Posted by Frank Chin on March 01, 2001 at 11:40:04:
Thanks Fred:
I checked on the internet in preparation for a trip up there. There’s a Worcester county and the town of Worcester.
Homes in the Masslive.com WEBsite for Worcester listed from 57k to 115k. Surrounding towns feature home at 250K to 285K or more.
As you said, most of the homes are 100 years old but I’m definitely encouraged by your post. I’ll see what I can do i the way of Rehabs
Thanks again.
Rehabbing in Springfield MA - Need Advice - Posted by Frank Chin
Posted by Frank Chin on February 22, 2001 at 06:35:25:
I live in New York City but currently considering doing Rehabs in central Massachusetts, in and around the city of Springfield for two reasons:
1- Single and two family wrecks can be bought for 30K or less, rehabbed for 20K to 25K, and sell for 65K to 75K - so I’m told.
2- My niece and her husband, Rob, are rehab contractors, and had done between 15 to 20 rehabs in the area in the last several years with a local investor no longer doing it. They’re looking for a new investor - ME !!
So I spent the last weekend there looking the town over, as Ed Garcia would say - hit the streets. Here’s what I found:
a) About two pages of foreclosures and auctions in the Sunday Real Estate section.
b) Drove by some of the rehabs he’s done. Pointed out the ones that were sold. BUT, several finished rehabs were the market over a year. One was with an out of state rehabber hoping to do do another once he’s got this one sold. I was thinking - that could’ve been me.
The other property was with the local rehabber - who had a for sale sign on the front lawn for the past year. I was wondering because he’s asking 75K and the neighborhood didn’t look so bad. He’s currently collecting $1,300/month rent - so I’m told. I’m also told he paid 2K for it and spent 40K rehabbing it. Rob showed me the before and after photos from his album.
d) Checked out one property listed for 24,900. Looked through the windows - inside needed extensive work. Rob was itching to do it. There’s boarded up house across the way. Wanted to do that one too!! The house next door had REMAX for sale sign proclaiming “Seller Financing”. Half a dozen other houses on the same street looked OK.
e) Drove by some VA and HUD stuff that’s been around for a year or so awaiting buyers. Rob had looked at some of them with other investors.
f) Checked out different neighborhoods. Just in any other town, they range from historic districts to war zones.
g) Called a few realtors about their listings. But I’ve been calling realtors for the past several weeks - and they by in large are not creative. One started reading MLS listings of properties in the 75K area. I asked - how long they’ve been on the market? “500 Plus days” was the answer. When I said “Oh my !!” - she replied “I always start with the oldest listngs”
Oh well.
I came back to give it some thought. Told Rob that I’ll be returning to check things out more thorougly. My preliminary thinking:
A) I might have a tough time unloading these things.
B) Maybe call the the owners of the unsold rehabs? Offer to L/O nad try selling them myself? Then I can find out why they’re not selling? Suggestions here.
C) Forget B - and go to the sheriff’s sale amd auctions and see how much they’re going for. See who shows up to bid and check the areas where these things are.
D) Talk to mortgage brokers about financing for buyers only after I have a better fix on things.
E) Wife thinks I should call half a dozen brokers to look at lots of propertes - just to get the feel? I think looking up comps on the internet and driving by the house would do just as well. Paralysis of analysis here?
Question for experienced rehhabbers out there:
Re: Rehabbing in Springfield MA - Need Advice - Posted by Nate
Posted by Nate on February 22, 2001 at 09:18:45:
Sounds like a tough market. Perhaps offering owner-financing and selling the notes would be a better strategy here.
I might try
F) Put ads in the paper - 3BR homes, ___ area, owner financing with $3750 down, $550/mo (or whatever the numbers would be) and see what kind of results you get.
That should tell you a lot about the buyer situation.
NT
Re: Rehabbing in Springfield MA - Need Advice - Posted by Jim Rayner
Posted by Jim Rayner on February 22, 2001 at 07:56:11:
Frank,
Welcome to Massachusetts. Springfield is an area I have been watching for the past 9 years. What you see today is the best its been in that time. although there has been a come back from the days of 0f 25% vacancy rates, Springfield has not enjoyed the economic resurgence of the Eastern half of the state currently enjoying .6 percent vacancy rates for nearly 3 years now.
From about Worcester county westward there has been very little growth in market rents probably due to the high vacancy rates. There are many multiple unit properties listed as well at seemingly great per unit costs until you look into the vacancy and credit loss issues in these markets.
I looked at one last year 178 units …great neighborhood but 25% vacant and needed major rehab and had below market rents. Seller had bought it the previous year for 600K as an REO wanted 2.1M and hadn’t done much if anything to the property in that time. I passed.
There are several other cities in this region all with similar problems Pittsfield and Holyoke. Paul(MA) can tell us about Pittsfield.
The current wave of growth ends at western side of worcester county. People have been driven from the coastal regions due the high cost of housing, congestion and a need for open space. Worcester county has enjoyed growth over the past five years, well ahead of the year 2010 projections. The vacancy is in the less than 3 percent range with increasing demand rental rates are beginning to climb. With the commuter rail system extending to this region many are moving to the “country”.
Hopefully Paul will jump in here with his report on Pittsfield.
Currently Selling a Condo there - Posted by Frank Chin
Posted by Frank Chin on February 22, 2001 at 12:13:39:
Placed a condo for sale downtown Springfield through a realtor since December, but hadn’t gotten any offers. She blamed the weather. We just extended the contract to May.
If the market is that tough, after May, I’ll go up there and camp out in the condo myself if I place the ad in the paper, with wording you suggested. We could also rent it out again, as we were always able to rent it since 1992.
Pittsfield - Posted by Paul_MA
Posted by Paul_MA on February 24, 2001 at 03:07:10:
Hi Jim, Frank
Here’s my Two Cents about western MA:
There is excess fix-up property here. If you tell the realtors you’ve got money, they won’t leave you alone. There are better deals than they can provide if you get to the owners first. One fellow in eastern CT wants to give his Pittsfield property away.
Rents are low here, kinda like northern NY, from where I recently moved from. Rents won’t be rising soon. (In Pittsfield)
Properties stay on the market for over a year on average, and realtors don’t seem to care about anything that isn’t in mint condition.
Make lowball offers, get rejected, then wait it out. As long a you MAKE an offer, they will remember you.
Good region to buy, fix and hold paper. Employment here isn’t strong, but I’m comfortable with a market like this.
Still getting to know the area here. Not completely severed from NY yet.
Been spending all my money on courses, so I may pass this year on the convention.
Paul_MA
Thanks - I’ll check out Worcester - Posted by Frank Chin
Posted by Frank Chin on February 22, 2001 at 12:04:46:
Thanks for the helpful info. The rehab contractor, Rob, mentioned Worcester is an active rehab area. He told me its a good 45 minutes drive for him and the crew, which is why he hasn’t done anything there.
Sounds like from your analysis that economic activity is expanding westward, and reached the western edge of Worcester. That might be where we should hit the streets.
Haven’t checked prices yet. things might be easier to sell, but harder to buy.
Re: Currently Selling a Condo there - Posted by Paul_MA
Posted by Paul_MA on February 24, 2001 at 03:10:51:
Dump the realtor and hold paper.
Everyone is getting their tax returns right now. Cash in on it!
Paul_MA
Re: Currently Selling a Condo there - Posted by Nate
Posted by Nate on February 22, 2001 at 12:50:06:
Also keep in mind that, all other things being equal, a condo usually takes longer to sell than a SFH except in condo-heavy markets like Miami Beach or such…
Re: Pittsfield - Posted by Frank Chin
Posted by Frank Chin on February 24, 2001 at 10:47:25:
Hello Paul
Thanks for responding.
Just wondering - had you been successful in fixing, and holding paper? OR know people who did?
I was also thinking along the lines of looking at larger apartment buildings. But looks like regular Realtors don’t handle them, as I have called several. Then it might be an REO type of thing. One Realtor remarked “God bless you. There’s so many professional tenants up here!”
I was told by my neices husband, the rehabber who he worked with bought an apartment building for $200,000 with a $150,000 rent roll. It was by a bus stop which is important. So even if half the people actually paid, he’s ahead of the game. Sounds easier than rehabbing.
Re: Thanks - I’ll check out Worcester - Posted by Jim
Posted by Jim on February 25, 2001 at 10:38:12:
Hi. I live east of worcester 1/2 hour. The market for single families is very hot, people looking for those and cannot afford are buying the multi families instead.
I’ve read alot, need the working experience.
good luck
You’re Right - I should’ve Dump the Realtor - Posted by Frank Chin
Posted by Frank Chin on February 24, 2001 at 11:06:11:
You’re right Paul
I picked this women as her firm managed the condo. After speaking with her a few times, I thought I might be better with someone more aggressive.
First, her office hours are from from 10:00 to 3:00, but she’s rarely there. “Better talking to her at home” I’m told.
OK, call her at home a couple of times. Half the time I’m placed on hold while she’s yelling at the kids or take another call coming in from call waiting.
Right now, I have a real estate deal to wrap up in New York, hopefully mid April. I got the feeling she won’t have the condo sold by May. Soooo, if I spend May, June camping out in Springfield, in my own condo, I can probably have it sold and scout out Pittsfield, Chicoppe, Holyoke, Worcester at the same time for some deals.
Re: Thanks - I’ll check out Worcester - Posted by Fred
Posted by Fred on February 27, 2001 at 14:53:12:
I am originally from Worcester and still have family there. I can tell you that Worcester is a good area to do rehabs in. It has all the major ingredients you need to be successful in the business: