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BBRRR Investment Strategy (Boston’s Buy, Rehab, Rent & Refinance)

One of the best ways to invest in Boston real estate with little to no money out of your own pocket, is the BRRR strategy. BRRR stands for Buy, Renovate, Rent & Refinance. With this strategy the goal is to buy single or multifamily homes that need significant work. You would then renovate this property and bring it to current rental standards. Once the property is fully rehabbed, and rented, you would seek out permanent bank financing to pay off your construction financing.

Part 1: The goal is to create enough equity via your rehab, and to stabilize the property with tenants, that the banks will not require a down payment when you attempt to refinance. An ideal situation is laid out below.
Purchase Price – $350,000
Rehab Cost – $130,000
Financing Cost – $20,000
Total Invested = $500,000 (Refinance Amount)
ARV = $625,000
$500/ $625 = .80 or 80% LTV

Part 2: The second part of the equation, is making sure that your rents fully cover your monthly debts after refinancing. In other words you need your income to exceed your expenses and to producing cash flow for the banks to consider this a good loan. The numbers should look similar to below.
Total Rents Collected – $6,000 Monthly
Mortgage Payment – $2,000
Taxes & Insurance – $1,500
Other Cost = $500
Total Monthly Cost = $4,000
$6000 Rents – $4000 Expenses = $2000 Monthly Cash Flow

Want to see a current BRRR project in process? Come check out our latest 3 family investment as we prepare to bring this rental property back to life! This is a buy and hold deal that’s getting a full rehab. During the property tour we’ll explain:
• Exactly how we acquired the property
• How we raised the capital to purchase
• Our rehab budget & plans for the units
• Our timeline & issues we’ve had along the way
• Rental expectations & cash flow projections

For more details and to RSVP to the meeting, please visit the link below. Hope to see you there!

(BRRR Strategy) Buy, Rehab, Rent, Refinance – Property Tour!

Saturday, Mar 18, 2017, 11:00 AM

701 Walk Hill Street
02126 Boston, MA

56 Wealth Builders Attending

Come check out our latest 3 family investment as we prepare to bring this rental property back to life! This is a buy and hold deal that’s getting a full rehab. During the property tour we’ll explain:·  Exactly how we acquired the property·  How we raised the capital to purchase·  Our rehab budget & plans for the units·  Our timeline & issues w…

Check out this Meetup →

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On December 14th, 2016 I finally closed on my first rental property! For over a year I have been educating myself as much as possible in real estate investing to one day finally take the plunge. That day finally came. A couple months ago, a property on the MLS cam back on the market. It was a 3-family in Mattapan that needed a decent amount of work to get it up to rental condition. Listed at 390k, I initially tried to get the property at 350k, a price that, once I ran numbers, felt would put me in the best position when it came time to refinance out of my purchasing loan, which I ultimately used hard money for. I submitted the offer with no contingencies, all cash and gave up the buyer’s side commission because I knew on the back end it would be worth it, but that was still not good enough and after some continued negotiation, had to settle for purchasing it at the full asking price. This would create additional challenges, but at the end of the day, if you believe in the deal, you’ll make it work.

Financing the deal was another challenge as I really wanted to find a lender that would finance a percentage of the purchase price and renovations. It was not until it was too late that I found a couple lenders where this was possible. At least for the next one, I will have this component lined up for a more streamlined process. I ultimately had to settle on using hard money, which is great for a short turnaround, but is so incredibly expensive to someone like me who hates to waste money. When it comes to hard money, if you have any other option, please use it instead.

Since the closing, it has been a mad scramble to start the renovations and make sure everyone is working constantly and as efficiently as possible. This is just another thing you will have to do when you slightly overpay for a property. Despite the challenges early on, I couldn’t be happier or more excited to have closed on my first rental property. Every day that passes makes me want to find the next deal more and more. Just always be ready for the more than likely roller coaster ride!

