How to make money in the Boston luxury condo market

How to make money in the Boston luxury condo market

You can always find a deal 

Never work with rookie Boston real estate agent

• Boston real estate agents who are experienced and successful – these tend to be the ones who are most well connected and learn about deals before anyone else. these individuals posses the knowledge and skill of selling Boston luxury condos from past experience.
• Boston real estate agent who are proficient in finance – if they can understand market trends and what is considered a bargain, you are more likely to make money. They’ll guide you and tell you what to do and what not to do. Once again, experience matters.
• Boston real estate agents who won’t give you answers when they are unsure – if you push a real estate agent to give you an estimate on what someone is likely to sell a Boston luxury condo for or what a unit is worth, they will probably give you an uneducated answer. But if they tell you they need to do their homework and get back to you, you are working with someone who is smart.
• Someone who is hungry – you don’t want a Boston real estate who just takes you to all of the open houses you are interested in. You want someone who will knock on doors and look for deals that aren’t on the market yet. And trust me, there is a ton of deals that aren’t on the market yet.

Retrain your brain

1. The best sellers are motivated sellers – you should only be bidding on Boston luxury condos that have been on the market for 6 or more months. These sellers are either really stubborn when it comes to negotiating or they will be desperate to sell. On the flip side condos that are only on the market for less than 2 days, and before the first open house. The logic sometimes an in experienced broker may have under valued the property, if you move quickly you may find yourself a deal.
2. Boston Views are everything –  If you can, buy a Boston luxury condo with a view of the Boston skyline or Boston harbor, do so, because such properties are more desirable, especially when your want to re-sell or rent out in the future.
3. Plan for the worse case scenario – I recently had a client that viewed a property that had a great view of the Boston skyline and was on the market for a very long time. The issue was it was priced at $2,000,000, which didn’t make sense to me. Assuming he had put 25% down, his mortgage payment would have been $11,188 a month (which includes property tax, home owner dues and insurance). If he had wanted to rent that unit out, he would have realistically gotten $7,000 a month. That means he would have had a negative rental disparity, owing $4,188 a month. In essence, that would have been a bad buy because it wouldn’t have given me a positive cash flow. And you should always be cash-flow-positive with any rental property.
4. Know your buyers – eventually you are going to sell. So before you buy, make sure you know to whom you could ideally sell. For example, had my client bought that $2,000,000 condo I mentioned above, he would have had to target someone under 30 as it’s a place for a younger person, as this condo was a fourth floor walk-up. The issue is, not too many people under 30 could afford to buy a $2,000,000 condo, which makes it risky.
5. Optimize for returns – you typically make money on the buy, never the sell. No one buys a Boston luxury condos for more than it is worth, which means if you buy for less than property’s market value, you’ll be making money from day one. Not only should you aim for a good deal, but you should also buy in a strong market that is growing, has a large and various industry openings (health, finance ect) and doesn’t have abundance of inventory where the condo is priced.
6. Schools and kitchens matter –  As a Boston single resident, who eats out a lot  I don’t care what a kitchen looks like or what kind of a school district is near, other people do. Don’t take these aspects for granted because Boston condos and especially single-family homes in the burbs are very desirable attributes usually sell fast. Plus, homes with good school districts usually have a lower crime rate.

Boston luxury condo tips of the trade

1. Don’t use clean numbers – when I put offers on homes, I use random numbers. For instance, instead of placing an offer for $500,000, I will place an offer for $490,492. That number is so random, it usually makes people feel that I don’t have much more money, which typically makes them friendlier to negotiate with.
2. Close fast – people who close fast tend to get the deals first. If you can, offer cash. If you want, you can always refinance later and pull out the money. Or if you can’t offer an all-cash deal, try to get pre-approved for and start working on your loan, which should help. I would also recommend that you stay away from major banks like Bank of America or Wells Fargo as they tend to take months to approve a loan versus a small mortgage company.
3. Never show interest – the more interest your show, the harder they are going to be when negotiating with you. Let them know that you are looking at other properties and that if they can offer a better deal, you’ll go with them.

Conclusion