All Forum Posts by: Brian J Allen

@Irving VizcainoThere are very few places that cash flow, you need to move tenants and replace them to get where you want to be.  Most people are selling because they cannot do that or will not do that themselves.  I know of places with $800 and $900 a month tenants who should be paying $1500-1700 and the owners want to price the buildings as if they are at $1500.  If you can solve that problem there are places to buy in Worcester.  If all the rents are in place, there are plenty of buyers ready to go who are probably doing a 1031 out of something else.

Worcester has experienced a big run up in the last couple of years.  The key is really knowing the traffic patterns and where the jobs are. There are 4 main tenants in Worcester, Section 8, long term renters, people who work in Worcester, and people who work east of worcester.  Depending on what you are looking for, you can find the right location.  Low inventory right now 36 multis for sale, but there is a lot of off market inventory if you work with local agents who are really involved with the market.  Love to help if you are interested.

Love Worcester, MA lots of colleges and lots of hospitals, and only 1 hr to Boston on the express train and 50 min to Providence and 50 to Springfield via car, even with some traffic.  Rents are increasing and the city has lots to offer.  Most of the multfamily housing was built 1890-1930 so there is a lot of upside with some renovations

I love playing basketball.  Lots of great guys to play with and good exercise.  There are a couple groups of Worcester Realtors who have gyms and play.  Great way to exercise and meet people. there is always someone of your level to play against in the game within the game

Worcester is tough to flip as most of the properties are picked over before they go to MLS and a lot of the wholesale deals are really Retail deals. Congrats on making it out. The sad part about the worcester market is that many people will buy places you think should be flipped and live in them as is. This is difficult to compete with. There are so many bad houses and bad apartments that finding a SF for $140k is so hard to do as many people will simply buy that and live there and there are more of them then will pay $275k for something that is done

The market is tight according to the MLS but there is a lot of off market inventory. Worcester is not about ZIP codes it is about how quickly you can get where you want to go. The key is working with someone who does a lot of Multis so they are getting the information prior to things hitting the MLS

@Armando Montrond It is great that you are looking to buy more properties. As an active agent in Worcester, MA there are properties I am getting for clients but we are super choosy right now. There aren't many that I recommend to my buyers for purchase. The good stuff in this market is in the $650-700k range, and most of the rest of the stuff is simply junk that needs work. Most of these do not pass the FHA sustainability on the top end, and the stuff on the bottom end needs a lot of work. For my FHA buyers are looking at things with FHA 203K loans and 2 families to avoid the sustainability issue. Most of the good stuff in Worcester trades off the MLS because the agents are afraid of having them sit out there and lose value.

@Kyle Curtin. The best place in Worcester to chat is in the basement of a lousy 3 decker next to a snowman boiler with lots of asbestos floating in the air.  Then they know what they are getting into.

@Bob Stevens what do you guys get for year over year appreciation on your buildings at those big CAP rates. In Worcester 4 years ago we would get a 10% CAP on good buildings and anticipate 5% appreciation. Ironically over that time we had 20% annual appreciation. Right now we are at 5% CAP and anticipating 5% appreciation again year over year. When markets have gone down in the past. Values on A-B neighborhoods dropped very little and C-D areas dropped like a stone. Most of this is that the tenants in those locations were least able to pay their rents. On the latest run up, not many A-B stuff changed hands, it was just a huge run up on C-D stuff because the anticipated rents were increased due to HUD rents going up. Basically the A-B location rents were always higher, and the C-D rents increased to match due to lack of inventory

How do people balance the need for cash flow vs the risk of properties in areas where an economic downturn leads to a loss of the income you are purchasing these properties for?

Additionally in the last 3 years people would buy distressed properties and hope to fix them up and refi.  That is sort of off the table as values aren't really going up enough to get out of the original loans.

All,

This is a wonderful discussion.  The biggest issue we have in Worcester is that you have to grade the AREA and the HOUSE and the TENANTS.  You can get an A house on the side of a hill with no parking, which might have great tenants, or a terrible house in a desirable area, with tenants that don't pay.  Lots of issues here.  I wish it was so simple.  The question is what is most important to you/the client.  It is so rare to get a nice house on a nice lot in a nice area with the tenants you want.  $710k for a 3 family.  And all the bad stuff with tenants might cost you $500k for a 3, and you still have to raise rents, move tenants, fix the house.  Doesn't seem like a value to most clients when you explain things to the.  

The difficulty which arises with most people is that owning a multifamily is great in principal, but once you see where and how the tenants live, a lot of people are scared off.