New investor - Boston rental market

12 Replies

Hello everyone. Recent college grad here currently working in business management consulting in Boston, MA. For the immediate future, I’m looking to purchase rental property to house hack my way through my early 20s. Maybe I haven’t hit a large enough sample size yet, but it seems to me that much of the focus of BP podcasts has been on cities in the South, Midwest, and West. I would like to get a sense of what the Boston-area market looks like from the perspective of a new entrant who has no deal experience and is probably standing on a smaller capital base than most other investors in the market - a market that is probably priced higher than most other cities mentioned most frequently on BP podcasts. Can anyone give me some color on the Boston-area market? Is it a no-go zone for new investors?

Hi @Dimitri Savidis

It sounds cliche, but there is are never "no-go zones" for real estate investors. It just depends on goals, what your comfortable with, risk tolerance, etc. I certainly have personal no-go zones.

If you want to househack your way through your early 20s in the Boston area, I have a few questions. Do you want to live in Boston or are you willing to live in Boston or are you willing to live further from the city. There are deals to be had south of the city -- @Charlie MacPherson would probably be a good resource.

If you're like a lot of younger people in the Boston area, you could househack on a much more personal level. You can purchase a 2 or 3 bedroom condo in Boston and rent the other rooms out to friends or other young professionals working in Boston.

You might want to also do some research into Turn Key properties in the mid-west.

Spend some time in the forums and you will see lots of talk about the Boston area. Additionally, there are a few podcasts featuring local investors.

Hey @Dimitri Savidis

There are a lot of options still in the Greater Boston area. Some deals and especially in certain areas just don't make sense because of the prices and competition but I'm a believer that there are always deals to be had depending on what you are looking for and what your goals are. I would be happy to talk more with you about everything especially if you have specific questions. Let me know!

@Dimitri Savidis   In JP where I grew up, I'm watching 3-plexes listing at $1.8M and wondering why anybody would pay $5,000+ to rent one unit.  Southie, Eastie and the South End are up in the stratosphere too.  

I think the next to gentrify and skyrocket are Roxbury, Mattapan and Dorchester - all well known as high crime areas.

Look to the south instead.  Plymouth County, Bristol County and Norfolk County still have better deals available.

Please also keep in mind that there are definitely pockets and areas within those affordable Boston neighborhoods that are safer and in more demand than others. 

Hey @Dan K. Appreciate the insight. I will be looking more outside of Boston rather than in the city itself (pretty much any area that is T or commuter rail accessible). The caveat with this investment is that it arises from my need to live in a space closer to work (currently commute from central MA and it is just not sustainable for any substantial length of time). That means I have to determine where I’m comfortable living and in what environment (ie. I could find a good deal in a less safe neighborhood but would I actually want to live there for a year?). These are things I’m going to have to hash out.

Hey Dimitri, welcome! Lots of good insight above, but want to chime in as an investor in Boston proper - JP and Roslindale multis. My partner @Jack Romano and I house-hacked our first three-decker in JP using an FHA loan, and though it took us 18 months to find the right one (right numbers, and right conditions for FHA), it's appreciated over 50% in the past five years and cash flows well. We've leveraged that (HELOC) to move on to other properties and I don't miss living on that specific street, but it was a good choice for us and worth it to live on-site for a few years to make it happen.

It's definitely still possible in Boston, but with condo demand high, so much of the small multi inventory has been converted in the past handful of years that finding the right property can be a challenge; the benefit of house-hacking in this case is that your numbers can be a bit less conservative and still make sense when compared to renting here, if you're willing to play the long game. You also stand a chance competing in on-market deals where a seller would prefer not to deliver vacant (remove existing tenants, e.g. for a developer to start work to condoize immediately), if you're willing to take a risk on taking them on.

Also, keep an eye on Malden and Chelsea - lots of two-family turnover in the past 2-3 years in Malden and it's been hot, fewer three-deckers there, but still room to work as a house hack on the orange line and commuter rail, and Chelsea JUST got silver line access this year which opens up some three-deckers that were previously less accessible (and accordingly, less rentable).

Happy to chat more if ever it's helpful! You're not imagining things: BP has a preponderance of talk of midwest markets, but it's feasible here if you're willing to be narrow in your criteria and patient. Good luck!

Dimitri let me know when you are looking for capital.  We have many younger investors who work with us in the Boston area and points south.  All of the replies have been good but Charlie Mcpherson who commented on Bristol and Plymouth Counties is on to something for sure.  We are doing a ton of deals in those communites and they still have upside.  The natural trend in RE cycles is that the stuff in and closest to Boston gets too hot and many investors get priced out, so they look north and south.  There are still plenty of deals on the south shore and south coast for sure, that is where we are focused.  

Good luck 

You want some color? Stay away... Prices don't make any sense. Some of the smartest real estate investors have done well by doing nothing. Wait until the market crashes. Then strike...

Hey Dimitri,

I'm in the same boat as you.  I'm a recent grad working and I just started working in Seaport District.  I'm currently saving so that I can make a downpayment within the next year but for now I've just been analyzing properties and trying to find deals that would make sense here.  One thing that I did which you might find helpful: on zillow you can draw a radius around an area and you will be notified when a property comes up within your search criteria.  I set a radius of about a mile around each T-stop in areas I'd be comfortable living in so that I don't have to waste as much time searching everyday.  But I'm also continuing to research which markets make sense.  @Charlie MacPherson brings up some good locations that I will need to start looking into as well.  I'd be happy to stay in touch as we both educate ourselves on our first property.

Kyle

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