All Forum Posts by: James S.

Originally posted by @Michael Ketchen:

Hi Shane, we have a decent sized portfolio across southern NH (80units) and electric heat is the one thing we avoid like the plaque and/or replace as soon as we purchase. 

 Hey Michael could you expand on why this is? I have a few units with electric heat and haven't had any problems with them. I once even added electric heat to a historic building because it was the easiest way to do the least amount of damage to the building, and it was a lot cheaper than adding FHW to boot. 

I know electric is expensive in NH, but if you're passing it on to the tenants, it's not hurting the bottom line. I've noticed no push back or more difficulty renting electric heat units.

Originally posted by @Tobe Zhang:

Originally posted by @James S.:

Hi Brian,

I am not from Coos County, so take what I say with a giant grain of salt. I am not sure how familiar you are with Berlin as a city, so let's look at a few facts. As you may know, Berlin suffered a huge blow with the paper mills largely closing up shop in the area. A drive through the city will show you just how much of an effect it's had on the area. The best areas of Berlin look like 'C' Areas, to me. The city is broke, it's citizens are broke, and there is no real hope on the horizon of a turnaround, despite moving a prison up there. Unemployment is still nearly 8%, twice the NH average. Housing prices are the cheapest in NH. It's losing population, and job growth is projected at -4%. It has one of the lowest houshould wages in the state, at 38,000+/-. That ranks 227 out of 238 in NH. 

No doubt the allure of $10,000 triplexes are enticing, I know they are to me. Your risk tolerance, and desire to deal with problem tenants will dictate whether you want to invest there. I have no doubt people are making money. Keep in mind it's very isolated from the rest of us; hard to check on your property manager, if you can find a decent one. 

Also, off the record, I've been told by more than one official that NH welfare services tell people to move to Berlin all the time, because it is one of the only places they can realistically afford in NH. There are very few areas in the seacoast a poor person can live, and the 1-93 corridor is not that much better. So, you're going to have a lot more headache tenants, and you aren't going to make that much off their low rents, since demand is so low. Also, Berlin is seriously suffering for tax revenue, and in NH that only means one thing, rising tax rates. There aren't many more services to cut in Berlin (there is enough deferred maintenance there already), so higher taxes are the inevitable byproduct of that. 

Just my two cents, I'm sure there are people here making money in Berlin. 

That's very insightful, @James Smith! I wonder if you are familiar with Claremont at all. I'm in Lebanon where the prices of properties have gone up 20~30% since late 2019, making it hard to find cashflowing investment properties. So, I'm expanding my search out to 30-minute drive, and Claremont is within that range and seems to have some less expensive multi-unit properties that may have potentials to cash flow. I drove there a few times but don't know much about the location and the situation of rental market in Claremont. Any insight you have to share would be greatly appreciated!

 Hi Tobe,

Unfortunately no, my main area of focus is in the seacoast, so I am wholly unfamiliar with the situation in the western half of the state. I have seen some investors in northern and western NH on these forums though. Just check NH-centric threads and you'll see some names pop up that might be able to give you a bit of a hand. I'm not sure of what, if anything, is Claremont's draw for renters, but there ways to make money everywhere in the state if you know what you're doing. Best of luck.

-James

My best advice would be to divorce yourself from the notion that you will clear money like all those emails bigger pockets sends out on a daily basis of people buying place with no money down, or making 2000 a month from homes less than 100k or all the silly things they put out on a daily basis. New England is a mature market, and every place that has good jobs has mature rental markets.

As in any mature market, with highly educated, high median-income locations, it's gonna be about value-add and finding non-MLS deals. Or finding creative buildings to buy that others don't want to that have problems others don't want too touch. If you want to go cheap, buy C-D areas in Lowell, MA or Rochester, NH.

Not sure where in NH you are from, but you should known it's highly variable here as well, as Sean alluded too in MA. As far as southern New England, the general consensus I've seen here on the forums is its largely a no-go for people who want cash flow or don't have significant capital to invest. Southern NH (whether central or seacoast) and Portland seem to be the best market to invest in (though the barrier to entry is much higher than 10 years ago) so again, creativity and sweat equity is rewarded.

@Matt Lefebvre OK so we're in agreeance that Duplexes don't make any sense basically anywhere people in NH want to live. Good to know that I'm not way off in my analysis over here, and that it's crazy all over the place in the state. Guess I'll stick to value-add stuff in my home market for now, though even those have mostly creeped up too high as well. Maybe the COVID foreclosure boom will help pull things back to semi-reasonable, though I'd rather no one lose their home. 

Great advice @Matt Lefebvre...I didn't even think to mention having to bring the entire building up to code! Definitely another hidden expense that people don't consider when doing their calculations. My recent building was a 3 unit that has one unit that's much too large (3000+ sq foot), but after realizing that same fact (adding sprinklers in a 1860s brick home), we decided against it as the cost was too high, and besides which there was no good way to add fire suppression without destroying the character of the home. 

