All Forum Posts by: Matt Lefebvre

@Marla Coletta I don't think you should sell it unless you are desperate for the cash.  The Bartlett/Conway area is and most likely will continue to see growth as the region continues to become a year-round tourism hub.  Housing in the area is already at a premium and with many challenges slowing large scale development, I believe we'll see prices and rents continue to climb.  If you can hang on for a couple of years, you can either refinance out some of the equity (once rates drop) you will have built or sell while the prices are high and actually make some money on the sale.  

If you can employ a mix of a LTR and MTR strategies to rent to both locals and contract workers (traveling nurses, construction, even some higher-paid tourist related jobs) I think you'll find remote management won't be too bad.  If you haven't already established a relationship with a local handyman or contractor, I'd say that's your #1 priority.  

Hey @Steven Gore, you're probably right.  The numbers on most of those 2, 3 or 4 unit multifamilies in Manchester simply don't work (and definitely don't for single-family houses).  Prices on a lot of these buildings have practically doubled over the last 3 years and no longer make sense as investment properties anymore. They are priced more for owner-occupants at this point. 

Keep analyzing properties as they come up.  Most of them won't work as-is but occasionally you'll find one the numbers start to make sense on if you make a few improvements and that's when you have to dig in further to see if you've uncovered a deal or not. We're in a very unique market right now with how fast prices, rents, and expenses have climbed while simultaneously being stuck with extremely limited supply and no end to that in sight. If you ever want my opinion on a specific property, feel free to send me a PM and I'm happy to provide feedback.  

@Chris G. the most important thing to consider in this scenario is that residential vacancy and commercial vacancy are vastly different.  As a general rule, renting an apartment in most markets around the country takes anywhere from a couple hours to a couple of weeks to fill.   A vacant retail unit can take a couple of weeks if all the stars align, but more likely will take months and can sit empty for years.  There's not enough information in your post to tell you what's "the right thing to do", but personally I would rather work with the existing tenants to make moderate rent increases (if they're paying $0.85 and the market is $1.25... why not stagger an increase to a $1.00 for the end of 2022?), get everyone signed to a month-to-month lease with new terms (including some hefty late fees could help), and work towards filling the vacant unit at $1.25 to "test the waters" and see how the market reacts. 

We're in a very volatile real estate market and economy as a whole; I'd feel a lot more comfortable owning a 100% occupied retail building that's 20% below market rent than owning a 25% occupied one that everyone is paying market rent.  

Hey @Zander Kempf, congrats on getting your license here in the granite state!  Would love to chat with you further about what you're looking for.  I hang my license at Elm Grove Realty which is a smaller firm that falls under the umbrella of a local real estate investment firm that manages about 1500 units in the area and executes a small to medium sized (roughly $3mm - $10mm) development and redevelopment projects around the region.  Might be some interesting synergies to explore here.  Give me a shout if you want to talk further.  

@Caitlin Lynch welcome to BiggerPockets and happy to see your interest in getting started in the world of real estate investing!  Investing in real estate and selling real estate (as an agent... assuming you're not salaried) is definitely two different things and can make it more challenging sometimes to invest.  While on the one hand, you get the benefit of having some firsthand knowledge on the industry, to @Jonathan Bombaci's point you can credit your commission against the downpayment of a property you're buying, and might be able to make a more competitive offer than a non-agent buyer, there are also some downsides that mostly come into effect when you try and get a mortgage.  Most (and I know you mentioned you work for Redfin so this might be different) real estate agents are 1099 independent contractors... and when you apply for a mortgage with this type of income, they take the ADJUSTED gross income on your last TWO years of tax returns, average it together, and then use that to fill in the "income" box on your mortgage application.  This has tripped up a lot of real estate agents on this forum (myself included!) and definitely needs to be something you consider in the absence of reliable W2 income that you earn from most jobs.  Certainly keep that in mind before trying to get started in real estate investing!

On the other hand, kudos to you for having the desire to get started and for having the willingness to explore outside of your market.  Southern NH/ME are both good places to look as the prices are comparatively cheaper than what you'll find around the Boston area. Best of luck on your real estate journey, always happy to chat and give guidance where I can!

Hi @Hayden Done, welcome to BiggerPockets!  If you're feeling a little bit overwhelmed from reading about real estate investing, that's okay!  Keep reading!  The best thing you can do at this stage is understand the fundamentals about buying and investing in real estate.  There's no need to rush into it as real estate investing is a looooooooong game.  You don't strike it rich overnight and building up your knowledge and portfolio little by little is the way to go.

While a lot of the knowledge in BP books are great fundamentals and will help get you excited and have a basic understanding about investing, I'd encourage you to soon start reaching out and networking locally.  There are lots of NH locals on this forum (a few have already commented here!) that you can connect with or you can find meetups on this website (Network > Events tab here on BP) where you might be able to meet in-person or virtually with a lot of other investors in the area. 

