If you are a first time home buyer and lucky enough to have some capital on hand, buying an apartment building in Boston could open all kinds of doors for you! A block of flats (or block of flats) is a dwelling house with two or more dwelling units under one roof or several buildings in a complex. Two-family homes, townhouses, apartment complexes, and some types of condominiums are examples of multi-family homes.
The real estate market in Boston overall remains robust — with tenants in various multi-family buildings staying longer and renewing their leases at higher rates than in recent years. With a quick down payment and the right mortgage, you can potentially buy an apartment building as easily as buying a single family home. Investing in an apartment building in Boston can offer you and your family a comfortable place to live, a financially lucrative rental business, and residual income for years to come.
Your tenants will help you fund your investment and balance your bills while you learn the ins and outs of being a landlord. So, should your first real estate purchase in Boston be an apartment building? Here are a few things to note:
If you are a first-time home buyer and considering investing in an apartment building in Boston, what is your goal? Will this be an addition to your income or career? How much time and commitment are you able and willing to put into your investment? Is this your retirement plan? There’s a lot to consider.
A well thought out investment plan will give you motivation and peace of mind as you work through a purchase that could be life changing for you and your family. Many first-time real estate investors in Boston trust the BRRRR investment method. This stands for Buy, Rehab, Rent, Refinance and Repeat. The aim of this method is to build up a strong real estate investment portfolio consisting of several objects over a longer period of time.
While no real estate investment is without risk, investing in an apartment building in Boston comes with some excellent perks that could make you feel better. As an investor in multifamily homes, you can deduct things like repair and maintenance costs, insurance premiums, utilities, advertising costs, and property management fees. As always, location matters!
Real estate appreciation throughout the Boston area offers great benefits. In the last ten years alone, Metro Boston real estate prices have increased by 91.4%!
talks about money
If you buy an already occupied apartment building with good tenants, your monthly cash flow will come quickly. You should sum up the numbers and see how much money you can expect. You should work with a local real estate professional to get a more detailed figure, but you can roughly calculate your monthly income by calculating the difference between your projected monthly income (rent, parking, storage fees) and your monthly expenses (repairs, maintenance, Insurance). This is your Net Operating Income (NOI). Then subtract your monthly mortgage payment from your NOI for your cash flow estimate. With the right investment, this number will make your investment worthwhile and your wallet fat!
While the potential income and tax benefits of owning an apartment building in Boston are alluring and desirable, such investments come with the full responsibility of the landlord. You must be responsible for maintenance and repairs, as well as paying taxes and insurance, collecting rent and deposits, and more. Someone also needs to oversee the search and screening of tenants, so you should look for a local real estate company with good online reviews and a proven track record. Also, you (or a backup, such as a property manager) must be on call for emergencies. Whether you accept full responsibility or hire a property manager, the dollar always stays with you – the owner!
Responsible real estate involves planning ahead. A good investment provides you with a positive cash flow after spending. You should save this money for rainy days in case you need to make major repairs later. For example, in 7-10 years you may have to do an expensive roof repair. For example, if you set aside $300 a month, in 7-10 years you would have $25,200-$36,000. Even if you’re lucky and your investment property doesn’t need major repairs, you can use that money for renovations. This allows you to stay competitive, increase your rents and increase the value of your investment.
Once you get the hang of managing a multi-family home, you might be motivated to expand your real estate investment portfolio by adding more units to your property or investing in additional multi-family homes. This is the final step in the BRRRR method of real estate investing – repeat. Investing in your first property has given you some experience, which means you’ll make fewer mistakes the second time around.
You may find that adding another investment property, especially over time as you gain experience, isn’t necessarily double the work. The concerns and needs of tenants in property management are basically the same; However, the additional income potential is significant!
Boston Pads Services can help
If the prospect of owning an apartment building in Boston appeals to you, the experienced realtors who work with Boston Pads know Boston Real Estate inside out! Your first real estate purchase in Boston should be one that you feel confident about. We’ll help you find the perfect apartment building that fits your living and investment goals.
Release Date: August 31, 2022
Shani McKay has been working full-time in real estate since 2016. After becoming fully immersed in real estate rentals, she studied the city, became fluent in sales, and gained enthusiasm for the business. In just two years, Ms. Mckay transitioned from her agent position at NextGen Realty to an office manager at Douglas Paul Real Estate, overseeing lease and sale transactions. She has provided quality service building relationships with clients and more importantly maintaining those relationships through effective communication. Now, Ms. Mckay’s knowledge of real estate has enabled her to help sellers make money in the market, investors to expand their portfolios and first-time home buyers to begin a new chapter in life