Investors seeking Worcester multi-families

Photo | Grant Welker Apartment complexes in Worcester include the new 145 Front Street apartments, where rents are listed as high as $2,175.

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By Thomas Grillo

When Gustavo Veloz’s client from Revere was searching for a multi-family investment property, the agent took him to Worcester.

“Many buyers are priced out of Revere, where there are very few multi-family homes for sale, and the ones listed are very expensive,” said Veloz from Com-Pro Real Estate Services in Revere.

The MLS Property Information Network on Dec. 4 had 10 two- and three-family homes for sale in Revere. The lowest-priced property is a two-family for $464,900. The highest-priced is a three-family, six blocks from the Beachmont MBTA Station, for $899,900.

In Worcester, MLS listed 47 multi-family properties from a low of $159,000 for a two-family needing work on St. Johns Road to $498,000 for a triple-decker on Oread Place.

Photo | Grant Welker

The Central Building in Worcester has been made into affordable housing for seniors.

“For investment purposes Worcester makes more sense,” Veloz said. “The homes are unique, they are much bigger, and offer more space than multis near Boston.”

His buyer closed on a renovated three-family on Windham Street last month for $435,000. He paid $10,000 over asking price, but still considered it a bargain, said Veloz.

“Everything is so overpriced near Boston, it doesn’t make sense,” he said. “But Worcester is up and coming and buyers are paying attention.”

Rising demand, rising prices

From January through October, the number of two- and three-family homes sold in Worcester increased by 7% compared to the same period a year ago, according to Peabody real estate data firm The Warren Group.

As sales rose, so did prices. The median price for a two-family home reached $260,750 this year, up from $251,600 for the same period a year ago, a nearly 4% hike.

The price of triple deckers really sailed. Median prices for three-family homes rose by 19% to $336,750 for the first 10 months of the year, up from $283,250 in 2018.

“There’s lots of interest in multis, and there’s lots of interest in Worcester from Boston buyers,” said Arthur Berry, a broker at 1 Worcester Homes. “There’s lots of optimism because of the Worcester Red Sox stadium being built; and there’s a sense that Worcester is turning around, and they want to invest here.”

Klaudia Dang, a sales agent with Keller Williams in Worcester, said she’s seeing lots of first-time homebuyers who want to be owner-occupants. A big driver of sales is rising rents.

“Rents are so high it’s better to own,” she said.

The average monthly rent for an apartment in Worcester from January through October was $1,681, a 3.5% increase compared to the same period one year ago, according to RealPage Inc., a Texas provider of real estate data. The cost of an apartment in Worcester is above the national norm of $1,412, but well behind Boston’s average of $2,366, said RealPage.

Consider these advertised prices:

• At 145 Front Street, the 365-unit complex downtown, advertised rents range from $1,460 for a studio to $2,175 for a two-bedroom unit.

• Audubon Plantation Ridge on Plantation Street is advertising one- and two-bedroom units from $1,840 to $2,090.

• On the less expensive side is 22 & 26 Vernon Street Apartments, offering studios and one-bedrooms from $895 to $1,150.

Multiple offers, no inspections

Paul O'Rourke, the broker-owner of The O'Rourke Group Real Estate Professionals in Worcester, said he has noticed Greater Boston investors are flocking to Central Mass. where homes are less than half the price.

Paul O'Rourke, owner of The O'Rourke Group Real Estate Professionals

“The market has really shifted as a result of these out-of-town buyers,” he said. “I’ve sold 15 multi-family homes this year, and nearly every one of them had multiple offers; and most of them sold for well over asking price.”

Since the first of the year, 50% of the 365 Worcester multi-family homes listed on the Shrewsbury-based MLS Property Information Network fetched more than the asking price.

O’Rourke said many of the sales are from cash buyers who are not from Central Massachusetts and routinely waive inspections.

“Rather than pay $1 million and up for a multi in Boston, they come to Worcester where prices are much lower,” he said.

The shift began over the last two years, he said, as prices in Greater Boston skyrocketed. O’Rourke said the minor league baseball Red Sox's deal to move from Pawtucket, R.I. to the Canal District got the attention of out-of-towners.

“Four years ago, a multi-family home in the Kelley Square location, not far from the stadium site, sat on the market for up to six months,” he said. “Now, those same multis are selling for up to $400,000 with no problem. It’s incredible.”