Remember to ask questions, take your investing journey slow, and connect with people here! 

Feel free to shoot me a message if you ever have any questions and happy to provide my opinion.  

Thanks for the tag @Shane Cloutier!

@Ruth Moynihan it sounds like you're jumping into a big project... congratulations for taking the first step!  There is a LOT of work that goes into a conversion project from an existing commercial building (and what type of building we're talking about makes a huge impact... office, retail, warehouse, etc.) into an apartment building.  While I don't have personal experience running a project such as this, our company, Elm Grove Companies, has completed several large adaptive reuse projects converting old, run-down, mixed-use buildings, and creating high end apartments with a light retail component attached.  A couple of things to keep in mind for any project:

1)  You need to be purchasing this property for a substantial discount.  If you're paying full market value for a 10,000 SF commercial building that can be used functionally for it's intended purpose (in NH that's probably between $80 - $120 PSF), your numbers will probably never work to build apartments.  While I don't know what type of building it is, if you're paying more than $30 or $40 PSF, you're probably paying too much.

2)  It costs a lot to build apartments from the shell of a building.  You can almost never maintain any of the existing infrastructure within a building because it is not suitable for residential use.  Expect to spend anywhere from $80 to $150 PSF depending on the scope of the project, the type of apartments you're building, and the amount of infrastructure work that has be done.  A project this scale has to be done with a professional construction company... especially with your first project, you can't try and bootstrap this yourself.

3)  A part of your due diligence should be city approvals.  Just because a building isn't zoned to support residential doesn't mean the city won't grant a variance.  It makes it significantly more challenging to get approvals if the "spirit" of the zoning code doesn't support high density residential, but it still can be done.  Make sure you hire the right people to get through the city approval process and have a working idea and a level of comfort with your project before you close on the property.

I'm sure I could go on and on about different pitfalls and points to remember but I'll wrap it up here.  Conversion projects can have big upsides but also big risks.  If you're willing to take them on and either have experience, or have a partner with experience in this area... I definitely think you can move forward and successfully tackle a project.  If you want to talk more offline on specifics, happy to weigh in with what I can.  

@Clayton Murray I'm happy to hear you're looking to come back to New England!  No matter where you end up (though I have to say, I'm totally biased in telling you to go visit NH), its a great place to live and there are a lot of good things going on in New England as a whole.  As others have mentioned already (@Sean T. and @James S.) prices can vary wildly between states and between cities/towns within a state.  Really understanding where you want to live is important because it will have a big impact on the price you'll be paying for your first property.  I'd encourage you to familiarize yourself with different parts of New England and weigh where you want to live with the employment opportunities in the area... unfortunately your W2 job is going to dictate what you'll be able to afford, so buying somewhere that provides a good, well-paying job, will have a big impact on your initial success with real estate investing. 

@Toni Mo also brings up a very important point regarding the landlord/tenant laws in various states.  MA and RI (and to some degrees CT) definitely have laws that are more in favor of the tenant (between the process, the length of eviction, the number of regulations that need to be followed, etc.) whereas somewhere like NH tends to be much more weighted towards the landlord.  COVID-related eviction moratoriums have an impact in the short term in where you're investing, but hopefully by the time you buy a property, those will be a thing of the past and not something that you need to take into consideration.

Best of luck with your search and always happy to talk about real estate around here!

@Zac Ballin how big of a loan are you talking? 75% LTV shouldn't be too hard to find right now for a cash out refi... the only challenge you might run into is banks requring some hefty P&I reserves depending on who you're dealing with. I'm seeing rates in the high 3s to low 4s for most properties under $2mm offered at 75% LTV on a 25 YR am... finding a lender that fixes the rate for longer than 5 years is a little bit more challenging right now but there are a few out there.

@James S. no they still don't make sense... and its definitely a challenge.  In most of Southern NH when you're dealing with duplexes or smaller multifamily properties, the numbers produce low cash flow, break even cash flow, or even negative cash flow (as is the case with most duplexes).  It's almost impossible to purchase a duplex at full market value with minimal work and create a positive cash flow investment.  The vast majority of buyers for residential multifamilies are owner-occupant or out-of-state buyers with more money to burn.  I really only see a positive cash flow scenario possible with some type of value-add.  That's why I'm a huge proponent right now of owner-occupying multifamilies and jumping from building to building to grow a portfolio in the short term because its so challenging to have a good cash on cash return otherwise. 

@Devin Miles "simple" duplexes are more rare these days than before... but the problem isn't the rarity... it's the competition!  I constantly see these types of buildings bid up on the price because there are so few of them out there.  We're closing in on a sale for one of our customers of a duplex over $200K/unit in Manchester!  It's crazy how competitive it gets.