Why are Multi- Family Homes in Boston Cheaper Than Single-Family Homes?
First-time homebuyers in Boston typically only consider purchasing single-family homes or condos. This is the more traditional route to becoming a property owner. However, in today’s current real estate market, it may make more financial sense to purchase a multi-family home in Boston. While the overall price tag (and down payment) may be larger on a multi-family home, your net monthly payments could be lower.
Multi- Family Homes in Boston Cost You Less Money out of Pocket Each Month
Boston real estate is expensive, no matter what type of home you purchase. However, multi- family homes have a huge advantage over single-family homes. You can live in one unit and rent out the other unit(s). The rental income can significantly offset your monthly mortgage payment. Rents for Boston apartments are extremely high, with Boston overtaking San Francisco as the second most expensive city for renters. Having the ability to cover some of your mortgage with a high rental income would offer some relief while allowing you to continue building equity. This is especially important considering the Fed has hiked rates six times in 2022.
Multi- Family Homes in Boston Create Rent Income That Helps Build Equity
Equity is the current value of your property minus the mortgage balance. For example, if your Boston real estate is worth $750,000, and your mortgage is $550,000, the equity on your home is $200,000. When your tenants pay their monthly rent, you use that rent to pay your mortgage. In some cases, the monthly rent can cover the majority of your monthly mortgage payment. Rental income can also provide positive cash flow after the mortgage payment is paid.
Each time you pay your mortgage, you’re building equity in your property. Rental property can be an incredible investment. If chosen well, not only does your investment offer good returns, but also predictable cash flow. There is a lot of demand for Boston rental housing right now- after all, housing supply has been unable to keep up with renter demand for the past decade. This means if your rental property is in good condition and priced accurately, it will likely rent in less than two weeks from being made active on the open market.
The Boston Pads Property Owner Portal (POP) can help you with that. The POP uses real-time rental market data targeted to your property location to optimize your rent price, amenities, and marketing. It also offers AI-based pricing recommendations to maximize your rents while making sure you remain competitive. This is a great tool for first-time landlords and/or experienced landlords looking for more data-based information on pricing.
Multi- Family Homes in Boston Can Help Build Your Real Estate Portfolio
Many wealthy people in the city have made their riches through the purchase of Boston real estate, particularly multi- family homes. A good amount of them started with one (1) multi- family home, leveraged the equity in that property, and used it to purchase more properties. As you can do this over and over, this is the start of building an investment real estate portfolio.
The key to building your portfolio is to refinance once you can show a solid and consistent rental income and history. Many choose to cash out refinance and use that money to buy another property. This is known to some as the BRRRR Method for real estate investing. BRRRR stands for, “Buy, Rehab, Rent, Refinance, and Repeat.”
Multi- Family Homes in Boston Provide You With Options as Your Needs Change
Many multi- family homes in Boston are configured to have a larger unit for the owner to reside in, and a smaller unit(s) for the tenant(s). Nevertheless, you can always choose to live in the smaller unit in order to generate more rental income. This way you can take advantage of the incredibly hot rental market that Boston is currently experiencing. If your immediate family grows, you decide to live with a roommate, or start working from home and need more room then you can always switch to the larger unit when it becomes available.
In conclusion, purchasing a multi- family home in Boston can be less expensive than buying a single-family home when all is said and done. If you’re interested in seeing what’s out there for multi- family homes in Boston, please check out the Boston Pads Real Estate Portal.