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Unrealistic Buyer Expectations (Pt II)

I think I came down a little hard on some buyers the last time I discussed unrealistic expectations. Although I stand by my statements… I do understand that misinformation is the root of all of this. That being said… came across two other misconceptions we hear a lot in this business…

Foreclosure sale and Auction purchase as a first time home buyer.

Most people do not understand the auction protocol, and do not understand it is sometimes difficult to finance. Definitely not possible with traditional financing as auctions need money almost immediately, sooner than a traditional lender can provide.
Foreclosures are an awesome option for getting properties at a discount. Unfortunately Boston is extremely competitive and you are probably competing against cash buyers… you don’t stand a chance as an FHA buyer with these properties unless no investor wants it. 
 
Many first-time homebuyers have FHA pre-approvals, so they have other stringent property condition requirements to facilitate their lender. If you’re going conventional shoot for the stars. 
 
I think my favorite buyer is the one where every property is overpriced. I switch the question on them, and advise one day they’ll be there seller. Are they going to offer a deep discount. Probably not!
This is an off the cuff post so not as detailed as my last on this topic but still… let’s be realistic this  house hunting season.
 
Be sure to sign up for our blog alerts to stay current on what’s happening in the real estate world. 
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5 Need Funding For Flips? Here Are The Top 5 Hard Money Lenders In MA

Are you looking for funding for you local real estate flips? Great, Below is a list of the TOP 5 HARD MONEY LENDERS in the Massachusetts area. If you have a deal pending, or would like to get more information about working with these lenders, please contact Doug Medvetz at 617-297-8641.

Endeavor Capital is a “direct” real estate lender that has been providing investors with immediate access to short and intermediate-term commercial loans for over 15 years. Endeavor serves a growing need for experienced investors looking for creative, situational financing within a tight time frame to fund acquisition, construction, and other investment projects.
Unlike commercial banks, Endeavor makes asset-based lending decisions that focus on the financial strength and underlying value of the collateral that secures the loan and not on the credit history of the applicant. The length of these loans is generally between six months and two years for amounts ranging from $100,000 – $10,000,000.

Conquest Capital specializes in private lending secured by real estate. We work with experienced real estate developers and investors primarily in Massachusetts and California to finance the acquisition and construction of non-owner occupied residential properties. The firm’s principals have a combined 30 years of experience in all aspects of real estate lending and investing. Having spent years developing real estate prior to launching the firm, its principals have built Conquest’s private lending platform from the ground up. Since the firm’s inception, its principals have consistently invested their own personal capital into its lending projects alongside its investors.
Conquest Capital’s core investor base consists of individual as well as institutional investors. Our mission is to provide investors with attractive current income and total returns while remaining focused on capital preservation. We aim to deliver real value to investors and to outperform the returns of other secured investments in the marketplace.

Commonwealth Equity Funding is a direct collateral based private real estate portfolio lender with over 50 years of collective experience. We provide investors with bridge financing to purchase, refinance, construct, or renovate their residential and commercial investment properties when traditional lenders cannot perform in a timely manner. Our fast, flexible, and creative financing solutions provide borrowers with near immediate approvals on asset based loan scenarios. Our common sense lending guidelines are solely based on the underlying equity present in the real estate we are securing, the likelihood of default, and the marketability of the property. We use stringent loan to value guidelines and have a hands on approach to our loan investments. Origination, processing, funding, and loan servicing are all handled by our in house team. This allows us a unique understanding of our borrowers and loan portfolio at all times. Our reputation speaks for itself by the repeat clients that choose us for their financing needs year after year.

Grand Coast Capital Group is a national private lending firm based in Boston, MA that provides creative, short-term financing to real estate investors, builders, and developers across the country. As a direct lender, Grand Coast has the ability to analyze and fund loan requests very quickly in order to meet time-sensitive transactions.
Grand Coast finances residential, commercial, industrial, and multi-family properties as well as entitled land, with a primary emphasis on 1-4 unit residential properties. We do lend in all 50 states, but with a particular focus on the Northeast Region and Southern California, in addition to targeting experienced local investors and operators in their perspective markets.
Grand Coast targets lending opportunities that do not necessarily fit within the parameters of conventional bank financing either due to time constraints, complexity, or value-added nature of the transaction. We primarily make first-position mortgage loans with a maximum loan-to-value of 75%. Our typical loan size ranges from $100,000 — $3,000,000.

