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Marc Savatsky, Ray Hurteau, and Dan Rubin open up and discuss their own deals, budgets, and mistakes every Tuesday.
Not guru content. The stuff that decides whether a project makes money: what a triple decker really costs to build now, the retroactive Newton tax bill that landed on unsuspecting condo buyers, the helical pile surprise that cut a deal's IRR from 70% to 40%, the eleven-week-old demo company doing $6K a week against a $20K burn. They read their own numbers on air, including the ugly ones.
A typical week is some mix of: a breakdown of one of their active projects (an 1874 adaptive reuse in Amesbury, a Dorchester three-family held fourteen years, a waste and demo business), a guest who does one thing extremely well which include zoning attorneys, architects, labor lawyers, energy consultants and brokers. Ray's Multifamily Minute on the news that actually moves the needle, and a round of Overrated / Underrated / Appropriately Rated.
Heavy on Greater Boston and New England, because real estate is hyperlocal and pretending otherwise is how people lose money. Useful anywhere the same problems show up: permitting, capital stacks, subs, tenants, and the gap between what the spreadsheet says and what the building does.
For investors, developers, GCs, agents, and anyone still holding a W-2 while they figure out deal one.
Co-hosted by Ray Hurteau, Dan Rubin (Instagram: @rhinvestgroup), and Marc Savatsky (Instagram: @choose_boston)
Follow the Real Estate Addicts Podcast on YouTube: @RealEstateAddicts
00:04
So you were saying Ray that the. Yeah, just something came out. saw the other day home prices in the greater Boston area are now over a million dollars median home price. Can you believe that? a family. For a single family, excuse me. And it's just the greater Boston area. All of Massachusetts is like six. it didn't mention condos because that's more niche and specific to Boston, but. Well, how much is a dozen eggs? I got a dozen eggs for 99 cents at MarketBasket. Stop it.
00:33
Like, on the go. You should need those. Organic. How about a gallon of gas? No. It's like four bucks now. I guess part of my point is, it's just, you know, inflation's real and it hits everything. And that's why housing is a great store of value when you're fighting inflation. You know, cash melts like butter in an inflationary environment. That's why the stock real estate. Yeah. know. The stock market's going up too, because everything else is up. I mean, I think, have you seen any changes in the brokerage mark in terms of...
01:02
slow down in condo sales versus single family home sales. think single family home market in general is still very, very hot in great- Desirable suburbs with good school systems and you have a nice product to sell, it will sell, assuming it's reasonably priced. Multifamily in the city, I think is a little bit more challenging. I'm not gonna say that the market is dead.
01:30
That would be a gross over-exaggeration, but if you're thinking that like the Google Maps, it might be the yellow traffic signal, but it's not red. So good product in a good location at a price, which isn't what I would call aspirational. It's going to move. Yeah. see a lot of, mean, I've listened to and seen people talking about higher priced condo.
01:57
units are, there's a lot of that sitting. I even think there's, there's a lot of higher price single family sitting, but you probably still have such a huge backlog of first time home buyers that are still itching to get into the market. But for whatever reason between interest rates being higher and prices being higher or low inventory, they just haven't been able to jump in and they're just waiting for the opportunity. You know, you go out there and it's, it's.
02:26
It's sad to say that it's hard to find stuff under a million, like good newish product under a million dollars. Right. Yeah. And I don't know, typically you see an inverse relationship between interest rates and prices. And so I think that proves your point that the demand is real. And maybe on the supply side, if people don't really need to sell, then they're not going to. So maybe the flood gates of supply haven't really opened as much here either.
