Foreclosure in Hyde Park>Question Details

bird, Home Buyer in Massachusetts

can you make a profit on a 2 family home in today's economy, and what area in boston would it be good to invest.?

Asked by bird, Massachusetts Sun Dec 26, 2010

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7
Bill Patterson’s answer
Hi Bird,
You will have to consider a few things for each property that you look at. Start with purchase price (lowest seem to be in the Dorchester sections right now) and then calculate rent. You will need an agent to help you figure out your annual operating costs so you can compute your Net Operating Income and then compare it to your costs.

Best of luck!

Cheers,
Bill P
0 votes Thank Flag Link Thu Dec 30, 2010
Bird,

As most of the other agents have said it depends on what you mean by profit...in short the answer is maybe and as for areas it depends on what your goal is with the investment.

There are many different parts to investment properties where you can make a profit. Cash Flow is what most people commonly view as profit. This is where the property is bringing in more money then the expenses tied to the property. Keep in mind that there are expenses beyond the monthly mortgage payment such as taxes, snow removal. and sometimes utilities.

Another way that a property can produce a profit is with tax benefits. It is best to consult your tax advisor before purchasing a property for an investment. They can explain to you how to depreciate the property for the best benefit to you. This is unique to each individual depending on their situation. At times I have had investors that found it was best not to have cash flow from a property so talk to your tax advisor!

Appreciation is another way to make a profit (and another reason to talk to a tax professional) on an investment property. The Standard & Poor Index is projecting that over the next 12 months MA will see almost a 3% gain in prices. The longer that you hold onto the property the larger the chance for appreciation.

Another way that people often profit from real estate transactions is flipping. If this is what you are considering doing make sure that your real estate professional knows what you are planning so they can help you to make the best investment. There are many different factors that can play into this type of transaction.

There should also be some consideration to leveraging your money. If you invest the money in something besides a 2 family home what would you do with it? What is the projected return? Which will bring you a larger return over the same time period.

If you would like additional information or have any other questions you can contact me at 617-329-9396 or ErikasHomes@gmail.com

Best Wishes,
Erika Pitman
Keller Williams Realty
Licensed MA, NC & SC
0 votes Thank Flag Link Wed Dec 29, 2010
Hi Bird,

I have specialized in the sale of multi-family properties in Boston for more than 10 years. If by profit you mean monthly cash flow beyond your base expenses then traditionally 2 family properties purchased at market rates do not produce significant cash flow. More often than not, these properties are purchased for an owner occupant that is looking to offset some of the costs of home ownership with the additional income of the other unit. The exceptions to this, are 2 family properties that are purchased significantly below market value or properties that are in student areas where the average price of a bedroom is significantly higher than those in non student areas.

In short, most income producing properties (ie cash flow) are 3 units or more. If however, by profit you mean appreciation in value during your ownership term, then most likely yes you can make a profit. However that depends on how much you purchase the property for and how long you intend to own it for.

If you would like further information about multi-family investments, I can be reached at jd@realestateboston.com

Best-

Joe DiGangi
0 votes Thank Flag Link Tue Dec 28, 2010
Hi,

I specialize in working with multi-family home buyers and seller in the metro Boston area. If I can help in some way please give me a call, and I would love to discuss the details of investing with you.

For some quick multi-family investing tips, download my free e-books at the web address below. They are written specifically as a guide for Metro Boston multi-family buyers and sellers.
http://www.wjmandrell.com/ebook

Good Luck!
Web Reference: http://www.wjmandrell.com
0 votes Thank Flag Link Sun Dec 26, 2010
It depends on your goals for profit, are you looking for a quick profit to buy, fix and sell or ae you looking to buy and hold and collect rents?

There are some fantastic deals right now. A buyer broker can do the work for you be searching out a list of whats available. Do you due diligince and you can find a home that could accomplish either short or long term investment goals.
0 votes Thank Flag Link Sun Dec 26, 2010
Bird,

It depends on your investment goals. As Steve asked, are you looking for short term profit, cash flow, long term appreciation, or a combination of those?

If you are looking for cash flow, many 2 family houses and other multifamily properties prices have fallen to the point where they will generate good to reasonable cash flow. For information about cap rates and gross rent multipliers for many Boston area communities, check out posts on my blog that have been tagged multifamily.

Cheers,

Rich
0 votes Thank Flag Link Sun Dec 26, 2010
By profit do you mean on a monthly cash flow or by flippin and selling it for a profit?
0 votes Thank Flag Link Sun Dec 26, 2010
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