Three Types of Properties in Boston Market Dear members and guests: Do you want to know “what’s the best investment in the current market”? (Pause) Warren Buffet said it is real estate. In a recent SYNC interview, Buffet said he would snatch up millions of houses if it were practical. Unlike Buffet, you probably don’t have the meaner to buy millions of houses, but if you have some money and are looking for investment opportunities, owning one or more properties might be a good choice now.
There are tens of thousands of properties in Boston and the nearby arrest, so you may be wondering: what type of properties should I buy as investment or rental property? As an experienced real estate investor and landlord, today I will introduce three major types of properties in Greater Boston, and share some of my knowledge and experiences on each of them. First, there are all kinds of condos, especially in the city. Condo could be one unit of a big complex, or one of a mute-family house.
For first time buyers, singles or young couples, to stop renting and buy a condo for yourselves might be the best choice to start for real estate investment, because condos are relatively cheaper and tend to be near the city, which will make them more marketable if you decide to change them to rental properties later. If the condo complex is managed by professionals, you don’t need to worry about repairs, yard work or snow removal, and the condo manager will answer tenants’ phone calls, 7 days a week, 24 hours a day.
However, high condo fee is a big catch, and you must obey all the rules the condo association established even if you think some of them are not reasonable. For example, in one condo complex, the policy doesn’t allow residents to sing after pm. It is ridiculous! Don’t they know that I can’t help singing very loudly when taking showers every night? Anyway, I think condos are not the best choice for people who want maximum return and control of their investments. Second, the most popular type of properties is single family houses.
There are all sorts of single families in every city and town, so you won’t have any problem finding one near wherever you live. Compared with condos, single Emily houses tend to appreciate more and quicker in an up-market, and depreciate less and slower in a down-market, which meaner more potential for capital gain and less risk of capital loss. There is no condo fee or bad neighbors to worry about, and there is no condo association telling you what you can and cannot do. However, it also meaner you need to take care of the property yourself.
If the toilet backs up at midnight, you are the person who need go and fix it immediately. So if you are not very handy, and hate the toils, single family house might not be a good investment or you. The last type, and also the one I would recommend today, is multi-family houses. I believe it is the best choice for most of you. Similar to single families, multi families also have the advantages of no condo fee, good appreciation potential and absolute control of the property. In addition, multi-families have another key advantage: higher return on investment, or so called Capitalization Rate or Cap Rate.
Say you bought a condo or single family at KICK, your net rental income might be around $1250 a month. It gives you a 5% return on investment, which is good but not likely to get much higher net rental income because two groups of tenants are paying you for two units. $2,000 a month is a very reasonable amount you can expect, which gives you an 8% Cap Rate. It is 60% higher than single families or condos. Furthermore, because of the higher return on investment, now you can afford to hire a condo manger to manage the property for you and still maintain a high Cap Rate.
This allows you to enjoy condos’ benefits of care-free without their headaches of lack f control. I would say, if you acquire multi-families one by one, probably you don’t need come to Innovators any more in ten or fifteen years. Instead, you can relax at the beach or travel around the world, collecting rent monthly and letting condo managers do all the hard work for you. What a great life! Unfortunately, I’m probably not the only person who knows multi-family houses are a great investment. So it is unlikely that a nice multi-family in good location and condition is readily available.
Therefore, it may take you a lot of effort to find one and probably some hard work to renovate it upfront. Additionally, multi-families tend to have a higher price tag, especially the ones containing three units or more. Nevertheless, multi-family houses are still an excellent investment for many of you. Now, you’ve learned the pros and cons of condos, single families and multi families. Let me ask you the question again – What’s the best investment in the current market? (Pause) Correct, multi-family houses! Congratulations! You are even smarter than Warren Buffet now.