Analysis of Quincy, MA: Multi-Family and Rental Market Dynamics

[Lior Rozhansky]

Hi BP,

Over the last number of months, I have been aggregating data and analyzing the Quincy, MA (south of Boston) multi family market. Here are the big trends I have uncovered. 

Quincy Areas

-From driving around and studying the rents and prices, clearly Quincy Center seems to be the hottest area in town (especially with all the new construction coming down). Excluding areas such as Wollaston and Houghes Neck that are right on the water, I noticed that South Quincy and Quincy Point seem to be values at slightly lower rents/prices, followed by North Quincy. Clearly this depends on distance to T stop, major highways etc (so South Quincy area next to Adams T stop is more attractive than the rest).

General Rental Rates

-1 bed/1 bath seem to be in the range of 950-1100 a month (600-800 sq feet)

-2 bed/1 bath seem to range in the 1400-1800 price range (800-1100 sq feet). I've noticed that on sites such as realtor.com, many of rental listings are of relatively furbished units  (hard wood flooring, tiled kitchen). I've only really stumbled on minimal number of multis that had some clear wear and tear on them. 

-3 bed/1 bath seem to range in the 1800-2200, with some very "high-end" apartments taking prices of 2500+. 

I think an interesting trend that investors have to be on the lookout for is with the newly constructed  apartments set to open in Quincy Center, will there be an impact on rental rates in these furbished multi family units that would begin dropping rental rates (logic being if i could pay another 200-300 and get this fancy new apartment in the heart of Quincy rather than dealing with a multi unit). 

Besides that, I've been trying to look for any trends that make renters "click" for in this market. Any thoughts would be appreciated, but from what I've seen, increased rent is commanded by cosmetic updates such as hardwood flooring, ktichen cabinets, and of course, the number one rule of real estate, location (T stop, highway convenience, beach).

Multi Valuation

-With a focus on triplexes and fourplexes, I started to analyze the valuations of these multi family properties. One of the biggest trends I have discovered so far by studying sold property data has been a cap rate of 3.5-4.5% (now this has gross assumptions such as a 45-50% operating expense structure--and no, when I put down an offer I will not use this, I will actually do a valuation of capex using lifeyears although repairs I'm still working on....) . I've heard on the forums and some meetings that the Boston cap rate is around 4-5%, but I did not think Quincy was so low as well! To be fair to this valuation, it does seem like many of these sold properties have obvious room for at least cosmetic repairs which could boost your NOI, though that would need a thorough analysis of its own.

As mentioned before, the expense structure has definitely been trickier to fabricate in terms of this market. I havent seen or heard anything that would suggest there are drastic flags an investor needs to be aware of here (besides floor insurance if buying close to the ocean). If someone is interested in these updates, I am planing on calling roofing companies, contractors etc. to find out their views on the expenses associated with capex (and general repairs).

Long post, but I think is a nice overview of this market. I hope its helpful to anyone thinking of buying here (I'm looking for that ever-elusive first property), and for anyone who has experience in this market, I'd love to hear thoughts on these dynamics.

Cheers,

Lior

[Andrew Schena]

@Lior Rozhansky I own 2 two families in the Wollaston area and I'd say your numbers are pretty solid. I think depending on your finishes/location yiu most certainly can push your rental rate. Overall your overview is spot on and I always am keeping a tab on this market. Quincy is poised to reap the benefits of the people who don't want the high prices of Southie and Dorchester, which is trending higher, especially along the red line corridor. Keep up the good work and let me know if you ever need any help or opinions down there. 

Best,