Real estate investment - Multi Family in Boston? (Cambridge, Somerville: rental, condo)

[dantm]

Looking at some of the multi-family investment opportunities with mortgages at an all time low and rents all time high the numbers look pretty good.

Any opinions? Seems like some of the student areas would be recession proof, although not educational-bubble proof (?).

Allston-Brighton -- expensive properties but good and solid rental with limited vacancies;

Brookline -- too expensive, numbers don't work out well;

Cambridge -- ditto;

Other areas?

Dorchester -- prices are decent; good rental income too, are there issues buying here?

Somerville?

Watertown? -- prices are higher than Dorchester, rents not great...


Just as a comparison, it looks like a 3-decka is around $800-900K in Allston-Brighton, $400-600K in Dorchester...

Any other areas or thoughts about this investment opp?


Thanks.

[HenryAlan]

id go with A/B over Dot. The way to make money in Dot is by rehab/condofication and flip.

[dantm]

What if one is looking for positive cash flow and long term appreciation, does that change the equation?

To me a MF in Dorchester (say) that sells for $450K and rents for $1.5K x 3 has better cash flow than an Allston/Brighton one that sells for $800K and rents for $2K x 3 (considering student turnover and lease breaking end of May on a yearly basis). That is unless the vacancies in Dorchester (or equivalent) are higher???

[HenryAlan]

That's the calculation you'll need to work out. Can you get $1,500 per unit, can you fill each unit? What is the likelihood that the market will change in a negative way? Your point about student neighborhoods being less impacted by economic downturns is solid. Would Dorchester also be stable enough to weather a storm?

[Cliff Clavin]

I have a friend who owns a triple decker in Dorchester just outside Andrew Sq. He paid about ~300k for it 10 years ago, and put some work into himself. As decent as the location is, he isn't getting $1,500 a month. I think he's getting $1k-$1200, depending on the tenant/floor.

[HenryAlan]

How big are the units? Some triple deckers are much larger than others. There is also the quality of workmanship inside. I get $1,500 for the one bedroom condo I own in Roslindale, but it is immaculate, and I wouldn't at all be surprised if a similarly sized unit elsewhere on that street were priced at $1,000. There are so many factors that go into pricing a rental.

[dantm]

Originally Posted by Cliff Clavin

I have a friend who owns a triple decker in Dorchester just outside Andrew Sq. He paid about ~300k for it 10 years ago, and put some work into himself. As decent as the location is, he isn't getting $1,500 a month. I think he's getting $1k-$1200, depending on the tenant/floor.

The lowest rental $ that I find on Craigslist in Dorchester (all areas) is $1400/mo for a 3 bed; I assumed that this would be the current going rate?

To me a RE investment that brings in 1% of the property value in gross proceeds per month (i.e. $300K property - $3K/mo, $500K property - $5K/mo) deserves a serious look at...of course the condition of the property is relevant (as are expenses going out the door)...

These properties seem very hard to find around the Boston area.

[dantm]

Originally Posted by HenryAlan

How big are the units? Some triple deckers are much larger than others. There is also the quality of workmanship inside. I get $1,500 for the one bedroom condo I own in Roslindale, but it is immaculate, and I wouldn't at all be surprised if a similarly sized unit elsewhere on that street were priced at $1,000. There are so many factors that go into pricing a rental.

Say 1000-1200 sq. ft. and some recently renovated or rebuilt...

With rents in the city at an all time high it would not surprise me to lift up some of the rents in slightly less desirable areas (i.e. the good, safe areas) of Dorchester, etc.

[Cato the Elder]

I don't know Dorchester very well, but I'm surprised at $1400/month being the going rate. That's the going rate for neighborhoods a square removed from Red Line stops north of the river. It's all about competition and I don't see how Dorchester can compete with that market if the rate's the same (all other things equal).

[Cliff Clavin]

Originally Posted by dantm

The lowest rental $ that I find on Craigslist in Dorchester (all areas) is $1400/mo for a 3 bed; I assumed that this would be the current going rate?

His were all 2 bd units. Livingroom in the front, 1 bed and bath off the hall with the kitchen in the rear and the 2nd bed off the kitchen. I doubt they were more than 900 sq ft.