The Boston real estate market is considered one of the fastest growing real estate markets in the US housing market due to the increase of population, countless touristic sites, and natural attractions which make it a good place to visit and live in. This means that the demand over Boston real estate properties by residents, visitors, and foreigners is increasing, making Boston real estate a good opportunity for real estate investors in 2018.
Boston Real Estate Market 2018
Real estate experts state that home prices in the Boston real estate market will keep increasing in 2018 and that limited inventory is driving properties’ prices. In 2017, Boston added more housing than it has since the 90s, releasing around 5,349 permits for new properties, apartments, and condos. This resulted in a 17% increase over the number of housing permits issued in 2015. However, Boston’s population is growing faster than developers and real estate investors can provide new units and properties. Therefore, many people intend to rent instead of purchasing a property which means that renting prices will also go up.
On the other hand, Boston is one of the liveliest cities in the US with multiple universities, colleges, and businesses that attract job seekers, not to mention its countless touristic and cultural attractions. All these mentioned factors combined make Boston a hot market and location for investing in Boston investment properties particularly rental properties including short term rentals (Airbnb Boston) and long term rental strategies.
Let us take a look at some numbers provided by Mashvisor’s investment property calculator related to the Boston real estate market. It is worth mentioning that Mashvisor’s investment property calculator uses predictive analytics and real estate comps in order to provide you with estimations that help you form a constructive decision regarding your real estate investments.
Median Property Price: $826,000
Airbnb Rental Income: $3,640
Airbnb Cash on Cash Return: 3.1%
Airbnb Cap Rate: 3.1%
Traditional Rental Income: $2,750
Traditional Cash on Cash Return: 1.7%
Traditional Cap Rate: 1.7%
Note: Cash on cash return and cap rate are the same figures because Mashvisor’s investment property calculator assumes that the property purchases are financed in all cash until an investor enters his/her unique information.
Are you curious to know more about Mashvisor’s investment property calculator and how it works? Make sure to read Mashvisor’s Investment Property Calculator: Real Estate Investing Made Easier.
Boston Real Estate: What Are the Best Investment Opportunities in the Boston Real Estate Market?
As the above-mentioned figures calculated by Mashvisor’s investment property calculator indicate, Airbnb Boston is a great real estate investment strategy to implement in comparison with traditional rentals as it yields a higher cash on cash return and cap rate.
However, before you start investing in Airbnb rentals in the Boston real estate market, you should be aware of Airbnb regulations and what you need to do as a real estate investor and a business owner in order to start your investment in short-term rentals. In order to start an Airbnb business in Boston, the first thing you have to do is to obtain a business certificate that is renewable every four years from the city clerk office. Getting this certificate saves you from getting into trouble with the state law for illegally renting out a room on Airbnb. Moreover, it is required from you to annually register your Airbnb property if you are not present during its occupancy by Airbnb guests and an inspection is to be done every five years. Make sure to register in order to avoid any fines or possible fees.
As for taxes, Boston collects a room occupancy tax for your Airbnb listing. Make sure to check Massachusetts Room Occupancy Tax Guide to make sure whether this tax collection applies to your Airbnb property or not. Massachusetts excise tax may also be required, read Section 64G(3) of Massachusetts tax code. Being aware of these regulations puts you on the right side of Airbnb investment in the Boston real estate market.
On the 13th of June, the Boston City Council voted to impose new regulations on home-sharing sites such as Airbnb that are operating in the city of Boston. The 11-2 vote approved new regulations that target investors and tenants who rent out apartments on a per-night basis. Furthermore, these new regulations also establish a city registry for those who invest in short-term rentals and Airbnb hosts will have to pay $200 to join it. The registry will be available publicly to make it easier for residents to know about it.
Are you curious to know about other challenges that investing in Airbnb poses? Make sure to check Major Challenges of Owning an Airbnb Rental.
What Are the Top Places in the Boston Real Estate Market 2018 for Investing?
Jamaica Plain is one of the first streetcar suburbs in America and is surrounded by many parks. Moreover, it has undergone significant urban renewal since the turn of the century, with scores of fine shops and restaurants, making it an attractive place for people to visit and consider for living as well.
Median Home Price: $908,222
Airbnb Cash on Cash Return 1.01%
Airbnb Cap Rate 1.01%
Airbnb Rental Income $3,178
Traditional Cash on Cash Return 0.52%
Traditional Cap Rate 0.52%
Traditional Rental Income $2,506
Regarded as one of the most desirable neighborhoods in the Boston area, Beacon Hill makes a good real estate investment opportunity for single-family houses and condos. Let us take a look at some figures of the Beacon Hill real estate market:
Median Home Price: $599,450
Airbnb Cash on Cash return: 2.53%
Airbnb Rental Income $3,963
Traditional Cash on Cash return: 0.86%
Traditional Rental Income $2,430
Located in the northwest corner of the city, this neighborhood is well known for its historical sites. However, its space is dominated by condos and multi family properties, making it a great opportunity to invest in these types of properties for real estate investors. The optimal rental strategy in this location is the long term rental strategy. In addition to that, the affordable median house price in Brighton attracts real estate investors to purchase more properties in this location.
Median Property Price $389,900
Traditional Rental Income: $1,652
Traditional Cash on Cash Return: 0.32%
Traditional Cap Rate: 0.32%
Do you want to know what makes for a good location for real estate investments? Make sure to check out Location Location Location: What Makes for the Best Place to Invest in Real Estate?
Investment opportunities are all over the Boston real estate market, you just need to know the market and the buyers’ and sellers’ behavior in the market in order to decide when the right time to purchase, sell or rent out a property is. Mashvisor has it all at your fingertips, sign up here.
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