Buying Individual Boston Condo Units for InvestmentNovember 3, 2012
We are seeing two categories of investors buying individual Boston condo units for investment. Some are buying to sell a few years down the road and make money. Others prefer to invest in properties rather than the stock market and are more interested in positive cash flow short-term.
Purchasing Boston Real Estate Based on Investment Approach
Buyers who plan to sell in the short-term generally purchase brand new construction projects expected to be completed in a year or two. The investors know that they can get a great price with more frills and once the project is completed, they can sell at a premium.
Many foreign investors fall into in this category – they want new units and tend to buy blocks of units in newer projects. They are less concerned about the rent it will generate later on. They know they can make money selling the units soon after the construction is complete. Their investment is based on the reputation of the developer and location.
Another category of real estate moguls will hold on to their property for occupancy rather than investing their money in the stock market. These buyers are obviously more interested in some positive cash flow short- and long-term. Rental fees have to cover most, if not all, of their expenses.
The question is where to buy or what to buy to avoid paying out of pocket on a monthly basis. Units in the luxurious, full service buildings generate high rents, but they also have much higher monthly condo fees. In most cases, if the purchase is financed with a mortgage, the rent will not cover the condo fees, taxes and cost of the mortgage. Smaller buildings tend to have lower monthly fees, but the rents may be lower as well.
Purchases really need to be analyzed on a case by case basis and is very dependent on location. Real estate agents can help you determine which properties will yield the highest rent and ultimately be most profitable. Needless to say, investors must also consider the annual percentage increase of the property value.
You need expert advice to explore your Boston real estate investment options and to ensure all angles are covered. Contact me to make an informed decision!