Originally posted by "REI":
Leon,
You have posted a number of messages talking up areas of Boston. Your last message more or less says that some areas that are not that great now will be winners in 3-4 years.
Other than you have something to sell what is the point?
Boston has seen ups and downs over the years. More or less like many other cities. Many locations will be a great deal if you buy now and wait 4 years. Much of FL is likely to fit the profile given how folks from MA and other locations like to move to FL.
Condo conversions can be a good deal or a way to get involved in years of lawsuits. Standard practice in CA is every developer gets sued by the buyers as there is always something they want to complain about. MA has a history of being pretty pro-consumer. What is the climate when it comes to lawsuits against condo conversion developers?
John Corey
To be honest, I'm fairly new to the real estate business. The previous experience I've had is in New York - and that was almost all just people purchasing houses to live in themselves.
The point of our program is the term passive. We don't get lawsuits, because our contract states that the investor, to the benefit of all, has no choice in the choosing, managing, or conversion of properties. We pick them out for each qualified investor, based on their credit application, and the amount of money they are willing to put down. BEI just happens to be located in Boston because of a few major things:
1. Boston has limited space. The city of Boston is only about 48 square miles. Nothing more, nothing less. Sure, people will move and live west to places like Acton, or south to Milton and beyond. But the city of Boston will always rest within that 48 square miles - unless you figure out a way to cheaply build on top of water in the next few years, in that case, sign me up.
2. Boston will always be on the map, in terms of business and development, on an international level. Fidelity is located here - one of the largest financial service companies in the world. Harvard, BC, BU, MIT are among some of the top colleges in the world, and are located all throughout Boston. People will always want to live in Boston.
3. Lack of competition - there are no other companies working on the scale we are in the areas we are focusing on. Chelsea, Dorchester, East/South Boston are considered crime-riddled down-trodden areas by still many. We are realizing its full potential for growth in the future. It's inevitable - think Harlem, think Brooklyn, think South End. We're turning entire areas around. You convert 100 condos in a neighborhood, you don't think property values and the quality of living are going to go up?
From what research I've done independently (I didn't blindly begin working for this company, I'm intelligent, and like to know for myself what I'm getting into), the real estate market is at a low point. It probably will go even lower. However, markets work in cycles. And over the long run, especially the real estate market, trends will always be upwards. Sure, you can buy a property and hold onto it for 30 years collecting rent, but our programs are designed to be finished in 1-5 years.
It's already happening for condo conversions we've done. In Cambridge, Somerville, Lexington, Arlington, and South End we have many properties we are converting this year.
I'm looking at a list right now of estimates. A 3-family property in Somerville that is going for $750k, with $100k in construction costs, and will sell after conversion for $1.1-1.2 million. This property is going to be finished before the end of the year.
We aren't worried about lawsuits. Our contract clearly shows that everything we do is in the best interest of the investor - we don't see any returns unless the investor sees returns. We need to partner with investors because of the sheer scale of our projects.
We've finished successful conversions since we've started. Our current investors are happy - in fact, most of them take advantage of the 1031 to re-invest in even larger, or more properties.
If you like to be hands-on, and really develop a personal interest in the real estate you invest in, then this isn't for you obviously. BEI offers a passive investing program. This is why we get many investors out of state. I'm talking to a professional poker player from Los Angeles that wants to invest - the advantage to him is he does NONE of the work. He signs the mortgage checks and contracts, and leaves the rest to us.
Again, I'm new to this business, so if I'm getting anything wrong, please let me know. I'll look into it myself.
