Multi-family property search: investment or owner occupancy

Triple Decker .. 3-family


There are several reasons to search for a multi-family (2 or 3 unit) property in the Boston metro area. The main two reasons are: 1) to be an owner occupant of one of the units; 2) to own the units as an investment.


Owner Occupying a Multi-family

When you live in a high cost of living area such as the Boston metro area, the reasoning to purchase a multi-family property is straight-forward — live in one of the two or three units in the property and rent out the other units to help defray the cost of ownership (mortgage, etc.). This is the reasoning and path that I took in 2009 and it requires the patience to find a property that is in your desired location, price range, and in fair to good condition (depending on how handy you are).


Investment: Multi-family

In this case, you are looking to put some of your money to work and get a better return than other avenues. Factor in the usual things for a property investment: 1.) cost of borrowing money; 2.) price of the asset; 3) return on investment compared to other oportunities (interest from treasuries, stocks, interest from bank savings). In 2011-2012, these are all in your favor for purchasing a multi-family home.


In both cases, have a simple model to follow to reach your goal for the purchase of a multi-family. What is the gross monthly revenues from the property? What are the other costs? What is your Net Monthly Revenue? Monthly costs are: property taxes, home owner insurance, water/sewer bill, maintenance, vacancy rate.


Example equation to find your Net Monthly Costs:


Gross monthly rent:  $3,500

Property Tax (monthly): $350 (based on $4200 per year)

Home Owner Insurance (monthly): $100 (based on $1200 per year)

Water/sewer:  $50-100 per month (based on $1200 per year)


To find your net income, subtract monthly rent from property tax, insurance, water/sewer, and if you know maintenance costs or other costs, factor them in accordingly.


The net monthly income for this example is $2950. The net yearly income would be $35,400. Subtract yearly maintenance costs, vacancy rates, and utility costs to get a firmer net amount.


Good luck in your multi-family home search!







Willard D. Cunningham
Willard Cunningham, Broker/Principal
(617) 921-4758
MA License# 9077116
1953 Massachusetts Ave.
Ste. 400775
Cambridge, MA 02140
MA License: 9011


“Your referrals to me will get the best of many years’ residential real estate experience

– and my heartfelt thanks.”

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