When looking at properties for sale in Boston, it is enticing to imagine buying a multi-family Property given the diverse options it provides for you as the owner. 

Whether you are building out a real estate investment portfolio or looking to generate passive income from your primary residence, Boston is the perfect place to secure a duplex or triplex. 

Many people come to Beantown for school or work, making it one of the country's most sought-after real estate markets with plenty of active renters.This creates a huge opportunity for buyers to scoop up a multi-family property for income and the possibility of long-term appreciation.

The prospect is exciting, but purchasing a multi-family property requires careful consideration and strategic planning. To help buyers maximize their investment potential, the team at Prevu Real Estate put together some tips to keep in mind when buying a multi-family house in Boston. 

Tips for buying a multi-family in Boston

• Figure out a budget

• Narrow down your property search

• Learn what building fits your goals

• Find an agent experienced in multi-families

• Hire a licensed home inspector

• Understand how to manage the property

Figure out a budget 

Before you start looking at multi-family homes for sale in Boston with room for three units, you will want to figure out your budget. Buying a single-family home is expensive, but depending on the market, you can buy a duplex or triplex for a few extra hundred thousand dollars, which is less expensive than purchasing a second home. 

If you are making the purchase with your capital, you likely have a good idea of your funds. But if you are financing your purchase with a mortgage loan, you must compile your financial information.

A lender will need information about your income, savings, a list of assets, and any debts you have. After reviewing this data, a lender will provide you with a pre-approval letter showing anyone selling a multi-family that you have a financial backer ready. 

Once you have financing, you should break down the expenditures like property taxes, insurance, closing costs, and potential renovation costs. While renters will bring in passive income to help you cover your mortgage and other expenses, you still want a healthy cash flow just in case you lose a renter or have to do repairs. 

Narrow down your property search  

Boston’s neighborhoods define the city quite a bit, and some have specific zoning for single and multi-family units, which dictates what kind of buildings are available. 

Some of the popular neighborhoods in Boston that allow for multi-family properties include: Allston, Brighton, Dorchester, East Boston, Jamaica Plain, Mission Hill, Roxbury, South Boston, and West Roxbury, among others. 

However, even within these neighborhoods, specific zoning restrictions may impact the type and size of multi-family buildings permitted. 

Learn what building fits your goals

Once you nail down your target neighborhoods, it is time to start looking for properties. 

First, you should know that buying a multi-family with more than four units is considered a commercial property. That means you need to obtain a commercial loan and meet different regulations. So long as the building has four units or less, you can purchase a multi-family with a residential loan. 

“Consider the pros and cons of two, three, and four-family homes. A two-family might be the most affordable option, however if one renter suddenly breaks the lease, you will likely need to dip into savings to cover your mortgage payment,” according to Greg Cummings, General Manager for Prevu Real Estate in Boston. “A three or four-family home will cost more upfront, but you diversify your expense risk across multiple tenants, plus you have the added benefit of extra passive income when at full occupancy.”

Another thing to consider is if you are buying a property with tenants already living in it or is empty. Review the seller's financial records, including rental income, expenses, and historical occupancy rates. This information will help you assess the property's viability and potential return on investment.

Find an agent experienced in multi-families

Purchasing a home in Boston takes a lot of work, which is also true of multi-families. To simplify the process, you should partner with an experienced buyer's agent to augment your search. 

Local agents will know where to find multi-family units, help you look for any issues in properties you look at, and will help you get across that final critical mile of negotiations. Every agent is different, so interview a few to get a well-rounded idea of their experience. 

As you ask about the deals they've done in the past, ask if they can offer you a commission rebate as part of their service. Sometimes called a commission refund, the practice allows a buyer's broker to return a portion of their commission to buyers after closing. 

Prevu Real Estate offers the largest commission rebate in the Greater Boston Area - giving buyers back up to 2% of the home’s purchase price. 

For example, if you purchase a multi-family property in Jamaica Plain for $1.8 million with Prevu, you could receive up to $36,000 back after closing. Funds like this go a long way toward rebuilding your savings, renovating the rental units, or setting aside funds for future maintenance.

Hire a licensed home inspection

Buying a home and finding an issue with the heating, cooling, plumbing, or electric is a headache for anyone. But if you purchase a multi-family and uncover leaky pipes in your tenant's walls, you are in for an expensive headache. 

As you attend open houses or property tours, you want to ask about the roof's age and know about the building’s systems. Another vital facet of the home is the fire alarm. Ask sellers if the building has interconnected alarms or if the individual units have local systems. 

You also want to ask about lead paint, as Massachusetts has specific regulations associated with it. A qualified home inspector experienced with multi-families can look for hard-to-find issues. 

One of the most important things to check is the electric meters. Ask sellers if the home is on one electric meter or if there are separate meters for each space. If the entire property is on a single meter, you must factor the energy costs into the rent. If there are separate meters, renters can be responsible for their own utilities. 

Understand how to manage the property

Although money generated from a rental property is often called "passive” income, the work associated with being a landlord can be anything but. 

Basic tasks like taking out the trash, ensuring recycling is in order, and managing the upkeep of the property are only some of the daily maintenance tasks. If the building is owner-occupied, these tasks are the same ones you have to do anyway, but if you live off-site, these responsibilities are extra work you have to put in. 

Some people create agreements with their tenants to do this work, but this may come with pitfalls too. If it snows and someone gets hurt slipping on the snowy sidewalk your tenant did not shovel out, you may be liable for the injury. 

You must also be ready for calls from renters in the middle of the night, with issues ranging from a simple sink clog to an appliance breaking down. If you get a leak in a window frame or, worse, a wall, you have to be ready to fix it as soon as possible, as your renters rely on you for the upkeep of the property. 

But the most challenging problem to deal with as a landlord is eviction. If a renter is delinquent on rent, you must have the courage to call them out or start proceedings to remove them from the property. 

Any of these events adds a lot of stress and takes time to deal with. But the upside is the passive income that can pay for your mortgage and more. 

Multi family homes for sale in Boston

Interested in buying a home in Boston? Browse listings and see how much you can save with Prevu’s Smart Buyer Rebate.