All Forum Posts by: Tyler Munroe

Continuing to add to this thread as I see opportunities in greater Boston! Hopefully it can give investors a sense of what's happening in the area in small multi-family deals. Walked the property below this weekend and there's definitely some good returns by taking advantage of the new ADU law in MA.

Deal Analysis – 5-7 Hudson, Woburn, MA – Duplex w/ ADU Potential

Great location with strong rental numbers and potential to add value via the new ADU laws in MA.

Property: 5-7 Hudson St, Woburn, MA
Type: Duplex-style 2-family
Location Highlights: Super walkable to Horn Pond & downtown Woburn, easy access to I-93/I-95, great for commuters.

Property Breakdown:

• Right Side: Spacious townhome-style unit, renovated in the 90s.

  • 3 beds / 2.5 baths

  • Walk-out porch, fenced yard, parking

  • Central air

• Left Side: Previously configured as two units (legal 2-family now), was used as an illegal 3-family at one point.

  • With new MA ADU laws, there's potential to convert this back to 3 units (2-family + ADU)

  • Roughly $50K in renovations to add a kitchen and fix egress

Estimated Rents (Post-Reno):

• Townhome: $4,000/month

• Other two units: $2,200/month each

• Total Gross: $8,800/month

Financials:

• Purchase Price: $900,000

• Down Payment (20%): $180,000

• Renovations (ADU conversion & misc.): ~$50,000

• Total Cash In: $230,000

• Estimated Monthly PITI + Ops (6.6%, 30-yr): ~$6,000

• Monthly Cash Flow: ~$2,800

• Annual Cash Flow: ~$33,600

• Cash-on-Cash Return: ~14.6%

House Hack Option: If you live in the 3BR/2.5BA townhome, you could do it for ~$1,600/month net after rental income. You get a yard, parking, central air, and solid space in a prime location.

Here's the listing on Zillow: https://www.zillow.com/homedetails/5-Seven-Hudson-St-Woburn-...

Thanks @Jason Zundel and @Drew Sygit! I haven't put this into practice yet so my info was just what I could gather online, great to hear from people actually doing it. I haven't tried to get actual liability insurance on the PMC, but it seems like either way if I run it correctly there should be some benefit to liability there, which is what I'm looking for.

On another note, this seems like an affordable way to create separation and protection from properties that you personally own and manage (even if they are under LLCs themselves). I'm surprised this isn't a more well-known strategy.

From what I'm seeing, it seems to be fine to own/run the management company as long I have contracts in place and corporate veil in tact.

That's my whole reason for doing it, actually, since they are all my rentals I'll be managing.

Am I wrong about this?

Hi BP - 

I wanted to ask the community if any investors use management companies as a form of liability protection? I self manage 14 units and am considering starting a separate property management company as an additional liability shield from tenant lawsuits. It seems as long as I follow corporate guidelines in terms of banking and not piercing the veil, the property management company can provide an extra layer of protection since it's a separate LLC with it's own liability insurance. I've researched the rules to put this into action, but wanted to reach out to the community and see if other investors are employing this strategy? If so, what are the pros/cons to this approach?

Thanks!

Tyler

Hey BP Community,

Adding another deal to my thread here - I recently analyzed a 2-family in Wakefield, MA (28 Lake St) for a client and saw a potential 51% ROI through a condo conversion strategy. Unfortunately, someone else got to it before we could move forward, but I wanted to break down the numbers and approach for anyone interested in similar deals.

This property had a unique setup—originally a single-family home in the front with a townhouse-style addition built in 1990. It was an ideal condo conversion candidate since there was only one shared wall, and parking and yard space could be split evenly. The back unit, built in 1990, was in great shape with AC, a new foundation, hardwood floors, and a solid layout. It only needed cosmetic updates. The front unit, which was the original SFH, needed some structural repairs due to settling near a stream, but a structural report was already completed by the seller.

The strategy was a hybrid condo conversion approach. First, renovate and sell the back condo since it needed the least work and was most appealing to buyers. Then, use the proceeds to clear the loan, leaving the front unit owned outright. From there, we would complete the front unit renovations and either keep it as a rental or sell it as a second condo.

Here’s how the numbers looked:

• Purchase Price: $805,000
• Down Payment (20%): $160,000
• Back Unit Renovation Costs: $118,000
• Front Unit Renovation Costs: $140,000
• Total Cash in Deal: $412,000

Projected sale of the back unit was $650,000, which would have paid off the loan, leaving the front unit free and clear. With the front unit valued at $625,000, that would leave $213,000 in equity. Divide that by the total cash invested, and you get an ROI of 51%. However, these numbers could vary depending on loan rates for the invested capital.

This deal required a strong capital position, but it highlights how lucrative condo conversions can be in the Boston area. These types of opportunities still exist, though competition is high.

This is a bit of a high-level analysis so I understand there's some nuances I'm leaving out, but would love to hear thoughts on this and if anyone is finding similar value.

Quote from @Kasey Mauro:

Hello !

I am a newish agent & now embarking on the exciting journey of  multi-family investments. I'm actively looking for multi- family oppurtunities in MA but despite many offers  I am not having any luck with what seems like a highly competitive market. I look forward to learning more to help me win some of these oppurtunities. 

It's hard out there for sure. One tactic that might help is to look at properties that have been sitting because they're usually over-priced. If you can do the work to get the price down, you can get potentially get an accepted offer when others wrote it off. This is a LOT of work and you'll get rejected many times, but in this market this is the type of effort that equates to deals.

Quote from @Benjamin Hernandez:

@Tyler Munroe, Thank you for the insight. After analyzing some deals, I'm quickly realizing that in order to cashflow in the Boston market, I'll need at least three doors. Feel free to send me a note with your availabilty over the next few days to connect.

 Sent!

Hi @Jocelyn Coo - welcome to BP! I'm very much involved in the Boston market and can tell you that flipping has gotten extremely competitive. Unless you find a deal off market directly, you're often up against seasoned investors with distinct advantages in funding and experience.

For newer investors, the live in flip may be the best way to gain an edge over pure flippers, as you can usually offer a bit more since you're looking at it from a longer term perspective (2+ years as opposed to flipping it ASAP).

I'd also recommend house hacking a 3-4 unit property and fixing up the units as they turn over. Properties in this range provide enough rental income to potentially cover your entire mortgage, and you can work towards a BRRR as you slowly renovate the units on your own time.

Happy to connect and talk about all your options!

Hi @Benjamin Hernandez! Boston is a challenging area for buy and hold in the current market, but we're starting to see some value in 4 unit properties. If you're looking for cashflow, you may have to consider 3+ unit properties, as traditional 2 families don't seem to fit the bill anymore.

Happy to connect and chat a bit more about your goals.

@Brian J Allen Thanks for posting this, great to hear different perspectives on this issue! Funny, I was advising a friend heading into retirement on your exact same question and we came up with a solution that hasn't been discussed yet. They've lived outside of San Francisco in an extremely HCOL area for the past 30 years. I would estimate they're looking at cap gains in the range of 2-2.5M when they sell, and this is just a traditional SF home. What we decided is to have them rent the space for at least two years (there's no mortgage so this is nice income for them) and then after that make the decision to sell OR 1031 since it's technically an investment property and they've lived in it for 2 out of the last 5 years. It looks like there may be ways to utilize both the primary residence exclusion and a 1031, but we'll talk to a CPA down the road about that (or if anyone here has insight on that please let me know).