Massachusetts Cap Rates

[Alex Jean Baptiste]

Hey guys so for those investing in buy and hold what is the minimum cap rate you’re settling for in these two areas Boston, Massachusetts and Brockton, Massachusetts. And then secondly what is the your realistic cap rates youre going for where it’s a pretty good deal. I’ve seen some in Boston from 9-12 posted by other agents however I’ve only come across lower.

So again what’s the minimum and what’s the realistic ideal.

[Filipe Pereira]

Originally posted by @Alex Jean Baptiste:

Hey guys so for those investing in buy and hold what is the minimum cap rate you’re settling for in these two areas Boston, Massachusetts and Brockton, Massachusetts. And then secondly what is the your realistic cap rates youre going for where it’s a pretty good deal. I’ve seen some in Boston from 9-12 posted by other agents however I’ve only come across lower.

So again what’s the minimum and what’s the realistic ideal.

I would pay careful attention to who is claiming 9-12% cap rates in Boston. What I have found in CT is that a lot of the listing agents "conveniently forget" actual operating expenses in properties. For example, they forget the snow has to be plowed in the winter, that vacancy exists, trash removal costs are a real think and my personal favorite....property management doesn't cost 5% of gross income.

I would be shocked to find that a property in a decent part of Boston, or Westfield, and even most of Western MA (including Springfield) has an actual cap rate of 9-12% in this market. If it does, I'd recommend buying it. 

Most actuals we are seeing right now are 6-8% in Western Massachusetts and north central CT for decent areas (think C+ / B-). 

Sorry I don't have specifics for Boston or Brockton.