The Raymond C. Green Companies offer creative, short term financing to builders, developers, and real estate investors throughout New England and Florida. We specialize in providing fast, flexible and reliable alternatives to traditional bank financing. We recognize the importance of customer service, building strong relationships, and QUICK CLOSINGS.
We provide financing for the construction of single family homes, subdivisions, renovation projects, condo conversions, condominium developments, bridge loans, permitted land development, commercial properties, DIP (Debtor in Possession) loans and more.
We are proud to have delivered over 50 years of professional service and look forward to earning your business.

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New Year, New Home projects. When you start the process of making renovations, make sure you ask the right questions. Many people fall victim to the bid quote they get from general contractors to renovate their homes. Our goal is to help you stay on budget! No one should pay more than they have to for any service.

Let us use the renovation quotes we often get for a kitchen remodel… many bids are likely to only cover about 33-50% of the total cost depending on the contractor.
The question then becomes, how do YOU the consumer protect yourself from predatory contractors who quote one thing and the final cost is dramatically different?
Ask the right questions upfront.
While the majority of general contractors include demolition, disposal and installation in their bids, many omit the cost of supplies/materials/hardware. If you are dealing with a novice contractor, they do not know the cost of  materials so they wait to price everything based on your specifications. The cost of materials varies tremendously by region, store, and your personal preference. For example, backsplash tiles can run from $7 to $90, a square foot.
ALWAYS ask the contractor what is included in the bid, then use those numbers to estimate further cost. Of course these tend to be ballpark figures but I would prefer to be in the same ballpark as my contractor than be rudely surprised.
A good rule of thumb is to research your potential contractor:
Speak with past clients
See their portfolio of work
Ask what is their statistics on quotes to actual final cost (you want to see if they have a history of underbidding to only cost more in the end or if they are always in the ballpark)
Research them on yelp, google+, Angie’s list (You want to learn everything about this person before you entrust them with thousands of dollars worth of work)
Other Good questions for the general contractor (unless they come highly recommended, I suggest you interview a couple):
How many years have you been in business? (You do not need 50 years of experience to do great work, focus more on quality than quantity. I know several contractors who have been in business for over 10 years but I would not trust them to do any work on my home)
Do you get supplies from a wholesaler (cheaper in bulk) or from Home Depot? If you value neighborhood stores, this is a great way to support local businesses.
What does your bid include? Is this a set price? If you go over budget, will you be responsible for the additional cost/ take it as a loss? (This is important to know upfront and GET EVERYTHING IN WRITING)
Obtain an itemized Quote and Contract and factor in 5% for miscellaneous overages but a good contractor should stay within budget unless they discover issues when walls are opened.
If your contractor does not want to provide a contract in writing with the breakdown of cost…RUN!!

Email us contact@mandrellco.com for recommendations of some of our trusted contractors or general questions.

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Word around town is that the big banks are going to start to foreclosing on many past due mortgages they have on their books. The feeling is they’ve been holding off until the economy shows signs of stabilizing and in many place we’re starting to see that stability. If you’re interested in locating investment opportunities through short sale and foreclosed properties, now would be a good time to start really eyeing to the market.

Here is our current Short Sale and Foreclosure list for Dorchester, MA.

197 Woodrow – Single Family
List Price: $235,853
Boston, MA : Dorchester 02124
36 Mount Ida Rd – Unit 3 List Price: $209,900
Boston, MA 02122
55 Devon Street – Unit 1 List Price: $234,900
Boston, MA : Dorchester 02121
123 Ruthven St – Unit 123 List Price: $241,000
Boston, MA : Dorchester 02121
77 Willowwood Street – 3 Family
List Price: $389,900
Boston, MA : Dorchester 02124
636-638 West Park Street – 3 Family
List Price: $424,000
Boston, MA 02124
47-49 Walnut – 3 Family
List Price: $480,000
Boston, MA 02122

Not interested in Dorchester? Are you interested in foreclosures and/or shorts sales in another area of Massachusetts? Please email (Contact@MandrellCo.com) your area(s) of interest and we can send you an updated report within a few hours.

