Multi-Family Properties in Hartford County

We spend a lot of time talking about single-family homes and condominiums, but multi-family properties are another important part of the local housing scene.

Where are the the multi-families in Hartford County? As you can see by the number of contracts written on this type of property over the past two years, they are concentrated in just a few towns. Lots in Hartford and New Britain, and a solid number in Bristol, Manchester, and East Hartford. Beyond that you have to really keep a close eye on the market or the opportunities will sneak past.

The overall number of contracts in 2010 was actually up slightly versus 2009, which is a big difference from what we saw in the single-family and condo markets. Even more interesting, there was a slight decrease in activity in the two biggest markets, but nearly all the other towns added just a couple deals and made up the difference.

Inventory is on the high side for the towns with lots of multi-family housing stock. This is partially related to the higher rate of financial distress than with other types of properties. Many investor-owners felt the pain of the housing crisis first (uh oh, prices aren’t going to continue rising) and gave up their multis early in the game – sometimes it was voluntary, other times not. Either way, the distressed sales have increased the available inventory and pushed prices down for everyone, even quality properties.

Our main observation is that even with the bloated inventory, the best multi-families sell quickly. There are financially strong investors out there looking to add to their portfolios, and the cap rates are much more attractive now that prices have fallen. Buyers on the hunt for a top-quality multi need to (1) have their financing in order, (2) have an automatic MLS search set up to get the new listings ASAP, (3) have a flexible enough schedule that they can visit the home the first day or two, and (4) be comfortable making quick evaluations/decisions. The good stuff sells very quickly if it is priced right.

7 thoughts on “Multi-Family Properties in Hartford County

  1. Thanks, I need to keep tabs on the comings and goings of the multi-family units, they generate larger than normal amounts of MSW.

  2. I would think that finding a good multiple family must be really difficult. Aside from wanting something in good shape in a good location with appealing rental spaces, I would guess most come with tenants in place, and I would really hate to buy someone else’s problem tenant. I don’t even know how you would determine this going in. I guess it is just a risk you take. You could do some intelligence work with a tenant roster and some background and public info databases, but still. I can say in my limited landlording experience, tenant selection is very difficult to get right and is the most important business decision.

  3. Josh- often properties come vacant or with all tenants on month-to-month leases for this very reason. Owners time their sale with the expiration of leases because they realize many people would want to find their own tenants.

    Lenders obviously like to see tenants in place but do allocate for some vacancy rate while qualifying the buyer, so a period to find new tenants should be worked into their calculations.

    If there are longer term leases in place it’s important to have a review of those leases as part of the contract process. The new owner will be taking them over from the existing landlord, so it’s important to understand what they’ve been signed up for. Also, it’s important to know what deposit money has been taken and that be transferred as part of the closing so there are no issues with returning security deposits when a tenant’s lease ends.

    All sorts of things to think about with multi-families. They’re definitely not for everyone.

  4. We looked for a multi-family for awhile in Hartford for investment and/or family/investment, and at one point for our occupancy. Ironically, I was just looking last night on what was on the market in Hartford in that category as I was consideing what plans to hatch….. When we looked, it was tough. Many were in very poor shape – but managed to keep tenants so the price didn’t reflect the costs of remedying all the deferred upkeep we saw. Some I felt almost angry at the landlords for having so little pride in ownership. Some of that may also have been the tenants perhaps – but mostly I blamed the landlords – especially those that didn’t live in the neighborhood. But I guess for some its really just a case of cash flow, and no different than owning any other commodity or stock. That’s probably why I’d lose money on it as an investment. And not sure I”m up for the challenges that may come up as to effectively dealing with tenants. Still, I’m keeping my eye out this summer. A small apartment house would be another option – but that would be like a little part-time job to run it I imagine unless you wanted to pay out for management company.

  5. As far as I know, just having a tenant on a month to month lease does not grant the owner much freedom. If the tenant doesn’t want to move, you would need to evict them, which can be a very slow and expensive process.

    We are learning a lot owning our house, it is definitely toughening me up, at first I was trig to be nice and very accommodating to the tenants, learned my lesson and now everything is quite strict and businesslike.

    @Michael, sometimes just handling one rental apartment feels like a part time job! I can’t imagine owning a small apartment house without outsourcing the management. You would never be able to travel.

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