Real estate investing in Boston is a popular topic! Rise Capital Co-founder and principal Gene Bernstein was interviewed earlier this year by Rick Scherer, Loan Officer with Guaranteed Rate and Ali Alavi with Alavi and Braza PC, hosts of Real Estate Radio Boston with on WBZ 1030 News Radio.
The pair asked Gene to share his expertise on a variety of topics related to real estate investing in Boston and the surrounding communities. Here are some highlights of the interview.
By way of introduction to their listeners, the hosts commented that Gene started his real estate career as an investor – buying and selling his own properties. He learned from his experiences and now incorporates that expertise in serving his investor clients. The interviewers noted that many people want to get in to real estate investing but need a guide, as you need to know what you are doing to have projects be profitable.
They further explained that Gene started in the business as a successful rental agent, and noted that this background prepared him in a unique way to service his current clients. Gene added he had quickly realized that working with investments was the way to go, and he began to doing his own personal projects and advising investors on theirs. He now co-owns a brokerage that specializes in investing.
“Having that rental background under your belt comes in handy with making assessments about what to purchase,” noted Ali.
Gene concurred and also added that he now leverages his significant contacts and trusted reputation among landlords to source proprieties for investors. He also finds properties for those that wish to buy more.
The interviewers called Somerville, Medford, East Boston Gene’s “sweet spots,” as his track record of successful investment deals includes many projects in those neighborhoods.
After discussing potential sellers’ attitudes toward selling in the current market – and noting that there are a variety of motivations for selling – the talk turned for a moment to 1031 exchanges, a topic Gene is quite knowledgeable on. Gene confirmed for the interviewers that there can be tax benefits of selling assets and starting a 1031 exchange in which sellers can then purchase property – a multi-unit building, for example.
Many types of investment financing – including 1031 Exchanges – involves using equity from a home to buy investment property. Gene employed this strategy himself when he first got started, leveraging current equity while creating diversified passive income.
Student Rentals in Boston: A Unique Market Factor
Next, investment in student housing in Boston came up. As Gene is well-versed in working with investors who wish to benefit from the lucrative student market, the interviewers asked for his insights. Gene noted that investor clients’ needs for expert support ranges from full property management for investors who prefer to be primarily hands-off, to help for those who wish to self-manage (and deal personally with all the day-to-day issues that arise).
The interviewers observed there are significant benefits to landlords who hire a Realtor who understands the nuances of this specialized segment of the market.
Gene agreed and gave a good example: Student rentals actually rent almost a year in advance in Boston. So, when a sophomore (or even a freshman) at Boston College arrives and is just starting the first week of classes, he or she already needs to be securing a rental for next year, because BC doesn’t guarantee housing for juniors. This is a fairly unique scenario, and having a grasp on the cycle of this process informs the marketing plan for these properties.
Increasing Rental Inventory in Boston
Next, Ali brought up the expected increase in inventory coming on the rental market. Most notable are the many luxury developments in the waterfront areas. He asked Gene if the increase in revenue concerns him for his investors… Is there – or will there be – an over-supply?
Gene responded that the luxury market may be affected, but he predicts the college market will remain strong. He described that a good indicator of the market is to examine what party is paying the fees – is it the renter or the landlord? In the past few years, renters are paying a half or full months fee as commission. Conversely, when Gene first started in the business, the landlords were paying the fees – and offering bonuses in addition to get their properties filled!
In the luxury market, the pendulum may soon swing in the direction of a buyers’ market, but Gene isn’t seeing that in the near future for the student rental market.
Flipping in the City
The conversation then to flipping, and Rick stated that if you want to buy and flip in the city, it can be more complex than flipping in the suburbs. There can be more moving parts. He asked Gene, “How have you become such an expert at navigating all of this for yourself and your investors?”
Gene responded that the key is knowing who your end buyer will be – for condos, multi-families, single families alike. What is a city buyer looking for? What do they not need? You have to avoiding both over-improving or under-improving.
He continued that having someone on your team who is tuned in to what a buyer is and isn’t going to want in those urban projects is imperative. This is going to be crucial to informing all the decisions you make about what to buy, the process of your renovations, the finishes you select, and what you spend on and don’t spend on.
For example in Somerville, Gene explained, a few years ago people were starting to seek homes there because there was parking available right in your yard. Now things have changed and buyers are happy to go there without parking in the yard – they no longer expect that. Gene explained that he worked with a client (also a friend) who was looking to invest in Somerville. “Everyone was passing over this one property because it didn’t have the in-yard parking… he ended up making a really good return because we sold it in a week without parking.” Other buyers were not aware the trend had changed, but we recognized the opportunity.
As time ran out, Rick had one last question to pose to Gene: “Are there still deals to be had in the city?”
Gene answered immediately and with one word: “Absolutely.”
Real Estate Radio Boston on WBZ 1030 News Radio airs Saturdays from 8pm to 9pm. It’s “a show on all things real estate.”
Lucas McGary of Marathon Moving also appeared on this episode of Real Estate Radio Boston. He spoke about how to prepare for a move and what to look for when comparing movers.
The full podcast of the episode can be heard here:
An abridged video segment from Gene’s appearance can be seen here: