Benefits of Buying Investment Condos in Boston's Back Bay
Back Bay is one of Boston's most prestigious neighborhoods. Real estate here is in high demand, making it easy for owners to sell and renters or prospective buyers to find the real estate they need. Among all types of real estate, condominiums are among the neighborhood's best types of properties. Continuous demand and high values on the sales and rental markets mean that it is making more sense now than ever to buy an investment condo in Back Bay. Boston's expanding population is looking for more housing in the area, and the area's economic stability is leading to tenants willing to pay a higher price. Following recent trends, prices have been increasing for Back Bay condominiums. In the third quarter of 2017, condominiums sold for an average amount of $1,194 per SF. That number was slightly higher ($1,185) during the first half of 2017. Rental prices in this historic neighborhood are starting around $1,895 per month and rising to over $10,000 per month.
According to industry experts at Boston Common, the condo market in Back Bay, and across Boston in general, is booming. New buildings are setting price records, and the high end of the market is surging. Record average sale prices are exceeding $900,000, and multi-million dollar sales account for over 20 percent of all condominium transactions. Condominium prices have risen over the past several years, and luxury units are starting at prices up to $2,000 per SF.
As you search for an investment condo in Back Bay, do a bit of research beforehand. Evaluate location, demand, and amenities like parking. Condos located in the neighborhood's top areas have a higher price tag, but they are also great sources of potential income. Back Bay, like other neighborhoods in Boston, has been experiencing a low inventory of unsold units and consistent sales demand. Another increasingly important factor for people coming into Back Bay is parking. A condominium complex with dedicated parking spots is likely to be more valuable than a building without parking spaces.
When debating whether or not to invest in a condo, there are several general considerations to remember. Condominiums may have more lending restrictions than detached single-family homes. For a condo building, lenders may require a down payment of 20-25%. Some lenders require an investor to live in the building for a year or more before renting it out. In lieu of a live-in requirement, some lenders ask for a larger down payment. Investing makes more sense than an outright sale if you plan to keep the building for at least five years. Before investing in a building, check to see if there is a rental cap, which is a limit imposed by the condominium's board or the governing Homeowner Association (HOA) that restricts the number of condos that can be rented out. Since renting is likely the primary purpose of you making the investment in the first place, this is an important consideration. You will also want to make sure that the building is not currently under litigation. It is almost impossible to get bank financing for a condo in a building that is undergoing litigation, so if you are paying with cash you'll want to make sure the building has a clean slate before forking over funds. Prior to making an investment purchase, check to see if the HOA recently did any special assessments, like a new roof or siding repairs, as these improvements are mandatory and can cost a pretty penny.