2021 Real Estate Observations (Springfield, Brockton, Randolph: heating bill, pictures, market)

[msRB311]

It could be the time of year but I feel like in my area the market is cooling down a bit. I saw a few homes listed at 699-750k when they easily could have been 850k a few months ago. One I was very surprised to see listed at 599k. It is dated...but that hasnt seemed to matter. I'm sure they'll go over asking...but definitely seeing some lower prices.

[massnative71]

Originally Posted by id77

Looking at this week's list for Back Bay, around 25% of transactions go to trusts/LLCs, and it's often difficult to tell if it's an individual looking for anonymity or a tax shield for their heirs, an investor parking money, or a company slurping up property. In several cases, the LLC or trust buying the spot names themselves after the property they're buying. For example, this week 338 Comm Ave #3 sold to a buyer named "338-3 Comm Ave LLC" for $1.4 million. Buyer looking for anonymity? Probably, but could be an investor too.

Regardless, 25% in a market like Back Bay isn't exactly building confidence that the money has moved on to other places to buy. If you restrict to just properties over $1 million (excluding most studios and small 1BDs not likely to get "parking money" interest), the percentage of LLC/RET buys jumps to around 40-45%.

One notable on this week's transactions in Back Bay is "See Real Estate LLC", who bought 291 Beacon for $5,643,880 and 372 Marlborough for $7,056,120 -- that's over $12.5 million in one week. Local, foreign? Not clear. One individual doesn't need two SFH brownstones on different streets not abutting one another but within a quarter mile of each other, so I'm left to assume it's an investment toward future rentals or someone parking money.

The ultimate determining factor will be the desirability of downtown real estate. Other than the complaints of those who are disgusted/confused at the prices inner Boston now commands, what actual data have we seen from an economic perspective to suggest interest from investors in RE downtown has dramatically altered? Last spring, where some people saw pandemic apocalypse in the market, others saw the ultimate 'buy the dip' opportunity; fast-forward a year and the dip buyers seemed to be in the right. Rewind to 08-09 and the dip buyers again seemed to prevail. To be clear, I'm NOT dismissing your claim, but other than your sentiment, what data have you seen that suggests this particular correction/dip is going to finally be the one that doesn't rebound and make the dip buyers even richer?

IDK, I would want to see similar stats vs. say the same period two years ago.



I think a telling trend in an investor dominated market, would be the rental occupancy/current going rents. They were in the gutter last summer, have they rebounded at all?



But I do not AT ALL consider the pandemic to be a "dip" scenario in the slightest. The diminished supply it caused, in fact created an opposite scenario with inflated prices/offers. I'm not sure what you are talking about there? For 08/09, I would absolutely agree (BUY BUY BUY in that case). Or if we see a 20% correction or so at some point, then I might feel safe again.



And on the LLC thing, I have never heard of that being used as a desire for anonymity. My guess is that 99+% of those are investment properties.

[id77]

Originally Posted by massnative71

IDK, I would want to see similar stats vs. say the same period two years ago.



I think a telling trend in an investor dominated market, would be the rental occupancy/current going rents. They were in the gutter last summer, have they rebounded at all?



But I do not AT ALL consider the pandemic to be a "dip" scenario in the slightest. The diminished supply it caused, in fact created an opposite scenario with inflated prices/offers. I'm not sure what you are talking about there? For 08/09, I would absolutely agree (BUY BUY BUY in that case). Or if we see a 20% correction or so at some point, then I might feel safe again.



And on the LLC thing, I have never heard of that being used as a desire for anonymity. My guess is that 99+% of those are investment properties.

Rentals ticked back up a bit in 2021, but once the universities are fully in-person the consensus I hear is the market will soar right back. The majority of rentals in the area are to students or people doing residencies and the like, so that makes sense.

LLCs and RETs are also useful tax shelters for individuals. A property in a trust or LLC basically bypasses the whole estate/probate tax system, letting you hand off property to heirs faster and cheaper. Heck, I'm probably going to start using them on future properties.

[P Larsen]

The trust format is more typically just a vehicle to simplify transition of real property so that the use of courts is not required. There's nothing necessarily about tax reduction to the form.

[id77]

Originally Posted by P Larsen

The trust format is more typically just a vehicle to simplify transition of real property so that the use of courts is not required. There's nothing necessarily about tax reduction to the form.

Prevents the trigger of things like inheritance tax because it’s not technically inherited. That simplified transition IS the tax break.

It's also a nifty way to get around gift tax.

[robr2]

Originally Posted by id77

Looking at this week's list for Back Bay, around 25% of transactions go to trusts/LLCs, and it's often difficult to tell if it's an individual looking for anonymity or a tax shield for their heirs, an investor parking money, or a company slurping up property. In several cases, the LLC or trust buying the spot names themselves after the property they're buying. For example, this week 338 Comm Ave #3 sold to a buyer named "338-3 Comm Ave LLC" for $1.4 million. Buyer looking for anonymity? Probably, but could be an investor too.

