All Forum Posts by: Kavi S.

MA has a lot of fun compliance rules for holding security deposits. I was reading about (and contemplating) not even bothering with deposits, but I stumbled upon a service that claims to take care of that, is fully online, and is "free." Looks like it was released 4 months ago by Leader Bank and I can't find any discussion on it. 

Anyone using it? Any feedback? See here: http://www.zdeposit.net 

@Alex Jean Baptiste I'm in Fairmount, near the BP gas station! Good to meet you neighbor! Might take you up on that manager recommendation when I figure out what I'm doing. Unfortunately the upgrades I need to do require total vacancy, removal of a chimney, full heating system replacement, removing walls between units, etc. 

@Tony Mai I thought my goal was going to own and self manage a few places, but I think that goal may be changing. I didn't realize the degree of hands-on required. I guess renovate and hire a manager could be a good combo. If I hire a manager today and a heating system goes or the roof leaks, well, the manager is still going to have to call me up right? 

Hi!

I bought a 3 unit in Boston (Hyde Park) last year and it's been a low-key year of ownership. I get maybe one call a month from a tenant. I live in one unit, other two are renters. 

My tenant leases expire this month and I told them they're tenant at will until the spring, when I will write new leases. I'm starting to get cold feet. None of my tenants are bad tenants by any means, I just really don't like answering to them and solving problems for them. I don't like mowing the lawn and landscaping the front flower garden. I don't know if I can do a full up-to-market-value rent increase in one swing. I feel like I'm slave to the decisions previous owners made on the house, silly layouts, crappy windows, etc. The furnaces or the roof could go any day now. There's pipes in unheated spaces and exterior walls. For comparison, I once worked a job supporting crappy software and I loathed it to the same degree, I now work a job developing awesome stuff and there's so much more gratification. I'm wondering if renovation would bring me there for real estate investment - maybe that's more my place in this market. 

I'm stuck between renting it as-is for as long as I can, or just gutting it and building something low-maintenance, nicer, and more profitable. 

Right now it has a ~600sqft studio, ~1100sqft 1 bed 1 bath, ~1200sqft 2 bed 1 bath. Rents are/were $1.1k, $1.5k, $1.7k. Market rates should be $1.5k, $1.8k, $2.1k.

If I bump up the rents and rent my unit out, I can take in $64.8k/yr, mortgage is $32.5k/yr for a cash flow of $32.3k/yr. I can afford a property manager and write yard maintenance into the first floor lease. Instant headache off my hands. 

If I gut it, I can turn the place into: ~1100sqft 1 bed 1 bath with 15 foot vaulted ceilings in the open concept kitchen/living area, ~1300 sqft 2 bed 1 bath, ~1400sqft 3 bed 1 bath with huge open kitchen/living area, 11ft ceilings. Rates would go up to $2k, $2.2k, $2.5k. (Yes it has 900sqft of free unfinished space I can use) 

This would bump my yearly income up to $80.4k. ARV roughly $800k. Currently valued at $610k and I have 25% equity in it. Renovation would cost $150k-$175k, I can finance that cheaply short-term privately, then refinance and take that cash out. My refinanced mortgage would be $42k/yr, which means $40k/yr cash flow. A mere $7.7k/yr gain over how it is now. A lot of the repairs in that renovation are impending anyways (30yr old furnace and roof) so I'm not sure if I'm talking apples to apples here. I could also condo it after the renovation and keep one unit, but I haven't begun to look at the cost/benefit of that. I'm not too confident in any of these numbers, though.. the ARV, ARV rental rates, cost of renovation... If I'm off by 1% this whole thing could hurt for a few years! But I love the idea of contributing to it and building something I'm proud of, and I expect the neighborhood to continue to increase in value too.

Obviously this is my first rodeo. I'm so torn! I wish I could find clarity in the numbers. What would you guys do? (And if you're in the Boston area with a bit of wisdom, let me buy you lunch and we can discuss!) 

My sister is looking to sell her house and there HAS to be something I can do here. Off the bat, I'm doing this to make our entire family better off, not just myself.

My sister bought a foreclosure for $230k-ish, my mom was her lender. She renovated it with the same lender, who now has about $300k into it, it's worth about $350-$375k.

Then two kids and a part-time job, she can't really afford it, she and lender are a little uneasy. She wants to move closer to home in a cheaper location where my mom can babysit for her and she can afford her lifestyle. She's looking at condos in the $200k range and would need a downpayment of about $40k, which she should be able to scrape out of her equity. 

