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Jamaica Plain: Market Update

Jamaica Plain is one of the fastest growing real estate markets in Greater Boston. Diverse, vibrant, and centrally located, it is highly sought after among buyers - investors and owner occupants alike. JP is an easy commute for those working in the center of Boston, and is more affordable than neighborhoods like Back Bay or South End.

Based on data from MLS, over the past five years, the average condo sale price per square foot in Jamaica Plain has increased from $428.91 in 2015 to $543.90 in 2019. So far this year, the average condo sale price is closing at 101.79% of the asking price, compared to 103.79% of the asking price as of the same date in 2015. In other words, not only are the average sale prices per square foot higher, but also condos are still selling for "over asking".
 


Source: MLS Property Information Network, Inc.

 

Curious about what's on the market in Jamaica Plain?  Click here to start your search.

 

 

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Art in the House

The whole culture is telling you to hurry, while the art tells you to take your time. Always listen to the art.
- Junot Diaz
 

Art enhances the home.

In today’s modern world, an environment adorned with art provides a quiet respite from the busyness of everyday life. Additionally, artwork has a huge impact on our moods and emotions and makes us feel calmer, happier, and inspired. It is cognitively proven that art in the home helps develop a child’s mental and social skills by boosting their ability to analyze and solve problems, improve motor skills and gain a sense of color. Studies show patients recovering from an operation have a faster recovery when surrounded by visual and audio artifacts (music) which uplift the human spirit and create positive energy. Art affects the fundamental sense of self and conveys a visual narrative about the life, childhood, family and interests of the owner.

From a design and value perspective, art is the best way to add personality, color and a focal point to a space. Interiors come alive with beautiful paintings, sculptures and photographs. The Penthouse at 89 Beacon Street, Beacon Hill is a great example of how a new construction condo with bare walls became a finished space with a beautiful balance, scale and texture. 

Galerie D’Orsay of Boston provided works of the masters including Picasso, Dali, Matisse  as well as contemporary artists Gove, Buist, Roblin and Zupan. The result is a gorgeous harmony of art, interior design and architecture which shows off the lifestyle of the home’s modern classic design, finishes and neighborhood.


Art turns a house into a home. It is an element of ourselves that we can project onto our walls and into our spaces.
- Ben Flyte, Galerie D’Orsay Boston 

 

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Buying a Condo as an Investment: How Many Bedrooms is Best?

For some real estate investors, residential condominiums are the preferred type of investment property.  Some benefits include that condos typically are less expensive than whole buildings and there are fewer management responsibilities because condo associations typically handle day-to-day operational issues like snow removal.

But, how many bedrooms is the ideal size to buy as an investment property?

As always, the answer is “it depends”.  Some investors take a philosophical approach – for instance, some investors prefer 3 bedroom apartments since there has been increasing willingness for co-living arrangements, particularly because it tends to be much cheaper for renters to live with roommates in Boston.  Others focus more on economics and might prefer the smallest possible units to try to maximize their rent per square foot.
 


Source: CoStar Multi-Family Market Report, Boston-MA, dated 11/12/2019



Source: CoStar Multi-Family Market Report, Boston-MA, dated 11/12/2019



Source: LINK Boston Quarterly Sales Summary, Third Quarter 2019, Citywide Report


The data shows that the ideal condo size for YOU will depend on your investment goals and criteria.  Larger apartments (2-3 bedrooms) have shown a lower vacancy rate than smaller apartments over the past few years.  Rents are higher for larger apartments as well, but of course purchase prices and expenses will be higher.

If you have questions about buying a condo as an investment, don’t hesitate to contact us.  We would be happy to share more specific market reports and data.  We also provide free consultations to real estate investors to review investment goals and when ready, help find the best opportunities for you!

 

 

Boston Bound Student? It's College Tour Season!

Guest Blogger: Nathan Hartseil of First Home Mortgage

Got a College Student in Boston?
Rent costs have you doing a double take?
What if you bought a condo instead?

Many folks are incredulous when I tell them that they are able to purchase a single unit (condo, townhouse, single family) residence for their child here in Boston at the same “market best” terms that they might get themselves – and that these loans are available with as little as 3.5% down, up to the generous local limit of $688,850 (as of this writing, October 2019).