Are duplexes and other small multis in good condition cash flowing in the middle of the state? I only ask because here on the seacoast, in just about any B or A area, they are really only making sense for house hacking. I see people buying 350k duplexes where the total rents are 2500-3000, and that's just not enough in my opinion. This is a generalization of course, but some of the duplexes I see here, if they are being bought by investors, have to be from people betting on appreciation (which, to borrow your phrase, I feel is glorified gambling), because there's no way they are cash flowing long term in these units. There were duplexes in my neighborhood three years ago that were overpriced (as relative to rent, the 1% rule, the 50% rule etc), three years ago, and they are selling for 70k more now. The rents have gone up in the past three years, but not 35k a unit up. So, good on the owner for the appreciation, but I'm not sure what their play is, if not appreciation. 

So if central NH is making money on good condition duplexes from just a pure cash flow standpoint, that would be good to know, since I don't want to buy a value-add property an hour away from home. Any input you have on that would be greatly appreciated. 

Hey Devin,

No problem, hit me up if you got questions or whatever. I would like to echo what Daniel said about the 6 bedroom, it's not gonna net you much more than a 2 or 3 bed. If the layout makes sense to convert, just remember a couple of things. Most importantly, is it an allowable use with the city. If it needs a special exception or what not. If it's in the "general commercial District," then according to Derry, there's no way to add a unit to that building legally. There is no addition of residential units allowed in that district according to a quick scan of the zoning ordinance, so that's probably a no go for you. If it's another commercial district that allows this (I am not familiar with Derry's code specifically) there's probably also an impact fee you'll need to pay as well to add a unit, and it's often 10k+. Just keep this stuff in mind when you analyze the deal.

If I was you I'd still shoot for a house hack first, though I'll defer to people who know more about the Central NH market on if that's a good long term deal even if no owner-occupied, but I'd be surprised if you had enough cash at 19 to do that deal without living in it anyway. 

Hey Devin,

Based on your description, I'm going to go ahead and guess you're looking at 4 Lenox St in Derry. I want to preface my comments by saying that I am not well versed in the specific prices in central NH (I'm on the seacoast). 

That said, it looks like it might make a decent house hack. I don't see anything in the pictures that raised any flags that would cause the home not to go FHA. So, if you wanted to own a home, and have the tenants pay most of your mortgage, that could potentially be a good deal.

However, as a straight investment you won't be able to use FHA anyway, and based on the 2 bedrooms currently available for rent in Derry, I don't see those apartments making enough money to even cover the mortgage, cap ex, etc., let alone making you any money. 

At 19 though, house hacking anything will give you a big leg up on future investment; if you can come up with 18k+ for an FHA mortgage (3.5% + closing costs), and it's a place you want to live, why not go for it. I don't see a ton of opportunity to value add to the property as it looks like it's in good shape, but again at 19, could still be good. That said, you could wait 6 months and see what happens with this market and all the foreclosures that may be coming, and there's probably no need to rush. But of course no one knows what the market will do.

Originally posted by @Shane Cloutier:

I've been going to virtual meetups for a few months now but they are mostly filled with people from NJ.  So we would love one with fellow NH investors. 

Better than MA at least...I guess? :) 

When COVID is over I'd definitely like to join in-person meetups.

Hi Courtney,

For more of my expounding on the seacoast NH, please check my prior posts on the subject (I'm on mobile so trying to keep this brief).  Aaron above mentioned Farmington, Somersworth, and Rochester as good spots for investing. This can be true from a strict numbers standpoint, but as you want to be an owner-occupier, I'd suggest you look beyond just the numbers.

These are the worst towns in the seacoast from a reputation and crime standpoint (crime, relative to the nation as a whole, is low everywhere in NH however). There are great investments there to be sure (I am negotiating one right now in Rochester), but if you are going to house hack I would implore you to make sure you know the neighborhood you want to buy in in those towns very well. Generally no one who rents in these towns is living there if they could afford somewhere else in the seacoast, like Dover, Durham, Portsmouth, Newmarket etc. 

If you end up buying a rental on Lafayette St in Rochester or Green St in Somersworth...I don't think you are going to enjoy your time there. I know I wouldn't want to live in C/D areas with C/D class tenants sharing walls with me. Here's an example of what I mean. Go to 5 Lafayette Street in Rochester on google maps, and look at the street view of that area. Then tell me if you want to live there. Out of town (or as is more usually the case, out of state MA investors) are making very good money in downtown Rochester. I know a few who do so personally. But I also have plenty of stories working for a property manager that worked on these types of areas in these towns. Missing doors, missing toilets, animal and human feces on walls and floors, piles of diapers, drugs, guns, police, police, police etc. You're gonna need a strong stomach. Or maybe you'll get lucky, who knows. 

I am not attempting to dissuade you wholesale from these areas, but just to think critically about them. There's money to made in Berlin too, but I don't see that being thrown around as a great place to house hack. The numbers for an absentee investor and one who is going to live there are not apples to apples. It's easy to pass off low end tenant management to a property manager; it's another thing entirely when you share a house.  

I'm on my phone so I've tried to keep this brief. Again I've said much more about this area in the past. Hit me up if you'd like to chat further.

There's absolutely no reason to pay for any of this if you want addresses. Just pull from the tax card off the city website directly. Can't help with phone numbers or email addresses, but it never hurts to start with actual letters.