02:53
Well, we just sold those three condos in Dorchester and we sold all three of them. We didn't even have to put them on MLS, but the price point was between $600,000 and $700,000. It was that perfect, and all three buyers were first time home buyers. It was newly updated. had parking, you know, it had all the bells and whistles you're looking for. But it's hard to find that. Yeah, it is. Even in Dorchester, even in those types of markets, that type of product is usually
03:22
dated or older, it's not new construction. Because from a development standpoint, it costs over a million dollars to build a triple decker now. Yeah, that's where I was going. Yeah. So it's like, how do you even make those numbers work? You can't without selling the units for a million bucks. Yeah, everyone wants to shit on developers for only developing luxury units. But it's like, a two by four costs the same in an affordable unit as it does in a market rate unit. The difference between making it quote luxury
03:52
And you know, whatever you want to call that, like a mid-grade product, it's so negligible that you would be dumb not to like put in the, you know, the nice kitchen and upgrade the bathrooms. I was going to say, why, why not? I to say, why not just pare down those affordable units? I'm setting you up for the question there. You should know the answer, right? Well, I'm not following. take the affordable units. If they're going to be affordable, can you cut costs on those units? No, you're not in Boston. That's the answer. There you go.
04:20
Not any, well, they used products must be similar to each other. They used to allow that way back, because you would go into buildings and you'd be like, why is this unit such a piece of shit from a finishing sign point? But they took that So the real question is, if there is an affordability component, do you bring down the building as a whole, or do you just eat the cost on a higher end finish? never fur-fur. No. The cost, to Mark's point, the cost to increase the finishes
04:49
by and putting in that nicer kitchen or putting that nicer appliance package in. It's so negligible compared to all the other components of the building, right? Like whether or not you're doing a high-end home or a mid-grade home, to your point, the framing's the same, the roof is the same, the windows are the same, the HVAC's the same, majority of the electrical is the same, the plumbing's the same, like the installation's the same. Right.
05:17
Everything behind the walls. Everything behind the walls is mostly the same. I guess what I'm thinking of is the, I guess you're not doing like Wolf or Viking appliance packages. Right. Or something crazy over the Again, the difference in price, it's just on the, the overall project, the percent increase is so small. I agree with you. So. I was just teeing you guys up. You also don't wanna overbuild. Yeah, right.
05:44
So there's a kind of a fine line because you don't want to try to get that aspirational price in a market because I don't know. It's challenging because sometimes in a soft market is when you actually do need to reach deeper and it's a gut check and it's a little uncomfortable, but you might want to go sub-zero wolf instead of. To set yourself apart, are you saying? Yeah, in a soft market.
06:09
gotta spend more to secure It's a risk, right? It's gamble that you're kind of have to roll the dice on to see. For sure. I mean. You'd rather spend the extra dollars to kind of get what you underwrote it at versus discounting to get that sale to close. It's sort of a which number is the bigger move. Yeah, yeah. Well, you said, so you saw that, you said earlier that the multifamily market in like,
06:37
Boston or greater Boston area is kind of softened. Yeah. Why do you think that is? Because if you can convo convert, are you saying in markets that aren't? It's a confluence of things. One, I think people are feeling less secure in their jobs. Interest rates is an obvious one. I think that prices have gotten to be very, price are very expensive. So even for a couple with both making good incomes, I think it's a challenge.
07:06
to make the mortgage. And I think the city of Boston has, you know, in soccer terms, has scored something of an own goal in the past few years with a lot of our policies that are causing businesses to The rent control stuff is very real.
07:27
So I think that kind of- But that's more on multifamily than- Well, we are talking Single family. Yeah, we're talking about multifamily. It's kind of softened a little bit. I think this might be a good opportunity though for, because I think we were talking, a couple episodes ago, we were saying, how do you start out or how do you get in the game? And we were talking about that it might be beneficial to buy a multifamily and house hack it. And you live in one unit and rent the other units out.
07:56
And it might be a good opportunity if the market is a little soft, there might be a good buying opportunity for an owner occupant to come in and pick one of these up. And that might be a good way to get into the real estate game and like be a small time landlord, figure it out. It's a good try, kind of like tipping your foot into the pool kind of thing. Also a lot of these,
08:23
rules that are being put in place or policies that are being put in place don't affect or owner occupants are exempt from a lot of these policies. Card notes for them, So that's another benefit of doing that. I agree, I've always advocated for that. you know, if you want to get into development, that's one thing. I mean, maybe you buy the multifamily and then you, on turnovers, you can redo each unit and see what that process is like.