Perhaps your student works, but doesn’t make enough to support the unit on their own?

Fannie Mae, Freddie Mac, and the Federal Housing Administration all allow a parent to “cosign” the mortgage – combining the income, assets, and qualifiers of both the student and the parent or family member on the mortgage application.

Perhaps your student is just starting out on their own, and you plan to visit often? Purchasing a “second” or “occasional” home in Boston, even without their help -  just 10% down assures that your student has a place to call home, and that you will always be able visit.

As long as your student (or parent, or disabled relative of any age) occupies the home as their primary residence for 1 full year, there are no restrictions (on the mortgage side) on roommates, future rentals, or any other customary uses…. A property that serves as a college home base can easily be converted to an income producing investment upon graduation.

What might this look like?

As of this publication, 30 year fixed rates are in the 3s-4s.  A 3-bedroom condo directly on the Green Line off student centric Commonwealth Avenue is currently available for $500,000.  Presuming a 760 credit score and a 5% down payment, Apr 4.05%:

Principal and interest: $2,268
Property Taxes: $268*
Condo Fees: $340
Mortgage Insurance: $100
Homeowner’s Insurance: $50-100

Total monthly expense: Around $3000

(*Boston also offers discounted taxes to primary residents, which will further reduce this expense by about $200, under the Property Tax Exemption Personal Exemption.)

With 2 paying roommates, your student’s expenses on monthly housing could be substantially reduced, while building equity to realize upon graduation.  If Boston’s popularity and average rents are any indication, holding the property as a rental could prove lucrative as well.

Ready to dive in to a search? Click here to get started. Or contact Cabot & Company to connect with an experienced agent to help guide you.

 

This is not a commitment to lend. Terms and conditions of programs, products and services are subject to change. All loans are subject to credit approval and property appraisal. Certain restrictions may apply on all programs. NOT ACCEPTING NEW YORK APPLICATIONS. First Home Mortgage Corporation of America, First Home Mortgage Services, Maryland First Home Mortgage Company, and First Home Mortgage Company of Maryland are d/b/a's of First Home Mortgage Corporation. First Home Mortgage Corporation is licensed in Connecticut, Delaware, District of Columbia, Florida, Georgia Residential Mortgage Licensee, Indiana, Kentucky, Maine, Maryland, Massachusetts Mortgage Lender and Broker (Lic. #MC71603), Michigan, Licensed by the New Hampshire Banking Department, Licensed by the New Jersey Department of Banking and Insurance, North Carolina, Pennsylvania, Rhode Island Licensed Lender and Broker, South Carolina, Tennessee, Virginia, West Virginia. Equal Housing Lender. First Home Mortgage Corporation.

 

Advantages of Working with a Buyer's Agent

We are sometimes asked: Do I really need a buyer’s agent, or can I make an offer on a property on my own?  Certainly, it is possible to buy a home without the help of a buyer’s agent.  However, there are a number of advantages in working with an experienced agent.  Here are some reasons to work with a buyer’s agent:  

1. It’s Free For Buyers. Except in a few, very limited circumstances, the buyer’s agent’s commission in the Boston area is paid by the seller or seller’s agent.    

2. Buyers Get Representation. The seller’s agent represents the seller, and it is their obligation to act in the best interests of the seller.  Having a buyer’s agent ensures you have an experienced professional on your team to look out for YOUR best interests.

3. Market Data. A buyer’s agent can educate you on local market trends.  Buying a home represents a substantial investment – it is important to know about the market/area you are buying into.

4. Make Searching for Property Easy.  When working with a buyer’s agent, there’s no need to scroll through endless websites looking at properties that are no longer available.  A buyer’s agent can create a custom MLS (Multiple Listing Service) search tailored to your search criteria, so you can be notified as soon as new properties come on market. 

5. Help with Paperwork.  There are a number of forms and documents involved in purchasing a home.  A buyer’s agent will help you navigate through them.

6. Price Analysis. You want to make an offer, but is the property over-priced, underpriced or priced right in line with the market?  Your agent will create a comprehensive market analysis based on similar properties that have been sold, to help you determine what price to offer.  A seller’s agent is obligated to get their client (the seller) the highest possible price; again, it is important to have a professional looking out for your interests.

