All Forum Posts by: James S.

Hi @Nick Mess,

I see a lot of option 2 votes being put forth here, but I'll go ahead and make a case for option one anyway. 

I've done option two, in Dover, and while it has worked out well for us financially, that doesn't mean it's always the best way to go. I've noticed a tendency on these forums to always shoot for the moon; while this is admirable, it's not always feasible, or even desirable, for everyone to go that route.

I don't think everyone needs to own 50 units. I believe some of us who think that overestimate the amount of happiness and freedom it will bring us. I could go on about all the studies that show your happiness relative to wealth tops out at a pretty measly 70k per person, and after that the money doesn't actually make you more happy. People tend to revert to the mean happiness level of 5 pretty regularly. I don't begrudge anyone who takes this path, but I know enough people I'd call "rich" to know that they aren't any happier than I am, even though they thought they would be. Life isn't about overcoming obstacles to get to the good part. Life is the obstacles. 

Those of us who use real estate as an investment feel like we've tapped into some secret knowledge, and sometimes scoff at those who follow traditional paths of just buying a SF home to live in and raise a family. But the reasons people chose that traditional path still exist in us too, we just move to quiet them for the sake of money. Who doesn't want a space that is entirely their own? Where there's no one walking around upstairs, where you don't have to be cognizant of having 10 people over at 11pm on a Tuesday, and where you can just let the dog bark at the mailman for 5 minutes if that's what she really wants to do. That is to say, we try to assign numerical values on everything RE related, and I don't know if that's always the wisest path.

There is something innately satisfying about having a home that is entirely yours. It is something I definitely miss; I have to play the guitar quietly in a back room only during waking hours, I can't blast a surround-sound system, I can't be naked in the backyard if I want to be, my drums aren't even set up in the house etc. The freedom of your own space; a sanctuary where you can always retreat to, where there is no construction staring you in the face, may be worth more than some extra money when you're 65. You could be hit by a bus tomorrow, and then where did those sacrifices get you? That is not to say I mean live like a hedonist in the moment; that's too shortsighted an ideology I believe. 

But if the whole goal of this game is to get enjoyment out of life (isn't that why we're all trying to build wealth?), and having your own space will make your life (and the puppy's!) life more enjoyable the second you acquire it, why not take that path instead of the one that gets you to the finish line a few years earlier? I view it a bit like the people who work hard their whole lives in a job so they can retire well, without any guarantee they'll be able to actually enjoy that retirement. They could be hit by the aforementioned bus, or have a brain aneurysm three days after they turn 65 or whatever. Why not enjoy your life a little more now? You seem to have a solid idea of where you are and where you want to go, so why not trust your future self to make the correct decisions, and trust that he'll make sure you're financially secure.

We could talk more about the specifics of doing either strategy in Dover, and the rental market here is rapidly changing, and I don't think most know exactly when or where it will end up, I certainly don't, but I think that would miss the point of the larger point I'm trying to make.

Just my two cents from someone who has done what you're thinking of doing. Thanks for reading. 

@Steve Babiak Hah my bad, I meant the mortgage. The rents don't cover the mortgage, let alone the actual costs of ownership. 

Hi Nicholas,

As others have mentioned, Portsmouth is basically a non-starter if you are looking to pay an MLS price for a property. Anyone buying a multi-family in Portsmouth will find the rents barely (and in some cases don't!) cover the rents.

Dover is more palatable, though from a strict investment point, even finding 1% properties can be difficult in this market. There are still gems out there here and there, but every time I've tried to pick one up they were under contract the second they hit the MLS; the deal was already worked out ahead of time. Personally I think buying in Dover is much more palatable as an owner occupied house hacking scenario, which won't work for you,  though enough of you guys move north of the border maybe you can be persuaded :).

Rochester is often mentioned, and there are certainly good deals there. But I would honestly recommend Somersworth over Rochester for the "next town" after Dover to really gentrify. If I may make a quick case from an observational and anecdotal standpoint (I suppose we could dig into numbers deeper at another time). Somersworth is closer to Dover/Portsmouth/Kittery/Pease/the ocean etc. than almost all of Rochester is. As the primary draws of people to Dover are for the things south of the city, this means Somersworth is physically closer to amenities people want, including their jobs. It is more connected, via Route 9, to the commercial parts of the Dover than Rochester. Finally fixing Main St. in Somersworth is paying dividends for the area around downtown (though there is a looong way to go).

Let's be honest though, both towns are amongst the most dangerous and rough towns in NH, and routinely make (or even top) the list of worst places to live in the state. Drugs, property crime, and violence are a constant problem in these two cities, which have been hit by the drug epidemic worse than most. They are dumping grounds for section 8 tenants who have been priced out of places in Dover, Newmarket etc. Their down towns are directly adjacent to the worst areas of the cities, the "French town" of Rochester next to downtown is a C- neighborhood, at best, and is a contender for worst neighborhood in the state (though the tree streets of Manchester probably win that title). When the newspaper police log reads "1:35AM Rode Down Street, the public jumped into bushes" you know it's not a great neighborhood.

There are no doubt deals to be made there, but every section of Rochester that circles the downtown area, where the vast majority of multi-families are, are in I would say C neighborhoods. Somersworth has some multis on "the hill" and directly on main St. that aren't so bad; converted Victorians and the like. Because of Somersworth's downtown "bad" area being so much smaller, I think that it will take less time to change that area around. The sheer scale of the bad areas of Rochester range North, south, east, and west of Main St. means that a LOT more change has to come to that area to brig it up to speed. 