 

 

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Come join us on September 19th (Quincy Marriott Hotel) for this year’s Real Estate Investor & Developer Trade Show. During the event we plan to have a great discussion on Hard Money Lending. Chris Tobin from Endeavor Capital will be joining us for the day to tell us about his business and to answer all your questions about funding deals through hard money.  Some of the points Chris will touch upon include:

• What is hard money and how does it work?

• What do lenders look for and how can I qualify for a loan?

• How do I get a proof of funds letter so I can make offers?

• What type of property will Endeavor will lend on?

• What if I have bad credit? Can I still get the loan? 

This educational seminar will take place on the same day and in the same location as the MA RE Investor Trade Show. Seating is limited, so please RSVP to save your spot. Only members of Boston Wealth Builders will be allowed to RSVP. To become a member, please visit the group website at http://www.BostonWealthBuilders.com. Membership is complete FREE and only takes a couple minutes.

Hope to see you there!

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Single Family Flip Opportunity – Norwood, MA

Are you looking for your next flip? This may be one you’ve been waiting for!

420 Prospect st Norwood, Ma – 

This is a single family condo attach.  The unit consist with 3 beds and 1.5 bath, living room and dinning room and a full enclosed attic that can be use as a bedroom, plus a basement. Wholesale price $ 280k … Comps in the area around $385k to $400k.. This property is located within minutes to Westwood neighborhood and major highways. Great location!!!

Photos can be seen with the following link

https://www.icloud.com/sharedalbum/#B0D59UlCqJsWVJp

For more information contact Julio Evangelista at 407-914-5344 or Julio@ComEquityFunding.com

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You hear people talk about flipping homes with no money out of pocket, but how exactly are they doing it? This FREE seminar is going to show you how to use private funds to buy, fix and sell property for a profit! The event topics will include:

· Private money – What it is, and why you need it to fund your deals

· How to find and sell yourself to private money lenders

· How to structure deals and make your private lenders feel comfortable

· Evaluating potential rehabs and crunching the numbers

· What to watch out for and trouble areas to avoid

This 1.5 hour seminar will be presented by Andrew Schena of Capital Equity Partners. Capital Equity has purchased and sold 10 of millions in Boston real estate since 2009 when established. https://www.facebook.com/CapitalEquityPartners

Saturday, September 19, 2015 – to Boston Marriott Quincy – 1000 Marriot Dr, Quincy, MA

Join Boston Wealth Builders and RSVP to the event! Membership is FREE  – www.BostonWealthBuilders.com

This educational seminar will take place on the same day and in the same location as the MA RE Investor Trade Show. Seating is limited, so please RSVP to save your spot. Only members of the group will be allowed to RSVP.    www.BostonWealthBuilders.com

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Attention Boston Real Estate Investors:

The Mandrell Co office has an off market FLIP opportunity in Weymouth, MA. It’s a 1450 square foot home with 3 bedrooms, 1.5 Bath home sitting on an 1 acre lot. The house is located at 641 Pleasant Street. The seller looking for cash offers and a quick closing. The home needs some work but has a ton of charm and character. Comparable sales in area say $400’s and none of the them are sitting on such a large lot.

Seller asking $259,000. Buyers to do own due diligence. Pending tax liens will be paid by seller at closing. Contact Willie Mandrell at 617-297-8641 or Willie@MandrellCo.com for more information and to schedule a showing.

Looking for other investment opportunities? Join Boston Wealth Builders! Membership is free and takes 2 mins to sign up. Join the group at http://www.BostonWealthBuilders.com

 

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Do I need different insurance if I’m house flipping? What type of coverage do I need for vacant homes?