7. Negotiations. The purchase price is just one component of an offer.  A buyer’s agent will help guide you on the other terms that make up an offer, such as inspection contingencies, mortgage contingencies and timing – careful consideration of all offer terms help make sure your offer is as strong as possible. If issues come up during the purchase process (such as property defects identified during a home inspection), your buyer’s agent can also help negotiate for appropriate concessions from the seller.

8. Support throughout the Transaction. An experienced buyer’s agent can help make introductions to other industry professionals that may be necessary throughout the purchase process, such as lenders, attorneys, home inspectors and insurance agents.  Additionally, your agent will keep you apprised of upcoming deadlines and communicate with the involved parties to help keep your purchase on a smooth path towards closing.
 

If you would like to be connected with one of our experienced buyer’s agents, please contact us here.  

Just getting started with the home-buying process?  Feel free to start your search here.

 

 

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What are Current Cap Rates for Boston Multifamily Investment Property?

One of the metrics used by real estate investors to evaluate investment opportunities is called the capitalization rate (or cap rate).  The formula is basically the net annual income divided by the purchase price.  Cap rates do not take mortgages into account – since different investors receive differing financing terms, the cap rate is a quick metric to evaluate an opportunity on a level playing field.

 

The chart above shows multifamily cap rate trends over the past 10 years, and includes forecasts for the next five.  Boston has maintained a lower cap rate than the national average and is projected to maintain that spread in the coming years.  A lower cap rate means that investors are willing to accept a lower return on their investment, so investors will pay more for multifamilies in Boston because they view it as a stronger investment.

This article is focused on multifamily investment property – cap rates for other property types (e.g. retail and office) are different, and each property type has its own set of risks and rewards to consider.  If you are interested in more market data or have questions about investment property in Boston, please reach out to us.

 

 

Off-Season Rentals Offer Good Deals

The peak spring and summer rental market season can be quite hectic.  Fast moving inventory, top dollar market pricing, and competing with qualified applicants.  All of this makes the stressful moving experience even more so.  After September 1st, however, there are deals to be had if one can wait to move.  The rental market tends to slow down during the fall and winter, and sometimes this leaves landlords with vacant apartments.  Great deals are available for those who can move quick, or fill odd dates.  This is also an opportune time to ask for some painting or touch up before move-in when typically there wouldn’t be time.  

Call us and speak with a qualified rental agent to find out more.

 


Current Fall Specials (click for more info):

Dartmouth St, South End - 2+BR/2BA Penthouse Duplex with Private Deck - $4,995

M St, South Boston - 1+BR/1BA Renovated Penthouse - $2,625

Marlborough St, Back Bay - 2BR/1BA Penthouse with Central Air - $3,450

Warren Ave, South End - 1BR/1BA Renovated with In-Unit Laundry - $2,375

 

 

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How to File for a Residential Exemption in Boston

If you own and live in your Boston property as your primary residence, you likely qualify for a residential exemption on your real estate taxes.  Through this exemption, the City releases you from paying part of your property taxes.  Last year, the residential exemption saved qualified homeowners up to $2,719.09 on their tax bill.

For Fiscal Year 2020, you have until April 1, 2020 to file the application.  For more information, including the application and other requirements, visit the City of Boston’s website here

There are a number of benefits to homeownership, and this exemption is one of them.  Be sure to take advantage!

 

 

 

A Look at Boston's Most Popular Areas for Office Space

When evaluating “Boston” office space, some of the most popular locations companies consider are: Back Bay, Seaport, Financial District and Kendall Square (which is actually in Cambridge, not Boston).*  How do these areas compare?

 

Market Rent Rate ($/SF)

Source: CoStar
 

Sitting between two of the best educational institutions in the world – Harvard and MIT – Kendall Square is highly sought after by companies looking to source from the highly educated workforce in the neighborhood.  Kendall Square continues to have the highest average office rental rate in the area. 


Vacancy Rate

Source: CoStar


The vacancy rate in the Kendall Square office market is also the lowest, which is understandable given the high demand for this space.  Projections show that the vacancy rate is expected to increase substantially in the next few years.  That is primarily due to the large amount of space currently being developed (see chart below) – it is expected that this supply will outpace demand.  While the rent chart forecasts steady to slightly lower rent rates for Kendall Square, it is foreseeable that rents will drop even more. For landlords, this means they should consider locking tenants into long term leases now at the current, higher rent rates; for tenants, this means they are motivated to sign shorter term leases and then negotiate more favorable lease/rent terms in a few years.


