The latest from Lili about Boston Real Estate.

Managing Income Properties in Boston

May 18, 2013 |

The Boston real estate market is strong and local consumers feel more confident investing in income producing properties. There is also a surge of foreign buyers investing in such properties, since they realize the positive return on investment.

Invest in a Boston Home for Positive ROI
Investment opportunities range from a single unit or a multi-family Boston home. The rental market is very strong and tight. There’s a shortage of product out there and good product in particular is in very short supply. Where to buy and how to manage these properties is a challenging task.

Some high-end properties, particularly in well established neighborhoods like Back Bay/Beacon Hill/ South End/ Waterfront and upscale suburbs, may not have a high cap rate. Depending on the buyer’s personal financial situation, the rate of return in the short term may not be an issue.

Many investors are pulling their savings out of the volatile stock market and investing in Boston real estate. If you are planning to buy several income properties, it is wise to concentrate in one area to accumulate properties. By doing this, you establish a reputation and get to know the neighborhood, making it easier to buy and sell future properties.

Monthly rent for luxury properties is fairly high in certain areas. For example, in the Back Bay, some properties are renting in the range of 15K- 45K / month. Fortunately, this is not the norm. It is important to make sure the property you’re investing in is located in an area with strong rental prices and high occupancy demand, so you can base your purchase price accordingly.

In a strong rental market, you may consider buying a Boston real estate property that needs work and renovating it in preparation for a quality tenant. Tenants always pay higher rents for a more renovated property. Also, be very selective in terms of picking your tenants. You don’t want to have tenants trashing the property or turning it into 'party central' causing discomfort for abutting neighbors. Keep in mind that tenants who pay very high rent in super luxury buildings could be just as irresponsible as those paying more modest rents. Do a thorough background check, regardless of rental price and make sure a security deposit equivalent to one month rent is held in escrow. A knowledgeable rental agent will make sure these bases are covered.


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