All Forum Posts by: Brian J Allen

Understood, that is why I always refer out of my market so I can focus and provide the best service possible.

Much better to buy vacant and pick your tenants then get stuck with the tenants that come with the house.  Second to location is the tenants.  As mentioned above, the banks will use projected rents for the loan as long as the vacancy rate of the area is low.

Jason your numbers are correct on about 8k multis in Worcester alone.  I have been in 1300 of them in the last 3 years and i figure 2500 in my lifetime, and there are just more and more coming.  But keep in mind that only 3000 of them are on flat lots.  Location is KING and in Worcester, knowing the city and the neighborhoods can lead to a win over time or serious losses.  In the 20 years that i have done this, there have been ups and downs, and certain areas over and over again have all the foreclosure activity, and others continue to appreciate.  MAKE SURE IF YOU INTEND TO BUY A MULTI IN WORCESTER, YOU WORK WITH SOMEONE WHO REALLY FOCUSES ON MULTIS IN WORCESTER. 

So true Andrew, There is so much money chasing Worcester right now, since rents have jumped so much over the last 3 years. This is depressing the CAP rates from 10% 3 years ago to about 6% now. But also keep in mind, Location and Quality are the big drivers of RENTS and QUALITY of TENANTS. If you are in poor access locations or you have lame/tired units, you will never get good tenants who will stay.

it is typical not to see the units prior to making an offer.  But your offer should be subject to seeing all the units.  Honestly there are buyers who are willing to buy without even seeing any units.  I am not one of them.  Most of the money is in the basement.  I have put in offers on buildings with only seeing the outside and the basement, and they usually work out.  In a Worcester 3 decker the units can be terrible and you can overcome that.  If the outside and the basement are terrible, it is hard to overcome that.  Take the pricing this way.  Figure you have a $400k 3 decker.  These are the things you can price from the outside and the basement.  Roof $15k, Siding $25k , Windows $15k, Doors $10k, steps/decks $30k now in the basement. Heating systems $30k, Electrical $30k, just the cast iron soil stack $10k. THAT is $165k of stuff that can be done or partly done.  you can redo a whole unit for $40k and make it wonderful.  Let me know if you want me to show you the difference in Worcester. Im out every weekend

You can get a 5-7 CAP Rate on decent places in Worcester, you can stretch to almost a 10 on Properties that need a lot of work

Thanks for the kind words guys. There is a lot of off market small multi in Worcester, honestly there is a lot more for sale OFF MARKET than on the MLS. Currently there are 27 Multis in Worcester on MLS. We work with property owners who individually own more properties than that. Keep in mind that OFF MARKET DOES NOT MEAN A DISCOUNT. Do not confuse these things. Simply put you can have a conversation on price instead of bidding against yourself. That is what off-market does for you.

saidah you should look for financing and a realtor in parallel.  both are easy to do, but take time to find the right fit of skills and personality.

there are always opportunities. I am working with a wholesaler/flipper to create enough equity in a property to gift the down payment to the buyer and still have the wholesaler/owner happy in the end.  We will also do a closing cost credit so this may be a no down payment scenario in Worcester, MA where inventory is tight.  We are saving 2% for the seller on commission and reducing his hold time by 45 days by purchasing before the flip is complete.  If there is a will there is a way.

There are always good properties to purchase in any market.  The key is being comfortable with your target type of property. In Worcester you can get good properties with upside that will do well in any market.  You can also buy properties that look good in this UP market, and do not fare well in times of higher vacancy.  The key is to find an agent that really knows multifamily as most do not have enough experience.  You need to have someone who can explain to you the economics of the city as well as the specific neighborhoods.  You need to know transportation patterns, topography, and school districts.  You also need to know the quality of the property, not just the rents.  If your analysis of properties is just based on current rental income I think you leave yourself open to lots of pain and suffering.  Make sure you work with people who are committed to just helping investors like yourself, not just agents who are now dabbling in multi family because the prices are up and buyers are there.  Make sure you know who your target tenant is and where they intend to work.  Best of luck in whatever city you pick.