Under Construction

Source: CoStar


The amount of office space under construction in the Back Bay and Financial District has remained low. Back Bay is predicted to regain its position of having the lowest vacancy rate in 2021 – partly due to this lack of new construction, but also because many companies have a strong desire to be there.  

While the rent chart indicates the Back Bay, Financial District and Seaport will all follow a similar pattern in terms of rent growth/stabilization, based on the office space currently under construction and forecasted vacancy rates, it is likely that Back Bay office rent rates will increase at a greater pace.

Understanding Boston’s office market trends is critical for both landlords and tenants to understand in making leasing decisions.  Please let us know how we can help you complete an evaluation for your company.  Start your search for Boston office space here.
 

* Certainly, there are other areas and neighborhoods that should be considered as well.  If you are planning your Boston office move, please contact us and we can work with you on a complete assessment based on your requirements.

 

 

 

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Boston Landlords: 10 Tips for Renting an Apartment that is Still Vacant

September 1st has come and gone. Boston’s prime rental season is over and the number of renters out there has decreased sharply. However, all is not lost. Here are 10 tips to help get that apartment leased:

1.  Make Necessary Repairs.  If something is clearly broken (e.g. cracked windows, doors that do not close, etc.), many prospective renters will see that as a red flag. 

2.  Deep Cleaning.  Has the apartment been cleaned since the last tenant moved out? Prospective tenants this time of year generally have more options and are more likely to scrutinize unclean apartments.    If the apartment windows have not been cleaned (inside and out), that is a must-do to help maximize the natural light.

3.  Freshen Up the Paint and Floors.  Without furniture, scuff marks become focal points.  Not only will a fresh coat of paint help the apartment show better, but now is the best time to get that done since there are no tenants to work around. The same is true with the floors – refinishing hardwood floors and replacing carpet (with new carpet or hardwood flooring) can make a world of difference.

4.  Improve Curb Appeal.  Depending on the type of rental that you own, there may be limits to what you can do to improve the curb appeal.  However, for prospective renters, their evaluation of your apartment begins even before they step into the unit.  Put yourself in their shoes and walk-up to the building – how does the landscaping look, is the mail in boxes or scattered in the foyer, are the common areas clean, are the hallway lights working?

5.  Take New Pictures.  Nearly all renters’ searches begin online, so pictures will make the first impression. If you have been using the same pictures, take new pictures to give a fresh look.

6.  Consider Going Pet-Friendly.  For renters with pets, they will ONLY look at pet-friendly apartments.  If you have been advertising your apartment as not accepting pets, then there is a new audience of tenants that you could reach. However, careful consideration needs to be given here – for instance, some condo associations prohibit pets.

7.  Change the Lease End Date.  Consider entering a lease until June 1st, rather than doing a lease until September 1st. September 1st has tended to be the biggest turnover date in Boston, but June 1st is a popular lease turnover date too. Additionally, if you miss a tenant for June 1, then you still have several months of “prime” rental season to work with.

8.  Maximize Your Listing Exposure.  Working with a real estate broker can help maximize your exposure.  For instance, here at Cabot & Company we utilize a number of listing and advertising platforms in order to reach tenants.  Not only does the tenant typically pay the brokerage fee, but we provide a credit check and manage the lease signing and collection of upfront payments.

9.  Offer Incentives.  Agreeing to pay all or half of the broker’s fee can help alleviate a renter’s upfront moving costs.  If the renter needs to come up with the first month’s rent, last month’s rent, month security deposit and a broker fee, that can work out to a sizable amount. Foregoing the requirement for the last month’s rent and/or accepting a lower security deposit can also help.

10.  Consider a Rent Reduction.  This is the last tip, but probably the most important.  If you have already tried some/all of the tips above, then the market is saying that you are asking too much.  It is also important to consider the impact of missing an additional month’s rent as opposed to reducing your asking rent – generally, you find that the numbers work out that you are better off agreeing to a lower rent for a sooner move-in date than missing out on a few months of rent while chasing a higher rent.