Places where it’s getting more and more expensive to become a small landlord
The soaring cost of two- and three-family homes is probably affecting your rent, too.
Ever dream of becoming a landlord? Better get ready to ante up.
The cost of two- and three-family homes – basically the starter properties for aspiring landlords – has soared over the past few years, stats from The Warren Group show.
And the biggest increases have come in the Boston area, with Cambridge one of the most expensive places in the state to get started in the rental business.
The median price of a three-family home in Cambridge is now up to $1.2 million, up from $750,000 five years ago.
The price of a two-family home in Cambridge has also soared, crossing the $1 million mark this year. That’s up from just under $700,000 in 2010.
“I never thought I would live through a cycle like this,’’ said Tim Schmidt of REMAX Destiny in Cambridge. “This has been nuts the past couple of years.’’
Other local cities and neighborhoods have seen the price of two- and three-family rentals go through the roof as well.
The median price of a Somerville three-family is now $850,000, up nearly 30 percent from a decade ago. A two-family will put you out $730,000, up from $479,000 in 2010, according to The Warren Group, publisher of Banker & Tradesman.
Story continues after gallery.
Massachusetts towns and cities where homes are selling really fast
Driving prices up on two- and three-family homes has been intense competition for a limited supply of these starter landlord properties, with would-be mom and pop operators competing against everyone from small-time real estate speculators to foreign investors.
Soaring rents have made small rental properties more attractive as well, with Boston area rents now some of the most expensive in the country after years of increases.
In Brighton, the median price of a three-family is now $800,000, up from $690,000 a decade ago. Two-families have seen even steeper price increases, from $612,000 in 2005 to $845,000 today.
Three-families in Jamaica Plain, another hotspot of aspiring landlords, are now closing in on $800,000, up from $612,000, while the median price of a two-family is now $780,000, up from $525,000, The Warren Group reports.
The Boston area is especially attractive to investors and budding landlords of all types due to a vibrant economy and a decade after decade record of steady price increases in the hottest areas, like Cambridge, brokers say.
“This area has weathered most of the financial downfalls,’’ Schmidt said. “It is always going to be a sure bet.’’
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