To be sure, there are very nice areas in both towns I would be happy to live; there just aren't investments properties out there. That said, neither of these cities reputations are new. Rochester's downtown has been considered a dangerous place as long as I've been alive, and that sort of reputation doesn't get shed easily just because housing prices are on the rise in Dover. It took Dover 20 years to be considered a great place to live from the dive it was in the 90s. I don't think the change for Rochester will come any sooner, especially when there are other options. 

That's not to dissuade anyone from buying a good investment, but just to factor in the quality of tenant you are going to get there and make sure it's built into your calculation. Almost no one who can afford to live in Dover is going to chose to live in Rochester instead; which means that the people living there are there because their income demands they be, not because it's a place they'd like to live necessarily. That said, money is money, and a savvy (and patient) investor can make a lot of money in those cities.

Just my two cents. 

NH native checking it; great place to live by almost every objective standard! Except the weather, that kind of sucks a lot from Oct-Apr.  CA is also a great place to live: weather, beaches, and nature, what more could you want. 

I have no comment on all the other ridiculous stuff happening in this thread. Just had to defend NH.  

 
From NH's point of view, ANY money you collect that is not the first month's rent up front is considered a security deposit. So in this case, yes the last months would be considered part of the deposit, and would violate NH statue. 

Here is the link to the statue, and the relevant part of the text is below....

540-A:6 Procedure. –

I. (a) A landlord shall not demand or receive any security deposit in an amount or value in excess of one month's rent or $100, whichever is greater. Nothing in this section shall prohibit a landlord from entering into a written lease that requires the quarterly or less frequent payment of rent; provided, however, that the security deposit received in addition to the initial rent payment may not exceed the equivalent of one month's rent. 

NH law says a security deposit can be $100 or up to one months rent, whichever is higher. (It obviously hasn't been updated in a while, hence the 100  bucks). 

The only exception are the single family landlord who owns no other property, and owner occupied properties less than 6(I think) units.

I think I've said this before on a thread about Berlin, but there's really only one good consistent revenue source in Berlin for rentals, and that is section 8. Almost no one in this great state would choose to live in Berlin if they had almost any other option; it's just not an attractive place to live. Sky high property taxes (40/thousand is crazy, even for how low values are there), high crime (again in context of still being in the safest state in America), depressed values, no good jobs, depreciation, middle of nowhere etc. all combine for a place that few people want to live.

I've been told by multiple people that work with the DHHS that they have unwritten instructions to send section 8 people up to Berlin because the rents are so cheap section 8 can cover the whole rent (and it helps the state spend less than even housing them in the dumps of Frenchtown in Rochester). This "put 'em on a bus" strategy leads to an overabundance of section 8 tenants living in Berlin relative to the renting population as a whole. 

Not that there aren't people making a lot of money from section 8, I'm sure, but it's an entirely different ballgame of wealth-building, so just keep that in mind. 

@Megan Frank, absolutely agree with you on the scale of the epidemic in those towns. I have family that works at Frisbee, and they tell me it is much worse than is let on by Foster's and other local media (though understandably it stops becoming news when it happens everyday). Screening really is the key. You are right, on a small scale it shouldn't be too hard to find good tenants who just can't afford Dover or work north of Rochester, but finding 50 sets of qualified tenants in Somersworth could certainly be a challenge. I'd say the most important thing in those towns is to know what area you are buying in before you buy in it. Some areas that seem OK really aren't (say around the top end of Charles St., which is a little too close to French town for comfort), and some parts that seem a little off can actually be OK (some parts of Gonic). 

It appears we do work together, or at least share the same building :). I'm on first shift, 3rd floor. If our schedules overlap at all, feel free to swing by and say hello. I'm in the building until 4:30. 

Hey guys, just to add to this discussion for a little more about the different between Portsmouth/Dover and Somersworth/Rochester, I talked to my property manager today. He manages only one building in each city, and this morning, he evicted a tenant that ended up with the sheriff noticing heroin in the apt and turned into a huge drug ring bust, and then, THAT SAME DAY, got a call about his Somersworth building where a 15 year old kid was firing bullets into the air because he was mad at his girlfriend, and then pointing the gun at people trying to stop him.

If this does not help bridge the difference between the quality of tenant between the two areas, I'm not sure what will. I would wager there is not a single A area in either of those towns, and even B+/B areas would be a stretch for some, depending on your definition of a B area.

edit: The manager concluded with saying this "this is why I only stay in Durham/Dover/Newmarket/Portsmouth. Never again in those towns."

@Megan Frank is right, Portsmouth is a complete disaster as far as MLS available properties go for investment. You need some serious cash to buy or build large complexes to see any sort of decent returns. Unfortunately Dover is fast going this way as well. It doesn't take a genius to follow the trail of crumbs from Portsmouth to Dover, and everyone bought up everything in Dover. Properties in my area of Dover are going for $120,000 more than they were 4 years ago. A quick scan of the MLS maybe nets 2 or 3 properties that would meet the 1% rule, and none that come close to 2% (though good luck finding that anywhere in New England, that rule was made for the Midwest and South if you ask me). The properties I am watching fly off the MLS in Dover, I'm not sure how these people are even covering expenses, or if they paid in Cash, having a decent CoC return.

Somersworth and Rochester are, for now, much more affordable, but I don't think you'll find anybody challenge me saying they are much worse communities from a PR and tenant standpoint. They are Scumersworth and Rottenchester for a reason, and have some of the highest crime rates and lowest average incomes in the state. There are good areas of both, but very few people who could afford to live in Dover would live in either of those two towns instead. Parts of them are getting better, repaving and repairing High St in Somersworth is doing wonders for the downtown, but they have a long way to go to catch up to Dover. 

edit: meant High St in Somersworth, not Main St.