08:53
gives you the best of both worlds and you can see what it's like to be a property owner or a housing provider. So. I mean, are you seeing a lot of new development, multifamily condo product breaking ground or out there or have you seen a slowdown? Oh, certainly a slowdown amongst like our peers and friends who doing this type of work. Because obviously you're in the, so you kind of see the end stages of it or you're getting involved obviously early on.
09:23
Or how about maybe put another way, about transactional volume of existing products also? I mean, the market works. So you have supply and demand and naturally like the supply is being reduced. though demand may be down, the fact that we've started ERT permits in the city of Boston, it's some insanely low number. It's a very low. Hundreds of units have been built in the past. It's like at least 50 % below like you'd expect in like the small town I grew up in in New Jersey, you know.
09:53
So you have very low supply. So though demand may have softened, prices haven't because there's nothing coming on. Well, what's interesting is rents have softened. Yeah, yeah. So it's kind of weird. I think we're in a very weird standpoint when it comes to rents because, go ahead. I have a theory. I mean, I think obviously with the international students, I mean, the current political climate is hostile to international travel.
10:22
residents, non-citizens. And so that demand side of the curve is definitely eroding. And I also think that we still have not caught up from all of the new deliveries over the last three to five years. Yeah. I think that there's been a lot of new product that has come online in that's kind of the tail end of that development boom, so to speak.
10:50
And it's probably gonna take, there's gonna be, it's always lagging. So there's probably gonna be 24 to 36 months before you start to see all of that stuff getting absorbed and nothing new being delivered. So you're seeing kind of rents softened because of what you were saying, and because there's still a of inventory, but at some point stuff is gonna get absorbed. mean, we're not, I mean, know Massachusetts as a whole,
11:19
was losing population, but I don't think greater Boston is the population is going down in greater Boston. Census data will reflect that, it's so, I think they typically, I think they typically look at like data from movers, U-Haul and that kind of stuff. It's impossible to really know, but I agree. mean, I think the demand, it reminds me in a way almost of what happened when all the lockdowns from COVID happened, right? The demand side got,
11:49
crushed, no one was traveling or moving. Even domestically, people were like, well, maybe I won't go to college or I'll do the first semester remote if that's what they're offering. And so that definitely messed with the rental market, but it came back once that relaxed more. And I think this is potentially temporary depending on how the midterms play out and ultimately 2028. think another thing that will be interesting to see how it plays out is to your COVID point,
12:18
when COVID happened and all the work from home stuff started, everyone skittered out to the suburbs and moved away from the city, but you're seeing a huge push from businesses to bring people back into the office. know, like my wife works for a very large financial services company in the city and she has to go back to the office full time starting in September.
12:48
If you start to see all of these companies bring employees back into the office, then it will be interesting to see if people start moving back because they don't want to, they're not going to, you know, they're not going to drive an hour and a half or have an hour and a half commute each way into the city when they have to be here five days a week. It's just not going to happen. that will be an interesting factor when it comes to either rentals or,
13:18
buying. think nothing correlates to happiness more than commute time. Like if you drive an hour plus to and from work each day, it's like that is your time to do you laundry, the gym. It's like 10 hours. Yeah. There's lot of people who do that. So you're right. Yeah. Interesting. Good insight. We're redoing our website right now and we had a choose boss. Yeah.
13:48
We had a topic, was like market blog. And I was like, can we call that insights? I don't think anyone wants to read blogs. That's true. Yeah. is so tough. It's very, blog is big on SEO though. I'm learning all about still trying to optimize. Yeah. They really want like you to post. like we're circa demo and disposal. Like we should be writing how to get a short form permit for demolition in city of Boston.
