All Forum Posts by: Brian J Allen

Worcester is a great market for younger people. It allows both solid rents and appreciation of your asset. Properties are scarce as there are only 21 multis on the market in Worcester Proper at the moment. A normal market would have around 50. That in mind, there are still deals off market if you work with a seasoned Multifamily Agent who does a lot of Off MLS deals. One of my clients is going to close on a nice 2 family on 1 Dayton Place, Right by WPI on Friday for $320k. But that is off MLS, there are very few of these deals that hit the MLS after they are shopped pre mls.

Holly,

I'm with Andrew Freed here on his #2, make sure that you do not rent to more than 3 unrelated individuals as it is against the city codes.  Also, keep in mind that the $750/month you are looking to get would have to include utilities.  Figure $150/month for electric year round maybe more and $150/month for heating, and $100/month for internet. That is another $400/month.  I would also figure $10-15k for that heating system in the next 5 years since it is quite old.  And also try to figure out timing here.  You really need to have the tenants on ready to go for June 1 NOW, as the good ones already have Clark places for next year.  If you have contractors you know, you should be okay, but if you are relying on people to come and do the work, make sure you double your timelines.  I have a client who tried to GC his own project and micro manage and he is over a year into a flip that was a no brainer and hasn't' had any work done in months.

This property probably has an ARV of $350k if it is done nicely with the new heat and up to date electrical, so make sure you buy it correctly!!!

I'm in Worcester everyday, let me know if there is any way I can help.  

Paul, Feel free to reach out if you are interested in Worcester.

@Paul Ireland you should be able to get over a 5 cap in great locations in worcester and maybe a 7 cap in lesser locations. The key to driving up the cap rate and making more $ is to improve the property or increase the rents. What is tough is that there are a lot of older Terrible places out there and lots of places with low rents. Key is to make sure you don’t get a place with both low rents and a bad property.

I'm with Andrew on the HELOC. This way you can borrow from yourself and pay yourself back and keep things simple and the properties separated. If you have the good cash flow you can use that to pay back the down payment from your HELOC.

Oddly enough i was in a 3 decker STR yesterday on Everard Street for sale. Guy was running the whole building as AirBNB and doing well with it. There is demand since there are limited hotels and they are pricey. Also the airport is back up and running which will help. The colleges have demand and with Covid a lot of students are in STR as well. Message me if you want to discuss further.

Arian,

Sadly I am in a similar situation but not exactly.  I purchased a 2 family in Worcester where I was told the tenants were on Section 8, turns out it was RAFT(covid aid) through RCAP.  RCAP continued to pay the original owner (as they have limited ability to change anything) and i would get the checks a month or so later.  No one could produce any paperwork.  When that ran out they applied to RCAP again, which took more months.  Just so you are aware, I have been made whole, or actually will be, according to RCAP and a couple more checks keep coming.  

Since I have received the money from the government (the tenants have paid me 50% rent for a couple months) and at this point I am whole you would think I would advocate letting the government program play its course.  However, I sadly am in the camp of the others above.  I am tired.  I am tired of trying to get my tenants to pay.  I am tired of waiting for RAFT to pay and figure out that I am the owner, and send me random checks for the wrong amount with no indication of what month they are paying for.  Simply tired.

I can't wait until spring to end things and try to start over with new tenants.  At this point I just want to start over.  

The key decision here is if you want this person as a tenant, and if you think you can get a better one.  Short term pain of a couple lost months may be better than dragging things out for 6-12 months if the result may ultimately be the same.

Best of luck on your choice.

We can also price these buildings per SF. They range from $80/SF for junk to $200/SF for the super good stuff so there is a huge range. Most are in the $110-150/SF range. Also, we can price based on market rents - CAPEX. so a good building with no CAPEX runs about 110X monthly rent. So $1500X3 = $4500 X 110 = $495k. if it needs a roof (subtract $15k) if the bathrooms are poor (subtract $5k per BA) if it doesn't have central heat on the first floor (Subtract $10k). So the pricing is not just CAP Rate, but a more involved construction related pricing. I hope this helps. I have been in 1650 multis in Worcester in the last 4 years and have lots of data on building systems and rents and market prices. When you crunch the numbers you can still find value in this Market.

I would reach out to Bruce Mathieu at IC Credit union. And they are local to Leominster. They also do 80% LTV for portfolios

Still trying to get them out in multiple properties

nature of the game.