All Forum Posts by: Evan Ordway

Hello BP! My fiance and I recently purchased a duplex in Salem, MA and we will be renting one of the units out - hopefully for 8/1. We have prepared a lease and other documents, and we're hoping to have these documents reviewed by a MA real estate attorney to ensure we are abiding by all state laws. Does anyone have recommendations for attorneys in the Boston or North Shore area who can help with this? We have leveraged the MA lease on this site and updated it for our situation but just want confirmation that everything is up to date. Thank you in advance!

Investment Info:

Small multi-family (2-4 units) buy & hold investment.

Purchase price: $785,000
Cash invested: $116,250

Duplex with 5 beds, 3 baths in the historic Gallows Hill neighborhood of Salem. Unit 1 has 3 bedrooms and 2 baths, while Unit 2 has 2 bedrooms and 1 bath. We will be house hacking and living in Unit 2 while renting out Unit 1.

What made you interested in investing in this type of deal?

House hacking seemed like the best option to get started with real estate investing in a high cost area and overall crazy market.

How did you find this deal and how did you negotiate it?

We found this deal on the MLS and beat out 15 offers. We didn't offer the most, but the amount we were bringing for the down payment gave the seller's confidence that we would be able to close.

How did you finance this deal?

We got a 10/1 ARM at 4.25% during the fixed portion.

How did you add value to the deal?

We offered the seller's the ability to stay in the unit they were occupying for 2 months rent free, as they are closing on their new property.

What was the outcome?

We closed on the property 5/31.

Lessons learned? Challenges?

We learned that you should plan far ahead with getting your finances in one location. It takes a long time to move money from many accounts and documenting the transactions is cumbersome and stressful.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

We worked with a lot of great real estate professionals.
Agent: Ryan Guilmartin (Keller Williams)
Loan Officer: Adam Souza (Salem Five Bank)
Real Estate Attorney: Rachel Hollingsworth (Gilmore & Gilmore)

Hi @Yuzi Stha, is the typical down payment requirement for multifamily properties 20% even for first time homebuyers? 

Hi @Lien Vuong, we have been looking into the MassHousing Loan but will have to reach out to lenders to see if we would qualify for a loan in Salem since it is one of the Gateway cities. We are definitely flexible on the closing timeline especially if the number of competing offers is less. 

Great to hear Salem has been a positive investing experience for you. Airbnb during the Halloween timeframe has definitely been an aspect of Salem that intrigues us. Is the Airbnb demand consistent throughout the warm months or is it predominantly during the Halloween period?

Hi @Nico Dandini and @Jon McCarron, its good to hear from two people successfully house hacking in the areas we are looking at. Being able to save nearly $1000/mo in expenses while get the loan paid down and getting the appreciation, is definitely a win and a deal we're hoping to get. With inventory being so low, I wouldn't be surprised if each property has multiple offers and the seller being able to choose. Congrats Jon, on getting multi-family under agreement! We will definitely be reaching out to learn about your experiences and market insights.

Hi @Brent Coombs, thank you for your response and raising issues like Analysis paralysis and our own preconceptions/fears for us to reflect upon. My original post, might have been ambiguous as to when we would target the positive cashflow. As you said this strategy doesn't require a "homerun" deal that cashflows while we live there but target a property that doesn't make us house poor while living in it and turn into a money pit when we move out. We won't be getting stuck in hamster wheel of Analysis paralysis but keep creating opportunities that will motivate us in our investing journey.

Hi @Jamie Derasmo, thank you for the response and giving some insight into how the different types of loans can be viewed by the sellers. Prior to this, I would have assumed any loan would be viewed in the same light when compared to cash offers but it makes sense the sellers confidence would be lower in the more restrictive standards for the FHA (along with possibly longer closing time). We aren't currently working with an agent and would love to get the contact info for an agent in that area. Thank you!

Hello Everyone,

My fiancé and I are looking to start our real estate investing careers this year by purchasing a small multifamily property to house hack. We are interested in Salem, Massachusetts as the market seems investor friendly and offers market competitive rents, while properties are slightly less expensive than East Boston where we currently rent. We are targeting the spring as a time to get pre-approved and start looking for a property that we meets our investing criteria, while balancing the expected increase in interest rates, continued price appreciation, and low inventory/DOM. 

I have been tracking the rent and recently sold multifamily properties in Salem for the last seven months and believe a triplex or quadplex would be our best option to decrease our monthly costs while living in one of the units and then create positive cashflow when fully rented. We are planning on living in the property for the next three years before repeating the process. With the competitive market and property prices being $650k+ in Salem, would it be more beneficial to put 10%-15% down with a conventional loan compared to the 3.5% we could get from an FHA loan? Unfortunately, we do not meet the criteria for the first-time homebuyer programs like the ONE mortgage or have enough for 20% down, so PMI/the FHA equivalent will be included.

We look forward to getting to know everyone as we progress in our real estate investing career.

Thanks,

Evan and Katherine