With winter upon us and this crazy year coming to a close, my teammates and I are preparing for what is usually a seasonally good time for buyers here in the Northeast. Cold temperatures and shorter days often keep some buyers home creating less competition. Furthermore, sellers who list their property during these months are typically doing so because they need to, leading to increased motivation. These two factors mean a savvy and prepared investor may find the deal they’ve waited for all year!
Our team specializes in helping newer investors get started, typically by house hacking 2-4 unit properties using low-downpayment loans. One of the most common questions we get is “How do I get Boston to cash flow?” It’s a fair question seeing as Boston-area prices have seemingly gone straight up since the 2008-2009 financial crisis. In this blog post I will break down my top 3 recommended strategies to accomplish a successful house hack (and achieve cash flow!) in an expensive market like Boston.
Tip 1 – Make sure to occupy the MVS (Minimum Viable Space)
Whether you’re buying a property by yourself, with a partner, or even a family, this tip is all about minimizing your footprint in the property. By using the bare minimum amount of space for yourself you maximize the space used to create rental income. One thing I’m always on the lookout for is a 1 bedroom or studio unit within a much larger 2-4 unit property that has 3 or 4 bedrooms in the other units. This allows for the owner-occupant to have their own dedicated space while not “wasting” extra bedrooms in their unit that could otherwise be rented. While I consider this the “ideal” scenario for a house hack, it’s certainly not the only way as we will see in the next two tips.
Tip 2 – Enduring Short-Term Pain For Long-Term Gain (aka Roommates)
So you can’t find a huge 4-family property with a small 1 bedroom unit just for you (see tip 1). What do you do, give up? No, of course not. The second best option for a house hack in this area includes getting some of your closest friends to move into your unit with you to occupy the extra bedrooms. You must avoid “wasting” extra bedrooms at all costs! This scenario can, and should be, a win-win scenario for both you and your friends. Your roommates have a great place to stay for less than a 1 bedroom apartment and you have someone helping pay your mortgage – perfect!
Tip 3 – Finding “Bonus” Space
This last tip is arguably the most difficult to pull off but when the right property pops up you pounce! Many properties in the Boston area have been expanded to include living areas in their attics and basements. In some cases property owners have put in kitchenettes, bathrooms, and bedrooms. By no means does this create another legal living unit, but it does create what I consider to be a house hacker’s dream! This extra space is often private and can be the owner occupant’s dedicated space. However, because this extra space is connected to another unit you will still want to consider who your roommates are as you will likely pass by them and/or have access to each other’s living areas. It is essential you perform due diligence to ensure all expansion work was completed to code and with the necessary building permits. A good investor-focused agent can help you avoid any pitfalls!
Remember, in hot markets deals often need to be created. Those who think outside the box are rewarded, while those who don’t get frustrated and give up. Don’t be the latter!
The team here at Candor Realty Greater Boston is passionate about real estate investing and helping our clients achieve their financial goals through real estate. Drop us a message or give us a call at 617-804-1450 if we can help you on your journey.