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Richard C. Lee's Blog

By Rich Lee | Agent in Boston, MA
  • Wellesley, MA Single Family House Appreciation Lower Than You Think

    Posted Under: Market Conditions in Wellesley, Home Buying in Wellesley, Home Selling in Wellesley  |  September 30, 2011 4:38 PM  |  1,188 views  |  No comments

    Wellesley, MA single family houses have increased in price by 201% since 1999 using YTD figures.

    Wellesley, MA Single Family Cost Per Square Foot & Average Sale Price (YTD Through August)Wellesley, MA Single Family Cost Per Square Foot & Average Sale Price (YTD Through August)

    The average sale price of a single family was $635,944.  That figure was $1,275,414 by the end of August 2011.  However, the average cost per square foot of Wellesley single family houses only increased 112% over the same period from $348 per square foot to $389 per square foot.

    Wellesley, MA Single Family Average Square Feet of Living Area (YTD Through August)Wellesley, MA Single Family Average Square Feet of Living Area (YTD Through August)

    Closer analysis shows that the average square feet of a single family house sold in Wellesley went from 1,826 to 3,282.

    In short, house prices have increase a lot in Wellesley but you are also getting much more!

    All Real Estate Geek data in this post is based on information provided to and compiled by MLS Property Information Network, Inc.

  • Brookline, MA 2 Family House Gross Rent Multipliers

    Posted Under: Market Conditions in Brookline, Home Buying in Brookline, Home Selling in Brookline  |  August 28, 2011 5:49 AM  |  1,934 views  |  1 comment

    Brookline, MA 2 unit multifamily income property gross rent multipliers (GRM) haven't been down to earth for about a decade.

    Brookline, MA Average Rent Per Unit for 2 Family HousesBrookline, MA Average Rent Per Unit for 2 Family Houses

    The GRM are high due rents that do not justify the high sale prices.  Landlords of 2 family houses have been getting about $2,000 per month per unit over the last couple of years.

    Brookline, MA 2 Family House Average Rent MultiplierBrookline, MA 2 Family House Average Rent Multiplier

    Those rent levels combined with average sale prices around $1,000,000 mean that you end up with an average GRM of 23.3 through July of 2011.  I suggest that buyers of Brookline income property look at it as an affordable way to live in Brookline or as a very risk adverse and low return investment.

    Data in this post is based on information provided to and compiled by MLS Property Information Network, Inc.

  • Brookline, MA 2 Family Houses Rise In Value

    Posted Under: Market Conditions in Brookline, Home Buying in Brookline, Home Selling in Brookline  |  August 26, 2011 7:33 PM  |  1,861 views  |  No comments

    Brookline, MA 2 unit multifamily housing market average sale prices have steadily rose over the last decade.

    Brookline, MA 2 Family House Sales & Average Sale Price YTD Through JulyBrookline, MA 2 Family House Sales & Average Sale Price YTD Through July

    The average sale price for a 2 unit multifamily income property was $509,250 back in 1999.  The median sale price was $517,500.  These figures gradually rose with a few bumps in the road to an average sale price of $1,045,375 and a median price of $1,005,000.  Brookline averages about 10 2 family house sales through July of each year.

    Data in this post is based on information provided to and compiled by MLS Property Information Network, Inc.

  • Multifamily Income Property & Seller Financing Part 3

    Posted Under: Home Buying in Walpole, Financing in Walpole  |  February 25, 2011 8:26 AM  |  1,196 views  |  No comments

    Multifamily Income PropertyLet's evaluate a multifamily income property that is for sale (as of Feb 22, 2011) where the seller offers seller financing.

    The property for sale is a 10 unit multifamily located in Walpole, MA.  It is listed for $1,100,000.  In this example, I will compute the numbers for this investment, analyze the numbers, and see what options are open because of the availability of seller financing.

    The Numbers

    First, let's figure out what the rental income might be.  I base my rent numbers on rent figures that I find through MLS PIN for Walpole.

    • 5 1-Bedroom Units @ $800 per unit is $4,000 per month.
    • 4 2-Bedroom Units @ $1,000 per unit is $4,000 per month.
    • 1 3-Bedroom Unit @ $1,250 per unit is $1,250 per month.

    That brings us to $9,250 per month or $111,000 per year from my estimates.  This figure compares to $98,400 per year as the seller claims.  The reason that I calculate my own figures is because I do not know anything regarding the accuracy of the listing or whether the seller is telling the truth.  In this case, the numbers are in the same ballpark so I move on.

    I next calculate the cap rate and gross rent multiplier for this multifamily income property.  The seller provided expense numbers of $14,374 per year.  That means that the seller achieves a net operating income (NOI) of $84,026 per year.  The cap rate would be $84,026 / $1,100,000 or 7.6%.  The gross rent multiplier according to the seller's figures is 11.2.  The gross rent multiplier according to my rental income figure is 9.9.