I already own 3 units, my mom (her lender) is considering working with me to add this to the collection. My sister needs a downpayment for the new place, and I'm not sure my mom wants to play lender there again. Complexity being that my mom is retired and doesn't want ANY income for whatever financial planning reasons and she doesn't want to do the work, but she's liking the idea of keeping the wealth in the family and we've had a very good financial relationship for my entire adult life. (adult being an important distinction, I didn't get allowance when I was a kid, ugh) 

I'm thinking what I can do is let my sister list it, have her figure out what market value is so I don't have any family battles over fair value and her time renovating it. Then I take out a commercial loan for ((market_value+1)-$300k)=$50-75k-ish,  buy it for market_value but only pay her the difference, somewhere in the closing docs have my mom "forgive" or "re-assign" the $300k loan, and between her and I we would have a separate agreement and I'm not sure of the terms. I would want to figure out a way to split the rental income between myself and my mom. 

Alternatively, I could "buy the place for exactly what's owed," or have my mom "assign" the loan to me, then take out an equity loan against the place to give to my sister as a downpayment, and I can pay off that equity loan with the rental income as well as pay back my mom's $300k. This is probably a cleaner approach, but I worry that a sale this low is going to devalue the neighborhood. (Is that a thing people care about? When I bought my place in Boston, the neighbor's houses gained $50k in equity overnight) Or maybe I can do the $1 in-family sale? 

Any other ideas? 

Thanks for all the advice, everyone who chimed in! I closed on the house Monday morning. After much back and forth, the agents cutting their commission, one agent paying for a washing machine out of pocket, three rejected counter-offers.... we ended up at $603k. Ended up needing $147k cash to close versus 20% of $645k, $129k. I'm glad that the $18k didn't break the deal. I think I did well! With the new mortgage rate, it cash flows $200 with only the two tenants in place. When I buy my next multi-family in 2 years or so, rents should go up at least $200 per unit and the third unit should rent for $2000, I'm looking at $5000 a month from rent and cash flowing $2600/month from this property. 

Hey everyone,

I'm buying my first property ever and it's been quite an experience.

I had an offer accepted, 645k for a 3 unit on the edge of Boston - Hyde Park. I thought that was a bit high. My agent said he thought it reflected the area and said going in at list price was my only shot, if the bank appraisal disagrees then I can renegotiate. Sure thing. Did it. I'm buying it from a relocating investor who has done very well. He bought it in 2014 for 405k.

The rents are 1100, 1700, 1500. I'd be occupying one of those, but that's a different story. Assuming 50% operating costs, that's a 4.0% CAP rate. There's better to be had, but I'm factoring in my personal quality of life here and can take that hit.

The sellers insisted on a clause in the P&S that said we would split the difference between appraisal and offer 50/50 by default. My attorney was not happy that they snuck it in there, the deal almost fell apart but we landed on 60/40 split in my favor with a low appraisal limit of 600k.

The appraisal came back at 575k. With the 60/40 split deal I pretty much agreed to pay up to 3% above market value, so I applied that to the value from the appraiser and offered them $592,250. They decided they would walk. Then they decided they might not. I was told they would come down to 624k. It's funny because that's 14k more than the price their 50/50 split would have gotten them. At 624k I need to produce 49k extra out of pocket.

I can probably make it happen, but this deal has gotten pretty rough. I feel a bit disrespected that after not asking them for anything post-inspection, allowing them a trick clause in the P&S and even letting them push closing back for 3 months that they would ask for more than their own deal set them up for.

I should walk. But I did spend a long time looking for this property. But what kind of investor makes a bad deal because it's taken too much time? But it could still make a little bit of money. But that extra cash could be used for a second investment. 

I'm obviously not a savvy real estate purchasing machine. Any advice?

Thanks!

Hi!

I'm looking at places in the Hyde Park or Roslindale areas for owner-occupied buy and hold, and in the future I would like to rent out the whole place as I move on in life. One of the things I'd really love to have is a large garage for my projects, and I've been thinking I might just build one on the right property.

I'm really aiming for a 3-family, but I've seen some 2-family places sell that I would have liked. I'm wondering how likely it is that the zoning department would allow an addition of a 2-3 car garage with a small additional unit on top to turn a 2 unit to a 3 unit. Or, perhaps, extending the smallest unit of an existing 3-family into additional space over a garage. Is that something that you could just call the department and ask about? Has anyone done something similar, or been denied permission? Is this something that people would file the zoning/land use paperwork for during the due diligence period? Is it a good indicator if there's 3-family homes within the same neighborhood or street? 

