The Boston multi-family real estate market is still going strong. The high pricing often makes it intimidating for new investors. However, if you think it’s too complicated, or even impossible to invest in the city’s thriving multi-family market, nothing could be further from the truth. In many instances, you may even be able to achieve a lower net monthly payment for a multi-family home in Boston than for a single-family home. Keep in mind, there are a few steps to follow if you want to successfully invest in multi-family Boston real estate.
1. First, do the Math
Your first step should be to determine how much you can afford for a down payment. Depending on the loan product, the down payment can range from 5% to 30% or more. Typically, on an investor loan (non-owner occupied), lenders look for at least a 20–25% down payment. However, if you’re going to occupy a portion of the property, the down payment could become significantly more favorable. There are programs available that can make it easier to purchase your first multi-family. Never be afraid to ask around – a great multi-family real estate professional is usually well versed in trending deals or opportunities and can recommend a list of lenders experienced in multi-family financing.
Investing and holding a rental property is a more lucrative long-term strategy. Flipping properties in the Greater Boston Area typically requires larger cash reserves for construction/renovations. If the property needs work before you can rent it or flip it for a profit, you’ll need to add the estimated renovation cost to your budget and/or look into a construction loan product. Keep in mind that if you’re flipping, you need to account for carrying costs while the property is under construction and for sale. Carrying costs include mortgage payments,…