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From Boston Metro Real Estate Broker, Bill Patterson

By Bill Patterson | Broker in Boston, MA

GMail... Meet GHousing

If you aren't sold on investment property in Boston (rentals), maybe you should be. Google, the company that requires no introduction, recently broke ground on a massive rental development in the Brighton section of Boston. The location is Brighton Mills, current home to Star Market, McDonalds, a pet store and abandoned retail spaces. Number of units? Oh, only 240 rentals and 100 condos.

Read the Boston.com article here.

Here is the deal. Large apartment developments are happening all over Boston. They are quite literally, in every nook and corner of Boston, Cambridge, Somerville, etc. High end rentals (which rent for over $2,800 a month for small 2 bedrooms at a minimum) have been near 100% occupied for the last 3 years and the large residential development companies have been tripping over themselves to expand their city presence. Formerly relegated to off-ramp spaces and defunct hospital campuses in the suburbs, these giants (Avalon, Archstone, etc) have been building and building and building inside the city limits for the past 5 years and the results have been overwhelmingly positive for them. Real estate insiders have seen this happening for years and now it looks like others are starting to take note also.

No Condos - More Rentals.
Many large-scale condo developments in the city quickly changed their tune 3 to 4 years ago and decided to take condos off the market and keep them as luxury rentals. Mezzo Design lofts in Sullivan Square, 3rd Square in Kendall, MaxPack in Somerville, and others have all pulled their units for sale and are renting them to the highest bidder. Go look at their websites to see what the availability and prices are.... wow.

Google, Really!?!!
While it is quite unusual for an information company like Google to get on board with housing development, it does make a lot of sense when you look at the profits and the government incentives. Wait, what government incentives you ask could be given for luxury rentals????

Not For the Rich.
The thing that makes this development unique isn't Google's involvement but the fact that these units are for low income renters. No kidding! This is where and why there are government incentives, and helps explain the whole project. While it is admirable that Google get involved in building affordable housing, let's not kill ourselves to congratulate their altruism. They are going to make a lot of money here, and the government is going to help them do it. Here is a quote from the Boston Globe article:

An executive with Google said the technology company was attracted to affordable housing in part because the projects seldom encounter financial difficulties and almost never result in a default.

“We want to be responsible corporate citizens, and that’s what drove us to invest, but the returns are also quite good considering the risk,’’ said Axel Martinez, an assistant treasurer for Google. “Charlesview is one of the places where we were able to add value, when in the past projects like that wouldn’t have gotten done.’’

So, good for Google, and good for investors. Buyers really need to start paying more attention to market for multi-family homes right now. A quick look around Boston will show hundreds of 3-6 family houses that are ready to be bought and rented to yield a nice, steady profit. Google is not in business to give money away, pay attention.

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