Pricing?
OK No one laugh to hard. After securing my financing. I started looking around to purchase my first multi family. TOOO my surprise I experienced major STICKER shock. I used the monthly rental income x72 formula. Here in Mass that ='s between 250k to 300k max. The market pricing is currently around 360k to 450k for a 3 family. Am I just looking at the wrong time or are people just asking way 2 much. Any reccomendations out there I would greatly appricate it.
People are asking way too much. The fact is if it doesn't cashflow the way you want it to cashflow, it is a bad deal.
It's about property value and location. If yuo are serious about cashflow, look in the low-moderate income areas where more service people live.
Yup, sounds like you need to look elsewhere -- maybe way elsewhere. I'm not personally familiar with the MA market, but it sounds *inflated* to me.
It's great that you've got you're financing lined up, but you might have your horse before your cart if you haven't done your market research first. The best place to buy is where the local economy is in the crapper -- then it can only go up; if you're buying when prices are up... eventually they'll have to go down... in which case you can lose your shirt.
If you can't find something near you that's going to give a satisfactory ROI, then by all means look elsewhere... and if you don't want to own property far away from you (and there are good reasons not to), then find something else to do with your money. It's not worth getting into a bad deal just to get in.
Ont the othe hand, MA is a pretty big place. if you've only looked at a few properties, in one area, you might want to start casting your nets a little wider. Maybe Boston RE is overpriced right now, but Springfield is underpriced -- again I have no idea about the MA market per se, but the point is to find something worth investing in before you invest.
I see you are from Lowell. Are you looking there or in other locations? Is there much difference between Lowell (University plus local industry in city center) vs. some of more down market areas?
Have you looked at any 5 unit buildings. They are priced very differently as you likely know. Hence the value should be more based on the cash flow and less on the idea that someone could move in as an OO.
As Lowell is closed to NH have you checked the prices north of the boarder to see if there is much difference in pricing? The property taxes will likely be a lot different so the cash flow might shift a good bit.
Side note: Grew up in Lawrence and spent a year at U of Lowell before moving to WPI in Worcester.
John
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