Medford condo- rent or sell?

15 Replies

Curious what other people's opinions are.  I'm going to be moving into a larger house, and have been going back and forth on whether I want to sell my Medford condo or rent it.  Over the past several years it has gone from $280k worth to probably in the spring I could get about $400k!  However Medford is also having a lot of renters move in, so I could very easily rent it for probably $2300 /mo, and continue to have the value go up even further over the years.  If I did sell though, I could get a place somewhere else cheaper, maybe the rent wouldn't be as good though?  What are your thoughts?  I already have another rental on the South Shore so I'm not new to being a landlord.

Terrible investment as a rental. Take your profits out now and move on to something better. Based on a value of 400K the rent at $2300 is not even worth considering, No where near what you need on a $400K property. Investing your profits from the sale in a passive vehicle or a better positive cash flow property would reap far greater rewards than having this property.

This condo should be sold.

Originally posted by @Thomas S. :

Terrible investment as a rental. Take your profits out now and move on to something better. Based on a value of 400K the rent at $2300 is not even worth considering, No where near what you need on a $400K property. Investing your profits from the sale in a passive vehicle or a better positive cash flow property would reap far greater rewards than having this property.

This condo should be sold.

 That's what I was originally thinking, however people were encouraging me to keep it due to Boston property values continuing to go up and up.  Part of me looks at Somerville, and the people who must've been kicking themselves by selling years ago.

@Jen S. I would hold on to it until Amazon makes their HQ2 decision.  If they locate in Boston, I expect a significant bump in prices all around metro Boston.

I would hold it. Medford is a desireable location, and with price points being pushed up in Somerville and Chelsea, Id expect to see them plateua a bit at some point and push Medford/Melrose/Malden even higher.

I do not think Amazon HQ2 to have much of an impact on any major high income city on the east coast though.  You wont see an influx of population, rather they will higher mostly from an existing highly paid population thats already in place. Would HQ2 be good for a city lile Boston or DC? Absolutely, but it wouldnt be a game changer like it would for say a Baltimore or some place in the midwest.

@Russell Brazil My thinking is that Amazon has stated that HQ2 will bring about 50,000 jobs to whatever town they come to.  

That has to put a squeeze on the housing supply and with the law if supply and demand being what it is, I expect an increase in housing prices.

If I were making a decision on whether to sell now or not, I'd wait to see where HQ2 goes - but to each his own.

I don't think it is a good rental, but if prices gonna go up like @Russell Brazil said, why would you sell now.

You are not going to lose money by keeping it.

@Jen S.

however people were encouraging me to keep it due to Boston property values continuing to go up and up.

And how many of those friends remember when Boston Prices crashed? I would not be swayed  one bit by advice from people who are not investors themselves. 

I am contrarian.  The higher something goes the higher the odds are that it returns to long term averages. I would sell it. I probably would not list until after the first of the year or into Feb/March.

If you hold it for appreciation how will you ever be able to sell. Isn't it going to appreciate for ever, or maybe not and you will lose half it's value.

How much are you prepared to lose monthly to justify the risk of speculating on appreciation.

Toss the dice and see what comes up.

At the end of the day this becomes an appreciation bet - yes I said bet because nobody can be 100% certain if an asset will appreciate or not as others have alluded to - or a cash flow play. 

You can definitely get better cash flows if you go out of 128 or sometimes even out of 495 but it's a completely different market and skills required to manage such investment: maintenance, local resources, etc.

Keep in mind that from both the Somerville and Cambridge mayors, we have a deficit of over 42,000 apartment units in the region. 

Good luck with your decision!


Flavio

If I was in your shoes I would hold on to that property as long as the condo is bringing in positive cash flow. Medford is the next wave. When people got priced out of Cambridge they moved into Somerville. Soon people will be priced out of Somerville and they will be moving into Medford. I currently invest in both Somerville and in Medford. If you decide to sell please let me know. I am always looking at deal and looking to continue building the empire.

Hi @Jen S. , I guess it really is a personal decision based on what your goals are for the future.  If you are looking for some positive cash flow, I would definitely keep the condo and rent it for many of the reasons already posted (Amazon decision, potential rental growth, great area, etc.). If you are looking to expand and continue to grow your rentals, you could sell the condo and roll that over to another investment property with more units. Depending on where you move, you could find another property closer to your new house or in another area with more potential for value add and growth. My family personally has a 2 family in Medford and I like the area very much. If you have any questions, let me know and I would be happy to answer them.

I think @Michael Pallotta hit the nail on the head.

What do you want? Obviously the rental income isn't going to be very exciting. Some years it will be "nice" and other years after HOA fees you'll be wondering what you're doing.

That being said, I assume you're locked in on a owner occupant mortgage. You also know the market, know the property very well and are comfortable with the investment.

If you cash out, you need to determine how you'll invest those proceeds. If you're going to go "all in" with REI have you identified any properties? Have you talked to lenders? Do you know areas within secondary markets where you're interested? I'm bringing up these issues because I don't want to see your cash sitting on the sideline and suffering from inflation.

I appreciate all the different responses!  To answer some questions, if I were to sell, I'd end up buying another place to rent out.  I'd kept an eye on what people are saying are good places such as Worcester, Roxbury, Everett, Brockton... kind of all over the map but all places that seem to be good buys right now with potential for appreciation.  I don't want to count just on appreciation though, I also need cash flow.  

I've thought about going for a triple decker in one of those areas, I know those are what everyone has their eyes on though so I don't know how hard/easy one would be to get.  I have not talked to any lenders yet, however last time I asked my bank about it they said I would qualify for a very low downpayment mortgage in the future due to my status with them.

However I also agree that Medford could really continue moving up, and I don't want to miss out on potential continued jump in prices.  A lot of people I know are now looking to buy in Medford and are already complaining that the prices are high... I remember this same thing happening with Somerville, except Medford does not exactly have the "cool" factor (yet?) which Somerville has.  The condo fee is very low which is good.  

Originally posted by @Jen S. :

The condo fee is very low which is good.  

 I don't want to sound pessimistic, but don't forget that you don't solely control the expenses for the condo. So for instance, if there is a leak roof on a 3-family you could decide to patch it and then make a full repair in a year or two. Same thing with painting, etc. With a condo, the choice isn't solely yours.

The converse is also true. Resident owners might not care that the building has peeling paint and that the carpets are gross. However your renters might care.

Finally, if it's a small association, there might be some internal political issues when you rent. At meetings they might not take your opinions as seriously.

Hi @Jen S. ! I actually just purchased a condo in Everett myself. Ended up there because the Medford/Somerville markets weren't feasible on the cash flow side. I think you have to look at your own situation and decide where you're trying to take it. 

It sounds like you want to continue to buy and hold properties and if the cash flow is there already, why sell ? The rental market in Somerville/Medford is strong, especially with the younger generations. 

And on the other end, it's a very competitive market right now. Prices are high and a lot of investors are thinking the same thing as you. I think there's a lot of upside to the Everett/Chelsea/Malden area's with the Casino going in and all the business' coming into the Seaport. But, be ready for some fierce competition.

Good Luck!

Nick

Create Lasting Wealth Through Real Estate

Join the millions of people achieving financial freedom through the power of real estate investing

Start here