    Analysis

    The cap rate is OK on its own.  However, we have several factors that an investor must consider.  The expenses reported by the seller typically leaves items out that often should be included in the analysis.  For example, the expenses did not include property management.  You also have to consider that you can't always take the seller at his word and assume there might be some skimping on expenses.

    Next an investor has to consider what the typically cap rate for comparable multifamily income properties in the Walpole area market.  Does this cap rate compare favorably?

    Let's think about the gross rent multiplier.  Is 11.2 or 9.9 good or bad?  Is the seller charging market rents?  Does the seller have tenants who are delinquent on their payments?  My point is that you need to know the numbers but they only provide guidance.  You need to dig deeper the numbers warrant further investigation.

    Seller Financing

    For this example analysis, I'll assume that that cap rate and the gross rent multiplier are below par.  Since the seller is willing to offer financing, there are several ways that negotiations can go if an investor remains interested.  The buyer & seller might agree on a price at which the cap rate makes sense and the seller makes money on the loan interest.  Alternatively, the seller might be firm on the price but is willing to offer great terms and a good interest rate on the loan to the buyer.  These options, due to the availability of seller financing, might open the door for a deal that would not open in lender financed deals.

    SeparatorAre you interested in learning more about this multifamily property or investing in general?  Contact me for a free consultation today.

  • Brookline, MA Single Family Houses Retain Value

    Posted Under: Market Conditions in Brookline, Home Buying in Brookline, Home Selling in Brookline  |  February 8, 2011 5:33 AM  |  832 views  |  No comments

    Brookline, MA's single family housing market sees values hold.  Data in this post is based on information provided to and compiled by MLS Property Information Network, Inc.

    Brookline, MA Single Family House Sales and Average Sale PriceBrookline, MA Single Family House Sales and Average Sale Price

    Single family house sale prices averaged $1,319,749 in Brookline for 2010.  That's 3% below the peak of $1,363,250 in 2007.  Average sale price in 2009 was 6% below the peak which is very good compared to the rest of the Boston area.  Sales volume has dropped much more and ended 2010 at 146 single family houses sold.

    Brookline, MA Number of Bedrooms in Single Family Houses SoldBrookline, MA Number of Bedrooms in Single Family Houses Sold

    Home buyers get more bedrooms, on average, when they buy in Brookline.  Three, four, and five bedroom single family houses each made up about 1/4 of the sales during 2010.  The average single family house sold had 4.3 bedrooms.

    Brookline, MA Single Family Houses Average Days on MarketBrookline, MA Single Family Houses Average Days on Market

    Sellers should know that it took an average of 93 days to get an accepted offer on a single family house during 2010.  That's down significantly from 2007 single family houses had an average 146 days on market.

  • Quincy, MA's Expensive 2 Unit Multifamily Houses

    Posted Under: Market Conditions in Quincy, Home Buying in Quincy, Home Selling in Quincy  |  December 22, 2010 7:26 AM  |  787 views  |  No comments

    Quincy, MA offers a large selection of 2 unit multifamily houses, aka 2 family house, but for those who can buy elsewhere will find better investment opportunities.  All data in this post is based on information provided to and compiled by MLS Property Information Network, Inc. (MLSPIN) and extracted on December 1, 2010.  All 2010 numbers are year-to-date as of the date of data extraction.

    Quincy, MA 2 Family House Sales and Average Sale PriceQuincy, MA 2 Family House Sales and Average Sale Price

    The average sale price of a Quincy 2 unit multifamily house was $386,264 in 2010.  That's 84% of the average sale price of $460,087 at the height of the market in 2005.  60 2 unit multifamily houses sold so far in 2010 compared to 128 sales for all of 2005.

    Quincy, MA 2 Family House Average Rent Per UnitQuincy, MA 2 Family House Average Rent Per Unit

    For all the investment minded investors out there, the average rent for a unit in a Quincy 2 unit multifamily house is $1,194 per month.  That is close to the average level of rent landlords have seen for most of the 2000's.

    Quincy, MA 2 Family House Average Rent MultiplierQuincy, MA 2 Family House Average Rent Multiplier

    Cap rate information is not readily available for Quincy 2 unit multifamily houses so I look at the next best metric, the rent multiplier.  The average rent multiplier is 13.5 which is down from a high of 16.6 in 2004 but that's not a number competitive with some other communities close to Quincy.  This means that you can do better elsewhere but if you want to invest in Quincy, a 2 unit multifamily house will still likely beat investing in a single family dwelling!

    Are you wondering about 3 unit multifamily house, aka triple decker, numbers in Quincy?  Are you an investor looking to buy multifamily property?  Contact me today for help.

 
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