Rental Market for higher-end SFH in Boston suburbs?

Question

We are moving soon (from one metro-north/west suburb to another) and I am debating keeping our existing house and renting it out. Is there much of a market for rentals of larger / higher-end SFH in this area (Lexington / Arlington / Winchester area). House is about 6K sq ft, 6 BR, Zillow rental estimate is 6K though I suspect we could rent it for more. When we renovated our house a few years ago, we moved into nearby rental which was one half of a duplex, maybe 3K sq ft, not updated, and we paid 5K/month for 6 month lease.

I don't see much at all on the market, but I also know a decent number of people who have looked for rentals, mainly to live in for a year or so while they build/renovate their primary home. I'm not sure if that's enough demand, it seems like it's not desirable to have to find new tenants every year or so, but maybe worth it if I can charge a premium.

I have heard of someone in a nearby town renting out a very nice, large, new construction house for over 20K/month, which shocked me. I am guessing at that level they are providing something like a fully furnished "corporate housing" type of experience (e.g. someone who relocated here for a few years on a job assignment). Does anyone have experience with that type of market/clientele and have suggestions on if that's a promising way to go? I imagine there are property management companies in the are that specialize in this type of rental - any recommendations?

thanks!

Lien Vuong · Answer

Large private home rentals are now a much more desirable product than pre-covid considering that people are looking for more room, privacy, and outdoor space. Rental prices in the suburb have definitely increased - some markets 6-8% from last year - so you would be in a good position to get a high rental yield on this.

You can have your local agent run some rental analysis on the properties in the town and what the days on market and absorption is for single families properties such as yourself. I would say from a landlord's perspective though, it might not be worthwhile for you to rent this out as a long term rental asset as taxes in these communities are higher and single family has a lot of maintenance costs. Those factors, coupled with the fact that you and your partner would likely get the owner occupied tax exemption of $250k each, it would be an opportune time for you to sell rather than rent.

I echo @Timothy White's point in regards to the management (8-10% typically)and upkeep of corporate rentals. While they do bring in larger yield, its more work and you have to have your home furnished with full functioning features as these guests just expect to show up with a suitcase.

Timothy White · Answer

Ohh you have a wonderful asset In great towns for rental income.

we had a client whose home we sold In Lexington who had made above rent rates for that terrific town by managing Extended VRBO like stays.

these take more managing but can deliver highest returns if that's key for you and your family.

either way renting in one form or another retains your asset ,the tax shelter along with the market value increases over time.

well played sir!

Will Stewart · Answer

I’ve seen smaller houses than yours in my town (Andover) go for much more than $6k a month. Sometimes takes a few months to get someone though. Run the numbers- how do they compare to what you would buy if you took the cash out?

Greg K. · Answer

@Paul McDonald

It goes without saying but I’d be very selective on your tenant screening process. A 1-bed, 600 SF condo in the South End will have a $2500 security deposit protecting the landlord. And that’s just for the walls-in of the apartment. A Massachusetts landlord cannot collect more than one month’s rent for a security deposit. $6000 to protect damage for a 6,000 SF home seems real skinny to me. I’d focus on income verification - lots of people have funny money these days from asset appreciation (micro cap stocks, crypto, etc.) but may not have as much verifiable income (you’d want $250k+ combined income at the minimum). Your ideal tenant is who you identified - someone building a bigger, more expensive home than yours with prominent jobs and something to lose.

Rental Market for higher-end SFH in Boston suburbs?

Rental Market for higher-end SFH in Boston suburbs?

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