Real estate investing must be one of the best ways to make money there is. Real estate investment opportunities are endless; there is something for everyone who decides to become a real estate investor: residential real estate investing and commercial real estate investing, single family homes and multi family properties, traditional rentals and Airbnb rentals, different states and different cities. If you are thinking of becoming a residential real estate investor or are already one, you must be asking yourself: What’s the best location to buy an investment property in? One answer to this question is: The Boston real estate market. Boston is a thriving city commercially, culturally, and educationally, which makes it a best location to buy an investment property at any point in time including the present. However, the Boston real estate market is so large and so diverse that any real estate investor willing to own a rental property there needs further analysis and recommendations on the top neighborhoods for real estate investments in Boston. To get this information, just keep reading.
Related: These Top 4 Neighborhoods are the Best Areas to Buy Investment Property
What does the Boston real estate market look like at the moment?
To say that the Boston real estate market is hot is possibly an understatement. Boston is a lively city hosting multiple colleges and universities and numerous businesses and industries as well as important tourist, cultural, and sports attractions. The economy is dominated by services, which usually pay high wages and attract more and more job seekers. All these factors have created a hot housing market in Boston, dictated by both home buyers and tenants. Because of the large number of students, college and university faculty and other staff, and young professionals, the Boston real estate market is an ideal location to invest in a rental property. Moreover, any type of investment property – whether an apartment or a condo or a single family home – is likely to get rented out fast.
Now let’s take a look at some specific numbers from the Boston real estate market. All these numbers have been computed by Mashvisor’s investment property calculator which uses traditional and predictive analytics and real estate comps to facilitate the work of real estate investors and allow them to make the best real estate investment decisions. The figures are highly reliable as they are based on many comparable investment properties from the same location. Mashvisor’s investment property calculator is the new best tool for any real estate investor as it eliminated the need to conduct real estate market analysis as well as investment property analysis. As a final note before we delve into the numbers depicting the Boston real estate market at the moment, you should keep in mind that the two most important measures of return on investment and profitability – cash on cash return and cap rate – are the same because Mashvisor’s investment property calculator assumes all-cash property purchases.
Related: Mashvisor’s Investment Property Calculator: Real Estate Investing Made Easier
So, as you can see, real properties in the Boston real estate market are expensive, to say the least. The median property price is much higher than in other top housing markets such as Orlando ($296,000), Atlanta ($400,000), Dallas ($403,000), Chicago ($412,000), Houston ($464,000), Austin ($480,000), Portland ($497,000), and San Diego ($678,000). In the summer, the housing market in Boston heated up even further with major increases in property prices. But this trend has somewhat been reversed with the onset of fall, which is a natural phenomenon in any housing market. Property prices are going down, so soon might be the best time to buy an investment property in the Boston real estate market.
Any future real estate investor in the Boston housing market should have in mind that the expected rental income for both traditional rentals and Airbnb rentals is high. The combined effect of high property prices and high rental income leads to decent return on investment for Boston rental properties.
- Median Property Price: $826,000
- Traditional Rental Income: $2,750
- Traditional Cash on Cash Return: 1.7%
- Traditional Cap Rate: 1.7%
- Airbnb Rental Income: $3,640
- Airbnb Cash on Cash Return: 3.1%
- Airbnb Cap Rate: 3.1%
What is the best rental strategy in the Boston real estate market?
As the figures from Mashvisor’s investment property calculator above show, Airbnb rentals are the best rental strategy in the Boston rental market as they yield more rental income as well as more return on investment in terms of both cash on cash return and cap rate than traditional rentals. Luckily for real estate investors interested in Airbnb rentals, they are fully legal in the Boston real estate market and are not even taxed at the moment. Recent discussions among Massachusetts lawmakers failed to result in an agreement on taxes to be charged on short-term rentals. Although the city is likely to introduce such taxes soon, Airbnb rentals will remain entirely legal and taxed only reasonably.
Related: The Best Rental Real Estate Strategies for Beginners
What are the top neighborhoods for an investment property in the Boston real estate market?
In real estate investing, location is not only the city but also the specific neighborhood where an investment property is located. Thus, it is important for real estate investors to buy an investment property not simply in the Boston real estate market but also in the top neighborhoods in the city. Let’s take a look at the best locations for a Boston rental property according to data from Mashvisor’s investment property calculator:
1. Allston
Allston is a busy area in the Boston real estate market, which due to its location mostly serves the needs of the large college population. It is an excellent neighborhood to buy an investment property in as the median property price is well below the city level. Airbnb rentals are the best option here.
- Median Property Price: $480,000
- Traditional Rental Income: $2,580
- Traditional Cash on Cash Return: 3.1%
- Traditional Cap Rate: 3.1%
- Airbnb Rental Income: $3,840
- Airbnb Cash on Cash Return: 6.1%
- Airbnb Cap Rate: 6.1%
- Airbnb Occupancy Rate: 54.0%
2. Brighton
Generally speaking, Brighton is a quiet residential neighborhood, whose landscape is dominated by multi family properties and condos. The neighborhood is an ideal location for any residential real estate investor in the Boston real estate market.
- Median Property Price: $494,000
- Traditional Rental Income: $2,310
- Traditional Cash on Cash Return: 2.4%
- Traditional Cap Rate: 2.4%
- Airbnb Rental Income: $3,310
- Airbnb Cash on Cash Return: 4.5%
- Airbnb Cap Rate: 4.5%
- Airbnb Occupancy Rate: 52.3%
3. South Boston
Yet another one of the best neighborhoods to buy an investment property in the Boston real estate market, South Boston is an urban, highly demanded residential location with rich history and tradition. Your rental property here is guaranteed to get a lot of demand from tenants.
- Median Property Price: $634,000
- Traditional Rental Income: $2,710
- Traditional Cash on Cash Return: 2.3%
- Traditional Cap Rate: 2.3%
- Airbnb Rental Income: $3,910
- Airbnb Cash on Cash Return: 4.3%
- Airbnb Cap Rate: 4.3%
- Airbnb Occupancy Rate: 51.5%
Each once in a while, a new city emerges as the newest hot housing market. Meanwhile though, there are these cities which are always among the best locations to invest in real estate in, and Boston is no doubt one of them. Thus, you can choose one of the top neighborhoods in the Boston real estate market for your next investment property purchase. For more help, don’t hesitate to use Mashvisor’s property search engine and investment property calculator.