All Forum Posts by: Keith Anderson

@Steven Tawresey

Check out @James Wise at Holton Wise. I met with @Kevin Hoag on their team last month, and though my current strategy isn't a fit with their focus, it may be for yours. 

Bill, who are the turnkey providers you'd recommend in Indy? The only one I've stumbled on (admittedly I haven't really looked) has more demand than supply at the moment. Candidly that's my sense of the whole market... 

@Patrick Kelly

 Thanks for the additional detail. Will look into these neighborhoods.

Thanks for the input @Patrick Kelly. I'd probably be able to handle some risk if the neighborhood and property had high potential, but I'm probably looking for B/B+ properties before I start investing in C+ with B potential.

What are TODs? Haven't seen that acronym before.

Interesting idea, @Charlie MacPherson . We were looking at a similar strategy on the Cape and finding that the income potential may not pan out, but well check this out.

@Paul Brockmann I think many investors in coastal areas learn not to over-emphasize positive cash flow in year 1 (assuming they're buying the right properties in the right neighborhoods). 

It seems like the much more commonly discussed rules of thumb on BP and elsewhere would lead one to conclude that nothing makes sense in these markets, and yet... somebody owns all of that property! When I first began researching & learning I thought, "What a shame that so many fools bought property in Boston that doesn't cash flow," but I soon realized their definition of success must be different.

But I never really see anyone publish criteria or strategies for successful investing in these markets, aside from going out-of-state with turnkey operators or similar. The closest I've seen is in a book on building wealth one house at a time, in which the author looks back at people that wavered over $5-$10k swings in the purchase price of homes in CA 30-40 years ago -- homes that are now worth 8-10x what they were then.

I suppose your suggestion to look off-market for deeply discounted properties might be one way to do it, but I suspect that there are lots of investors that are OK buying at fair market value and finding that the appreciation and equity build more than satisfies after 15, 20, or years. Maybe "losing" a few hundred dollars in cash outlay to feed these properties every month ultimately pays off big, if that's your strategy?

Samantha,

Not sure if you're still looking for input from investors, but since I just discovered your thread researching MACK I figured I'd chime in.

Unfortunately I don't have any experience with the software itself, but I can give you some thoughts on what I look at when studying a proforma.

An ideal proforma for me includes:

• Multiple external and internal photos of the property
• Rehab status
• # of beds, baths, garage
• Market rents (or, if rents are estimated using something like the 1% rule, noting how they were derived
• Default allowances for vacancies and maintenance reserves > 0% (this was one thing that immediately turned me off in the "available properties" email I got from MACK last week)
• Monthly mortgage payment estimates assuming a 20% or 25% down payment
• Insurance estimates
• Property tax estimates
• Cash flow ($), Cap rate, cash-on-cash return, return on equity, and ROI (with both cash-only and leveraged #s displayed where relevant
• Monthly & annual views of income & expense estimates
• 10/20/30-year financial scenarios for all of the key measures of return
• Neighborhood info is icing on the cake -- schools, crime rate, public transit, and comps

I realize that's a lot to absorb. My #1 suggestion is to include conservative assumptions for all of the variables, especially price appreciation, vacancy & maintenance. As I recall, MACK just launched some 1-year guarantees, but most of us are investing over much longer horizons and care about years 2+.

Thanks @Ann Bellamy. Have been searching/browsing here daily and have attended a few REIA meetings. Always looking for more success stories and perspective.

I'm really glad to see local sub-forums and wanted to kick off the discussion here. Hopefully some keyword alerts for Boston, MA and Cambridge, MA draw folks in.

I'm a new investor based in Cambridge. My wife and I want to build a portfolio of buy-and-hold rental properties.

We've spent about a year looking for a viable strategy in our own backyard and are almost convinced that we'll have to "trade up" to investing locally in 5-10 years after an out-of-state portfolio has been seasoned a bit. We just can't find single-family homes that pencil out, and the multi-families are at relatively prohibitive price points. 

If your focus is cash flow, it seems like East Boston and Chelsea have some potential. But as an inexperienced investor, I'm not eager to jump into a "C" neighborhood. Similarly, I see a few folks promoting Dorchester and Roxbury. 

And I've heard Malden and Medford mentioned too for their growth potential. I've looked as far away as the Portsmouth, NH and Salem, MA areas, but still haven't found much that fits our target of 10%+ cash-on-cash.

The local investors that seem to be most active (like @Shaun Reilly and @Justin Silverio) seem to be fix-and-flippers, which seems much more viable than our preferred buy-and-hold approach. When I recently met @Aaron Montague, he echoed my observation that it's tough to find viable buy and hold properties in Boston.

So -- are there local folks with a strategy I'm totally missing? I realize the market dynamic here may dictate that we get more flexible on our strategy, but we're likelier to invest out of state than try flipping, notes, etc. locally.

I think the default rate is probably going to be reasonably high, but even with a high default rate the returns are looking pretty good. We'll have to see though... both Lending Club and Prosper emerged during the economic recovery and there isn't good historical precedent for how they'll perform during harder times (unless you look at credit card paper, as you suggested).

I use a service that automates loan selection, so it's a fully passive investment for me. It's still not a big part of my portfolio but seems like the path of least resistance to private lending.