14:14
Blog post today, blog post tomorrow. That is so outsourceable to AI. Yeah, but they'll also catch you on that. yeah. But I thought that, yeah, I mean, I know that that lumped for SEO back in the day. It's still a big thing. That's so big thing. Or not using AI for SEO. AI, SEO is like a whole other specialty. that's- Because when you plug into AI, where like-
14:38
what demo and disposal company should I use in Boston? how do get Circa to come up as like top 40? I'll tell you how, you guys don't know how? Go ahead. this? You gotta hack Reddit, basically. Yes, that's a big thing. Yup, you start posting things on Reddit and mentioning them and then that's the current cred and I'm sure the algorithms will get updated and...
15:02
fine-tuned because that's what's being exploited. So is combing Reddit? It's using Reddit as a source. ChatTubeT heavily weights Yelp. There's some partnership between the two companies. Interesting. So if you advertise on Yelp, your ChatTubeT might be more likely. So it is interesting how the whole world is about eyeballs now, right? You could be a great service-based business, but unless people are clicking on your website or the various AIs are sending them to you. Or you're established enough. You're at a huge disadvantage. if you're established enough.
15:32
where you have so much word of mouth, then yeah, like it's so hard to get your name out there. you know what though, I'm starting to cut you off. I will say just on that point of search versus AI, AI results in general seem to be going back to what search was intended to be before it got exploited for pay per click and sponsored ads. Anytime you search anything on Google,
16:01
the first like 10 things are ads, sponsors, and yes, they disclose it, which is fine, but you're going back more to the organic side of things and trying to find something useful. And you don't see that yet, but I bet that will be coming with AI. You'll start finding sponsored ads. on the rental side too, right? Like where we're releasing up like larger rental buildings where you're paying a partners.com or Zillow or those guys, cause they have different tiered plans to get you higher up.
16:30
in the search results. We've been playing with that. And it's funny, because apartments.com used to dominate the game when it came to that. And we were finding, what was it? Because we were paying for apartments.com and Zillow. And it's kind of swung the other way, where the majority of our leads were coming from Zillow versus apartments.com. And I wonder why. I wonder if it's because...
16:56
Zillow now has better search or when people are looking for like finding an apartment, I don't know. Or does they have better credibility than apartments.com? I don't know why it swung that way. So we like lowered our tier on apartments.com and increased our tier on Zillow because we're getting exponentially more leads on Zillow than apartments.com. I think Zillow had the head start right from the get go before apartments.com. Oh, I thought it was the other way.
17:21
No, think Apartments.com went super heavy on ads, especially Super also regional, I'd say. Like, street-easy is everything in New York City. Oh, interesting. Oh, really? That's fair. That's a fair point. street-easy. Is it like their MLS? No, it's like their Zillow. Anybody using Craigslist still? Oh, jeez. Only for certain weird things. What about Facebook Marketplace? I was facing Marketplace. No, no, for rentals. Oh, I don't know. We were using it, and...
17:49
knew a couple of people that had good luck with it, but there's pros and cons. But I think you got to be everywhere. Although play to the strengths. think Zillow has the- Do you do a lot of rentals or mostly for sale and like buyer? 70 % sale, 30 % of our business is rental. Oh, okay. Yeah. It's pretty healthy, Max. have some rental- The rental stuff is good. It's sort of like your base hits, keeps agents busy. That's kind of mine though. Yeah, especially right now.
18:17
Like we're really trying to make a push on finding agents who do a lot of rental, who are, want to transition their career more into sales. Because being a rental agent has always been a grind. It's always been the wild west, but right now it's worse than ever. Why? Cause the new rental laws, you know, who pays the broker fee? Not the tenants. I was gonna say, it's always gonna be the owner. and everyone's gonna, so it's a, that's. So it's kind of a, it's been a, it's been tough. Yeah, so.
18:46
I'd imagine you're referring to what they're calling open listings where there's no fiduciary or agreement with like an owner potentially. Yeah. Well, uh, Hey, I think it's been a good episode. Interesting tangent at the end there, but market insights from a real estate addicts and choose Boston choose Boston. Thank you guys. Thank you. Uh, we're here for it. And if there's anything we can address or talk about topics you want to hear, please let us know.
19:13
So thank you for listening, rating, reviewing, and subscribing, and we will catch you on the next episode. Cheers. Bye.