Thanks for any insight!

Hey everyone! I've been wanting to get into real estate for a few years now and I've been quietly waiting for factors to be in my favor. I've got a small amount of savings, no debt, I make almost double the average income in my state, and I'm waiting for the next slowdown in the market to pounce with the cash I'll have saved up, hopefully being able to buy 3-4 units near the city.

What am I doing until then? I live at my parents house. I love my job. I travel very, very heavily. We split expenses at home. I enjoy the heck out of the garage I've built up over the past 9 years. I enjoy projects around the house. Let me come right out with it: I love that house. There's so many things I want to do, so many things I've started doing. It's right on the inside of one of the city beltways. The values, while not recovered to 2007, are going up. The town is cleaning up. I want to raise my kids there (or maybe not. I'm like 70% on that)

I became an uncle a few months ago! I really was never fond of babies, but you know, that one ain't so bad. I learned that they do eventually stop crying, and this one likes to tug on beards. I don't blame my mom at all, she practically lives with my sister now. Meanwhile, at home, there's a lot to do and I'm pretty stressed about it. The in-law apartment I've been living in flooded a few weeks ago when the hot water tank's water broke. The tree work we needed to get done was going to cost thousands. The stress of all the projects got serious. Suddenly it became apparent that the house wasn't going to be the best place for all of us. I encouraged my mom to think of downsizing, and she came up with the idea to move in down the street from her grand daughter.

That's when I realized that my plans had changed too. I would not be the reason they'd need a larger house, the key word here is "downsize." I would lose 2 decades of their work on the house and a almost a decade of mine. You see where I'm going with this? I could buy that house. I could build a detached garage in the back with separate road access and rent the house out separately. I could buy a small place in the city and bring the bare minimum with me while having "free" storage at home with the rest of the place waiting for a reno and for me to come home to it with a family. I could tell my kids how their grandma planted that 60 ft tall hemlock. Problem: Parents still need to buy a new place. I still need to pay them market value for it, the market is inflated, I would still need enough down payment left over to find myself a place to live.

Another part of me wants to liquidate EVERYTHING and let them buy/sell as they please. Breaks my heart, it's hard to state the time and effort I put into my garage stuff. It's my escape. But I'd end up with ~60k extra in the bank and I'd have nothing holding me down anywhere. I could move to another country. I can live life with no projects for a bit. I'd be effectively throwing out thousands of hours of my life, but it wouldn't be the first time.

Another part of me wants to buy my parents a new house, rent the old house out and balance those the income/payment between the places. My parents are, however, worried that I may encounter problems on my own and they don't want to be affected. Fair judgement on their part. Plus I would be pretty tied down to Massachusetts, having to manage tenants. I could hire a property manager for the old place, but that makes it a breakeven rather than a profit. Which is OK I suppose, since this is more about preservation than profit. But then again, all that money tied up in a breakeven when it could buy me multiple units in a few years? Purchasing my parents place at market value is going to actually cost me when the market invariably plunges and rent hits a low. I don't know if that'll cost less or more than selling everything I own at a loss.

Another part of me wants to build my parents a new place. They don't want the hassle of doing it, but I think it has some key benefits: Brand new, no maintenance. Lower heating and cooling cost. Can be built to what they'd like (walk-out basement, 2 bed, large kitchen, office, open living room) I can also build a 3 car garage with a short driveway, which mitigates a ton of other problems they (and I) face. If I spend 100k on land and 150k on construction, rent from the old house will cash flow, and we can split that money proportionally.

Does anyone have any better options? Any advice? Any combination of anything that may work better? I'm totally flustered by the possibilities and risks.

Apologies if this isn't the most coherent thing. It's hard to organize so many potential thoughts, and I've already rewritten this post twice.

Awesome! The podcasts are the main driving factor for me being here in the first place. I play them at 1.3x speed so I can squeeze an entire episode into two 20 minute car rides. If I ever heard you folks speak in real life, I probably wouldn't recognize your voices.

What do you guys think of that mentality? 

There's 2 places I looked at in states of disrepair that when I played with the numbers, looked good to me. One was sitting for 2 years, one was sitting for 6 years. 

There must have been investors that have already turned it down, right? There must be something I'm missing? Or should I just pony up and pick a project already?