entertained investing in other markets, but seeing as this will be my first buy, I think it'd be easier to start here in Boston.

My interest in real estate started a little more than a year ago, while I took a solo road trip around the country for a few months.  Being on the road for that long, I had a lot of downtime and figured I could use that time for growth.  I started listening to ebooks and podcasts such as Bigger Pockets while I drove, and I found a huge passion for real estate.  Over the past few months, I've been actively searching for houses, analyzing at least one property per day.  To me, this whole process is actually exciting.  I like crunching the numbers and envisioning how a property would look, feel and operate in my name.  I'm excited for the next steps to come as well.

My ideal investment would be one that I can house hack, live in and rent out to people in my personal network while I fix it up.  In time, I want to have a strong rental property that I can rent out full time for the long-term.  But for now, it's just about getting started.

I'd love to connect with some new people and get some advice from people that care to share.  Feel free to drop some comments below.  

To start off, do you think now is a good time to buy in Boston?  It seems a housing market downturn might be on the horizon, so I wonder if it's better to wait until we see a dip in prices.  I'd love to get your thoughts.