Sunday, March 27, 2005

Dude, where's my rent?

More under-25s are breaking into real estate as landlords, sometimes relying on gumption alone to make a go of it

By Jenn Abelson, Globe Staff


When Sean Flynn isn't busy serving drinks at Hennessey's bar in Faneuil Hall, the 21-year-old is watching over his two condominiums in South Boston.

Flynn, who lives with his mother in Arlington, still hasn't graduated from college. But he doesn't tell that to his tenants.

''I just try to look serious and pretend that I'm older," said Flynn, who made the down payment on the first condo with $30,000 he painstakingly saved from bartending, stocking shelves at a liquor store -- and not having a cellphone or car.

''It's risky as hell what I'm doing," he said. ''I don't have much to fall back on if it fails."

Flynn is part of a growing group of young property owners who are breaking into real estate with little money or experience -- but lots of guts. Homeowners under the age of 25 are the fastest group of property owners in the Northeast, according to the US Census Housing and Household Economic Statistics Division. Between 1997 and 2004, homeowners under the age of 25 jumped 11 percent -- and now these youths make up one-quarter of all property owners in the Northeast.

A combination of low interest rates and a sluggish stock market have made property buying an attractive option for youngsters looking to make an investment. And these are not just kids playing with daddy's trust fund.

''I am young and property values are soaring," said 19-year-old Rayford Kelley, who bought a $560,000 fixer-upper in Roxbury with no money down. ''It can be rough sometimes. But in the end, I'll be the one making out and cashing in."

Kelley, who lives with his mother in Dorchester, had one thing going for him besides his gumption: good credit from making timely payments on a 2004 Ford Explorer. After enrolling last year in a first-time home buying class in Roxbury, Kelley purchased a four-unit Victorian he saw while passing through the neighborhood. Now, he is taking in about $5,000 a month in rent -- more than enough to offset his $3,200 monthly mortgage.

''A lot of people are unaware and think they can't buy a house if they don't have a whole lot of money," said Kelley, who works part time for the imaging service center at Brigham and Women's Hospital in Boston.

Still, the new responsibility is not easy. Kelley took off the semester from Bunker Hill Community College to get a handle on his investment. He had trouble leasing several units after he forced out tenants who refused to pay rent.

Eventually, Kelley agreed to lease one apartment to friends, even though he knows mixing business with pleasure probably isn't a good idea. He's already worried about the number of visitors coming through the house -- into which he has put more than $10,000 in repairs -- but doesn't want to say anything to his friends, at least not yet.

''As a young landlord, people tested us more -- in not paying rent, in trying to move extra people in, in getting pets," said Jamie Mara, who at 27 is a seasoned landlord, having bought her first property in Fitchburg eight years ago. ''We obviously got taken a couple of times in the beginning."

Sometimes, it's the simple things that can be most frustrating. Kelley recently recruited his girlfriend, who was home on spring break, to help hang new mailboxes at the Roxbury home. They spent more than 30 minutes trying to drill the shiny black boxes into the house before realizing the screws were too short.

''We're supposed to be going to college, not buying houses," said Kara Guillory, Kelley's girlfriend, who half-jokingly calls herself part girlfriend, part secretary, part assistant. ''Some of my friend's parents don't even own their homes."

Although these young landlords may not be experienced handymen, they are often more savvy with technology and more capable of running cost-effective properties, said Bruce K. Cole, executive director of the Boston Rental Property Association. ''They are much faster . . . in terms of learning how to be a good property manager and investor," he said. ''They will help make a stronger landlord class."

Take 24-year-old Mickey Northcutt, who knew to run credit checks on possible tenants and talk to references before leasing out his one-bedroom condominium in the South End. Northcutt financed the $185,000 purchase with a combination of college graduation gifts and job savings.

For 25-year-old Paul Phadungchai, getting a tenant to share his single-family home in West Roxbury was key to paying the bills. Until recently, he never raised the heat above 60 degrees and some months, ''I couldn't even afford to take a girl out half the time."

With a tenant on board, Phadungchai now has some cash in his pocket. But he lost the freedom to walk around in boxers.

Phadungchai purchased his fixer-upper for about $260,000 two years ago using $20,000 he saved from various internships. His mom helped pay for some repairs, but Phadungchai said he probably overspent with $50,000 in renovations that include a whirlpool tub and granite kitchen countertops.

''For a kid like me who had college taken care of and was able to save money a lot of the time, not being able to save money ever is really a life change," Phadungchai said. ''It's all gone and now all I'm stuck with is a huge mortgage. You have to really think about that."

He has given it a lot of thought, in fact. But it won't stop him from buying another home by year-end. It's an investment, after all.

2 Comments:

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