I am looking into buying a rental property in the Boston area (it does not need to actually be in Boston) but I want to be able to rent to students and young professionals, as I plan to do a micro-unit, coliving type arrangement, and they will be my target market. I would love to get suggestions on what the best areas could be to look for a house with 3+ bedrooms (ideally much more), in the 500,000 range, that would be a high demand rental market, and of course walking distance to the train.
@Marielle Walter $500,000 won't buy *anything* in the Boston market, even if it's engulfed in flames.
Even in run down parts of town - which are quickly gentrifying - you're looking at $600,000+ for a wreck. 3-plexes are hitting the market at about $1.8M in places like JP, South Boston and East Boston.
Cambridge is even worse - there's a 22-plex on the market for $17M ($1.29M per unit) and 3-plexes are $2.22M and duplexes are selling north of $1M.
Right now, Boston (all areas) has 51 3-plexes on the market. Prices range from $546,000 in Dorchester (REO, frozen pipes/rehab) to $5.9M (Charlestown).
I took a look to the suburbs. For example, Bridgewater (Bridgewater State University) had two duplexes sold recently at $542,000 and $575,000 - still over your budget.
I think you're going to have to raise your spend or consider another area.
@Charlie MacPherson Thanks. I would be comfortable with 550 k. I'll check out Bridgewater. I actually have seen several large homes for sale in Dorchester for a bit over 500 k, but looks like crime can be an issue. I am not pressed to buy in Boston - of course the market is very pricey there. I am more interested in surrounding areas that have strong rental markets, where folks can still commute into Boston by train.
Take a peek at what is near public transportation. While Bridgewater may be cheaper than areas closer to Boston, getting into Boston from there will be tough.
There are a ton of decent options in Dorchester (five Red Line MBTA stops) and while I've been in that one foreclosure that Charlie mentioned and it is a wreck, you can get plenty of places that still have positive cash flow.
@David Cahill Thanks so much! I have seen a bunch in Dorchester, I have also seen in other places like Malden a half a mile to the train - seems like a good bet? Homes not updated but in turn key condition, perfect for me. But I am unsure of the rental market for young professionals there - do you know where i can find more info on that?
@Marielle Walter , tough to say! I would predict that the areas with smaller units (1-2 bedrooms) would cater more to young professionals the most. I think South Boston, South End and Back Bay would be ideal for this. Secondary would be Allston/Brighton. The "problem" is that the returns are less than something that is 3-4 bedroom and caters to families and tenants with subsidies. It depends on your risk tolerance, really.
@David Cahill thanks for the input - I'll look into Allston/Brighton, though likely a bit over my price range!
@Jonathan Bowen thanks that is super helpful info. Sounds like i will be capped at renting 4 rooms. However, does this apply to all surrounding areas (Dorchester, Roxbury, etc.). I wonder how the soon to be micro-unit got approved - i guess you have to go from 4 rooms to a full on apartment building to get the permission? Any idea how one takes that step?
@Marielle Walter Yes. The neighborhoods of Boston include Allston, Brighton, Dorchester, East Boston, Hyde Park, Jamaica Plain, Mattapan, Roslindale, Roxbury, South Boston and West Roxbury. There are neighborhoods within neighborhoods... I know some micro-units are being built now but there aren't many to buy and, on a per square foot basis, they're extremely expensive.
@Marielle Walter as stated above, Boston and the closely surrounding areas are VERY competitive right now - $5-600k will be tough (factor in your renovations after purchasing too).
I'm in the Norwood area (with 3 commuter rail stops on the Franklin T Line) and $5-6 might buy you a smaller/older multi with 2-3 units.
I would highly recommend you explore the Franklin area (Also on the Franklin T Line) as property prices are lower, there is a bustling down town, there is a growing college and there are is a large office park. Seems like it could be a slam dunk for your business model.
Good luck and don't hesitate to reach out if I can be of any more help.
@Michael Fratalia thanks for the rec! I will check it out!
@Lien Vuong you are totally speaking my language :) I'll message you - would like to chat more if you are open to it. I have considered Malden and Everette, but have not explored them much yet. Would love to pick your brain about potential for a small scale micro-unit concept I have also.
Great to hear! Please reach out and we can connect. Would love to chat :)