Regardless, 25% in a market like Back Bay isn't exactly building confidence that the money has moved on to other places to buy. If you restrict to just properties over $1 million (excluding most studios and small 1BDs not likely to get "parking money" interest), the percentage of LLC/RET buys jumps to around 40-45%.

One notable on this week's transactions in Back Bay is "See Real Estate LLC", who bought 291 Beacon for $5,643,880 and 372 Marlborough for $7,056,120 -- that's over $12.5 million in one week. Local, foreign? Not clear. One individual doesn't need two SFH brownstones on different streets not abutting one another but within a quarter mile of each other, so I'm left to assume it's an investment toward future rentals or someone parking money.

The ultimate determining factor will be the desirability of downtown real estate. Other than the complaints of those who are disgusted/confused at the prices inner Boston now commands, what actual data have we seen from an economic perspective to suggest interest from investors in RE downtown has dramatically altered? Last spring, where some people saw pandemic apocalypse in the market, others saw the ultimate 'buy the dip' opportunity; fast-forward a year and the dip buyers seemed to be in the right. Rewind to 08-09 and the dip buyers again seemed to prevail. To be clear, I'm NOT dismissing your claim, but other than your sentiment, what data have you seen that suggests this particular correction/dip is going to finally be the one that doesn't rebound and make the dip buyers even richer?

It's pretty easy to find some information:

338-3 Comm Ave LLC was formed in June of 2021 for the purpose of "rental real estate." Google the owner and you find out who she is, approximate age, and her CEO husband. I'm guessing the LLC bought the property, she'll rent it for a while, and then they'll move into it at some point and pay themselves "rent." She's not hiding behind the LLC. She holds 3 other properties in Boston under her name.

SEE Real Estate LLC was formed in 2001 for the purpose of "real estate development." The manager of the LLC is listed in the annual report filed with the Sec of State. He has 3 other businesses there including another real estate holding company and a real estate agency. You can google him (again not hiding anything) and find his linked in page. Mass Land Records show the company owns 6 condos in Boston and that he also took a $9.9 million construction loan on those two properties at closing. Those were investments/flips. Again, he's not hiding behind the LLC.

Some developers create an LLC for every property/project they are involved in. It makes for clean accounting and allows for an easy sale when that happens. When the project ends, the LLC isn't renewed.
In the end, all the profits and losses from each LLC flows onto the personal income tax.

[id77]

Originally Posted by robr2

It's pretty easy to find some information:

338-3 Comm Ave LLC was formed in June of 2021 for the purpose of "rental real estate." Google the owner and you find out who she is, approximate age, and her CEO husband. I'm guessing the LLC bought the property, she'll rent it for a while, and then they'll move into it at some point and pay themselves "rent." She's not hiding behind the LLC. She holds 3 other properties in Boston under her name.

SEE Real Estate LLC was formed in 2001 for the purpose of "real estate development." The manager of the LLC is listed in the annual report filed with the Sec of State. He has 3 other businesses there including another real estate holding company and a real estate agency. You can google him (again not hiding anything) and find his linked in page. Mass Land Records show the company owns 6 condos in Boston and that he also took a $9.9 million construction loan on those two properties at closing. Those were investments/flips. Again, he's not hiding behind the LLC.

Some developers create an LLC for every property/project they are involved in. It makes for clean accounting and allows for an easy sale when that happens. When the project ends, the LLC isn't renewed.
In the end, all the profits and losses from each LLC flows onto the personal income tax.

Interesting. My Google skills must be getting rusty. Most don’t turn up anything or there’s 50 of them with none in the area. I’ll have to try some other strings next time I’m bored.

[robr2]

Originally Posted by id77

Interesting. My Google skills must be getting rusty. Most don’t turn up anything or there’s 50 of them with none in the area. I’ll have to try some other strings next time I’m bored.

www.mass.gov/sec allows you to search corporate records in the state.

www.masslandrecords allows you to search real estate transactions by county.

[id77]

Originally Posted by robr2

www.mass.gov/sec allows you to search corporate records in the state.

www.masslandrecords allows you to search real estate transactions by county.

Nifty, though I’m still not having luck with RETs in it. My guess is it’s only for LLC/corporation entities and not trusts?

Just in case we’re mixing acronyms here, I mean RET as Real Estate Trust, not transaction.

[robr2]

Originally Posted by id77

Nifty, though I’m still not having luck with RETs in it. My guess is it’s only for LLC/corporation entities and not trusts?

Just in case we’re mixing acronyms here, I mean RET as Real Estate Trust, not transaction.

I believe that RET's do not have to file annual reports to the sec of state. There is anonymity for a trust but other rules that LLC's and corps don't have.