Make sure you are properly covered! Vacant homeowners insurance (vacant home insurance hereafter) is special insurance protection placed on a residence that is expected to be empty or unoccupied for over 60 to 90 days, or perhaps much longer. Every insurance policy offered by a property insurer is different and there are even variations from State to State, but no “regular” homeowners insurance policy is able to cover a house that is not being lived in.

In order to properly protect the home, the existing policy needs to be cancelled and a special vacant home or vacant building policy needs to be put in place. A new policy has to replace the old. The vacancy policy is not the same as the existing homeowners policy in most cases. The homeowner has to understand what the differences are, and also should expect to pay much more for a vacant homeowners policy.

Read more at http://www.articlealley.com/article_818308_33.html?ktrack=kcplink

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FREE POF Letters/ Hard Money Pre-Approval:

Julio Evangelista and Commonwealth Equity will be providing attendees of the MA Real Estate Trade Show with Hard Money Pre-Approval Letters! If you’re getting into the flipping business you need a letter of approval or POF to make offers on offers on rehab deals. Come to the Trade Show and leave with a letter for your business! RSVP if you haven’t already… http://www.meetup.com/Networth-Investors/events/125269232/

FREE Business Head Shots:

Boston Photography is offering FREE head shots during the Trade Show! Get there early to make sure you don’t miss out. Use these photos for your business cards, website and lots of other marketing material.

Learn to Flip Houses W/O using Your Own Cash:

Andrew Schena from Capital Equity Partner will be teaching you how to find private investors, market your business to them and secure their funding for your real estate deals! If you’re in the business or soon to be in the business of house flipping you won’t want to miss this event. This event takes place prior to the MA Trade Show and will have limited seating. If you have not already RSVP’d please do so at http://www.meetup.com/Networth-Investors/events/130624832/

MF Real Estate Investment & Home Buying Seminar:

Interested in multifamily investing but don’t know where to start? Already own rental property and want to take your business to the next level? Come join us this Saturday for this Multifamily Investment event. Come listen, learn and share your experiences investing in rental real estate!

RSVP at http://www.meetup.com/Networth-Investors/events/133283712/

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One of the best things you can do as a new real estate investor in walk up and down the aisles of home supply stores like Home Depot & Lowes. Not that you want to be swinging a hammer on a job site, but there’s simply no better way to educated yourself on the cost for home repairs and upgrades. The knowledge you gain from this task will help you understand:

  1. The cost of construction materials and how easy or difficult a particular job may be. This will allows you to be better equipped you are when evaluating a particular property purchase. 
  2. How to negotiate with contractors for a particular job. For example, I know that if a contractor is quoting me $500 to replace a standard vinyl window, his labor must be between $250 – $300. I know this because and I can buy a standard vinyl window at HD for $200-$250. Now I can decide whether my contractors labor is worth what he’s asking, negotiate his price or gather other contractor quotes.
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Right now is a great time to be in the Massachusetts house flipping business! Real estate prices are seeing steady growth and home buyers are feeling comfortable again. The key to success in the rehabbing business is to have a great team of industry professionals around you.  There are so many steps involved in from the initial purchase of the property to the final sale, that you would be wise not to do it all yourself. The best flippers in the business build a good team of experienced people they can trust and that are experts in their areas of the business. Two industry professionals every rehabber must have in their corner are a good Real Estate Broker and a Money Man… a source of quick capital.

There are many real estate agents out there but only a few that truly have the experience and understanding of the Massachusetts house flipping business. You’ll want to find an agent or team of agents that understand what an investor is looking for and can locate homes that are potential flip candidates. The real estate agent you want is the one that can immediately see potential in a rehab project but can also steer you away from potential trap properties. The team member you’ll want can help you determine the property’s ARV (after repair value), has experience with the construction process and can help you determine the proper finishes buyers are looking for in for in that particular neighborhood. A good Realtor understands you’re in the business to make a profit and will often run the numbers themselves prior to bringing you a deal. This saves you a bunch of time from checking on properties that don’t make financial sense.

