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Richard C. Lee's Blog

By Rich Lee | Agent in Boston, MA

Are Newton, MA's Expensive Multifamily Houses Good Investments?

Newton, MA offers some expensive 2 unit multifamily, aka 2 family, houses.  Are they good investments?  Data in this post is based on information provided to and compiled by MLS Property Information Network, Inc.

Newton, MA 2 Family House Sales and Average Sale PriceNewton, MA 2 Family House Sales and Average Sale Price

First, let's take a look at the average sale price.  In 2010, the average sale price for a Newton 2 family house was $578,781 and that is significantly lower than $746,581 at the peak of the market in 2005.  Fifty-eight 2 family houses sold in 2010.

Newton, MA 2 Family House Average Rent Per UnitNewton, MA 2 Family House Average Rent Per Unit

For the investment minded, I'll go through the rent numbers and gross rent multiplier.  Newton 2 family house rents have been steady over the last decade.  The average rent for a unit in a 2 family house was $1,550 in 2010.

Newton, MA 2 Family House Gross Rent MultiplierNewton, MA 2 Family House Gross Rent Multiplier

The high rent in Newton is not enough to offset the higher sale prices.  The Gross Rent Multiplier has fallen in recent years and settled at 15.6 for 2010.  That gross rent multiplier is higher than many other communities in the Commonwealth.  I don't know the cap rate for a Newton 2 family house but I can confidently assure you that it will be low.

Investors might conclude that they should look elsewhere for their multifamily income property.  That could depend on whether look at a 2 unit multifamily as an opportunity to live in Newton.  The average sale price for a single family house during 2010 was $865,296 and that single family house does not provide the own occupant any income!


By Tean Wong,  Sat Mar 12 2011, 04:29
Multi-family is always a good option for a small startup family, who wants to generate income to help for mortgage. Many first time home buyer who bought multi-family as their first home end up move up to a new home and keep the multi-family as their investment. Not a bad choice of investment. The good think is the price for multi is down and lower compare to single family, with a plus of rentals revenue. It is not a bad idea to buy one.

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