Investing in Boston Luxury Real Estate Properties

Quite often, I come across (local, national and international) buyers searching for investment property. Investors generally fall into these categories:

Investors who just want to park their money and are not looking for a long term (5-10 year) return and less concerned with rental income to cover expenses. They are more conscious of future value, based on ongoing or future developments in the area, affecting demand and supply of the rental market in the area. Given the above criteria, these investors are willing to branch out to Boston luxury homes beyond downtown or historic, established Boston neighborhoods.

Investors with limited funds, but are hoping to find a property in a specific location or property type. Given the active Boston luxury real estate market, this could be a daunting task. Luxury properties have higher taxes and costs which may limit the purchasing power. Rental income won’t necessarily pay the expenses. They need to lower their expectation and not reach for the stars. Investors with limited funds should also be prepared to manage their rental properties themselves to save a few $$$.

Investors who are looking for a turnkey operation, because they don’t want the headache of managing their Boston luxury home rental — looking for tenants, paying bills, getting calls in the middle of the night to deal with maintenance issues. It is worth hiring a property manager to be hands-off owner. Having a property manager is also advisable in any scenarios. Being your own property manager is a daunting task.

As an investor, make sure you do your homework before purchasing Boston luxury real estate. Look at the number of vacancies in the area, the rent and vacancy fluctuations, how fast you can attract tenants, etc. These are all important factors consider.

Houses in the suburbs generally rent to families with children who are looking at the schools, and they happen to be longer term tenants. Tenants in luxury buildings are looking for amenities, security, proximity to work, etc. These tenants tend to be one-year tenants, and less long term than people who rent homes. They move around due to job relocation etc. or end up buying something instead.

If you’re interested in available properties in Boston, contact me to find out your investment options.