Having a good private or hard money lender by your side is also curial to your success. Many of the best deals come from sellers who need out of their homes quickly. Having access to quick cash give you the ability to close sooner and make your offer more attractive than someone searching for financing. Often rehab homes are in such bad shape that banks will not loan on the property and the seller absolutely needs to find a cash offer. The best way to find money sources is through networking with other investors and industry peers. You ideally will want to make some early connections so when you have a flip deal presented, you already have the mean to pursue it.

Want to build a good team of professionals quickly? Join a local real estate investment group. Two great groups in Massachusetts are Boston Wealth Builders and Metro West Real Estate Investors.  Join one or both groups and meet local real estate investing professionals. Find money sources, contractors, suppliers, legal representation and more. You can also meet other investors who could potentially become partners in your house rehabbing venture.  

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During these last two weeks I think we found a great contractor to help us with a growing property management business. The first two visits to the property I was there to see him fix a water stained ceiling. He was also hired to repair and paint the hallway. For this we left him the key. When we returned to check on his progress we were amazed. The walls, which were marked, stained, and rough now looked clean, smooth and really good from ceiling down 3 flights of stairs. There was no sign of the old stairwell. We also had the opportunity to watch him prep the front porches for staining and waterproofing. By the time he was done power washing and spraying, the wood looked fresh and full of color as if it had just been place there. I will be stopping by the property today to check on his progress. I’m expecting great things. Very happy because like with everything involved in running a business, it’s hard to find people that you trust. So far this professional relationship building experience has been positive.

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Saturday, September 14, 2013 11:00 AM   Hampton Inn 319 Speen St, Natick, MA

Interested in building a portfolio of rental property investments? If so, you don’t want to miss this event!  A large part of building a successful real estate portfolio is building a professional real estate team around you.

This tradeshow will bring together more than 200 local real estate investors and investment experts and is an excellent opportunity for you to meet local vendors & business professionals. It will also be a wonderful opportunity for investor networking and business development. If you’re serious about real estate investing you won’t want to miss this!

It’s free to register for this event. Just go to http://www.BostonWealthBuilders.com

Come speak directly to industry professional like never before! This event will be great for the novice to advanced real estate investors. Whether you’re just getting started with investing or looking to develop new strategies and income sources, we’ll have something for everyone. RSVP Now! http://www.BostonWealthBuilders.com

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The Mandrell Company works with many real estate investors & developers in and around the Boston area. We assist our investor clients in finding properties that need rehab as well as opportunities for development. If you’re looking to sell a property that needs minor or significant repairs, please give us a call. Almost all of our clients are cash buyers and can often close on your property with 2-4 weeks. Don’t waste your time with a realtor placing a sign in the yard and marketing your problem property with traditional sale methods. Our investor clients buy properties in “as is” condition, which mean they will not be asking you to make any repairs. They also purchase properties in difficult situations such as; pre-forclosure, non-paying tenants, or tax and other liens.

Let us help you move on and get this headache out of your life. Our clients are experts in renovating junk & ugly homes and can rid you of your problem house. They are also improving local Massachusetts neighborhoods with each home they complete!

Do you know of a property in your neighborhood you would like to see fixed up? Pass our information along to the owner and we’ll see what we can do!  617-297-8641 Call today!

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Attention contractors and investors. Great rehab opportunity. Legal 3 family being used as single. 2 studio lofts and one 3 bedroom apartment. Exposed brick & beautiful wood work throughout. One working furnace. Bus stop out front. Great buy and hold investment property or good for owner occupant. Roof replaced last year. May not qualify for conventional financing. Seller motivated. Bring offers!

Call us for more information! 617-297-8641

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Here are a couple great Dorchester multifamily rehab projects getting ready to hit the market! Both are going to be listed at $280,000 and both need a good amount of work. Could be a great long-term investments for the right person. Call Willie for more details. 617-297-8641. Here’s your chance to get them before the hit the competition!

 

Not interested in these? Call or email me and tell me what you are looking for! I’m always working with many multifamily seller’s in the Boston area and I could have the perfect property for you. 

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