All Forum Posts by: Tyler Munroe

I've been analyzing a lot of two-family properties in the Boston area lately, and almost every one that is rent-ready turns out to be negative cash flow or break even at best. If you were to buy one of these with traditional financing—20% down at a 7% interest rate—you would actually be paying out of pocket every month just to own the property. The rents simply do not cover the mortgage and expenses.

That raises an important question: who is actually buying these properties?

The fact is, these properties are selling, and there are several key groups making these purchases.

1. Developers Converting to Condos

In high-priced areas like Boston, Cambridge, Somerville, and Brookline, many developers buy two-family homes with the intention of converting them into condos. If they can expand the square footage—whether by finishing a basement, adding an attic space, or making other improvements—they can increase the value and sell at a higher price. For them, cash flow is not the primary goal; it is about appreciation and resale value.

2. 1031 Exchange Investors

Another group purchasing these properties includes investors utilizing 1031 exchanges. A 1031 exchange allows an investor to sell an investment property and reinvest the proceeds into another property, deferring capital gains taxes. Since these buyers often have large sums of money from their previous sale, they can put down a significant amount of cash, keeping their mortgage payments low and making the numbers work despite high purchase prices.

3. Foreign Investors Buying in Cash

Boston is considered a stable real estate market with strong appreciation, making it attractive to international investors. Many of these buyers purchase properties in cash, meaning they are not concerned about monthly mortgage payments or short-term cash flow. Instead, they view real estate in Boston as a safe place to park their money while benefiting from long-term appreciation.

4. House Hackers

Some owner-occupants are still using the house hacking strategy, where they live in one unit and rent out the other to offset costs. This approach used to be a great way to build wealth, but with today’s higher prices, it is becoming more difficult. That said, some buyers still choose this route because it can be cheaper than renting or buying a single-family home, and they hope that rental income will improve over time.

If you are looking for cash flow in the Boston market, the numbers may not be in your favor right now. However, there's definitely areas just outside the city where deals are starting to pencil, so that's great to see.

I’d love to hear from others in the market—what are your thoughts? Are there other types of buyers I missed? Is there still opportunity in Boston’s two-family market despite the challenges?

I posted the numbers on an IG reel if you'd like to see some examples, I'm @WealthyREI. 

1205 Mass Ave, Arlington – Mixed-Use Investment Opportunity - $1.6M

Back with another one here! 7-unit mixed-use property with some interesting angles. It has 3 residential apartments, 2 street-level retail spaces, and a garage/office combo in the back.

Currently vacant, but after running comps, I estimated a stabilized rent roll of $13,500/month across all units, including strong comps for the residential, retail, and even the garage/office setup.

With a commercial mortgage at 25% down, 25-year amortization, 7% rate, and $25K in operating expenses, the estimated cash-on-cash return is 7.5% when fully stabilized. I even built about $150k of renovation expenses into this number, but I did assume you'd self manage the asset.

What I like about this deal: The cash-on-cash return is decent for a straight rental property in an appreciating market. There’s potential for a commercial condo conversion in the $600K–$700K range. I found comps for new garage/office condo units in Waltham selling for ~$850K each, with most already sold. Arlington is a better location, though this building isn’t new construction, so I still think $600K–$700K is reasonable as a comp. You’d have to look into zoning and permitting, but it seems possible.

Commercial/residential deals typically eliminate smaller investors, meaning less competition and more room for negotiation. The tradeoff is needing more money down and tolerating a bit more risk.

How would you structure this deal? Keep it as a rental or try to split off the garage/office as a condo?

Hi @Dina Onur - what a great project! Would you be able to tell us what town it was in? How is the house hack working out for you? I don't hear too many investor doing ground up multi-family for house hacking in the area, so this is definitely interesting. Are you planning on eventually selling them as condos?

Good point, I should've probably title the thread "greater Boston" area, because the truth is there's no cash flowing properties close to the city at current prices and rates (at least nothing on market). I'm looking at areas within the 95 beltway that have direct access to the city via public transit or a short-ish drive. Boston is still the main economic hub for these areas, so I can consider that "greater Boston". With unaffordability at all time highs in the city, these areas are becoming more desirable so we're seeing rents that allow for cash flow at current prices and rates.

What's interesting is that multi-family is very much alive in the city, as properties are trading despite no cash flow potential at current rents, property prices, and rates. I think most of the buyers are some variation of the following:

1) Condo conversions

2) 1031 exchanges looking to relocate equity to a high appreciating area, able to buy down the mortgage enough so that the property produces cash flow.

3) Owner occupants looking to offset a portion of the mortgage (even though the numbers aren't great for house hacking, I still think people are doing this to some extent)

4) Foreign money all-cash transactions

Since inventory is so low, there's enough of these types of buyers to keep transactions happening at prices that don't make sense to average investors, in my opinion.

Adding another to this thread - 129 Webster St, Haverhill, MA.

This 4-unit property in Haverhill presents a strong investment opportunity with recent upgrades, solid rental demand, and potential for easy value-add improvements. I've been watching this for a bit and it's at 10 DOM, so may be some room on the price since it's sitting. I also like Haverhill as a peripheral city to Boston - commuter rail stop, close to major highways, and nice downtown with some municipal improvements on the way.

PROPERTY OVERVIEW:

• Unit Mix: (3) 2BR units, (1) 1BR unit, plus parking
• Recent Upgrades: New roof, updated electrical panels, new hot water heater
• Location: Walkable to downtown in a well-established neighborhood
• Parking: Dual driveways provide off-street parking for tenants

RENOVATION SCOPE & COSTS:

• Limited photos available, but if the rest of the house is in similar condition, likely cosmetic rehab only (~$30K per unit).
• Potential upgrades include paint, flooring, kitchen cabinets/counters, and appliances.
• Ideal for a DIY landlord or owner-occupant looking to add value, but also works well for any investor seeking cashflow.

MARKET RENTS & INCOME POTENTIAL:

• Market Rent Estimates (based on local comps):
  • 2BR Units: $2,200 - $2,500/month
  • 1BR Unit: ~$2,000/month
  • Total Potential Rent: ~$8,600/month
• Currently Fully Tenanted:
  • Current rents cover mortgage payment.
  • Would need to manage tenant move-outs before renovations, which could delay the project.
  • Evictions may be necessary if tenants do not leave voluntarily.

FINANCIALS & PROJECTED RETURNS:

• Financing Assumptions:
  • 20% down payment, 7% interest rate, 30-year fixed mortgage
  • Principal & Interest (P&I): ~$4,524/month
• Annual Expenses (including taxes & insurance): ~$17,000
• Utility Costs:
  • Heat is not separately metered, leading to higher utility costs (factored into analysis).
• Projected Cash Flow & Returns:
  • 10% cash-on-cash return once stabilized
  • $31K+ annual cash flow
  • 5-year total ROI ~95%, factoring in principal paydown and 2% annual appreciation

Thanks @Lien Vuong! Great info, nice to see there's some deals making sense these days, although it was UAG in only a few days so we won't know the final price for a bit.

Thanks Warren! I haven't walked this property to verify numbers, so it could definitely be a bit more expensive for the renovation, but nice to see some deals pop up that potentially cash flow in strong markets around Boston. Too bad I can't say the same for the anything close to the city...

As an investor-only agent in the Boston area, I'm looking at the market nearly every day and analyzing deals for clients. I've been pleasantly surprised to see a mix of buy and hold, flip, and ADU type opportunities surface, so I figured I'd put them out to the BP community for anyone who's in this market and feeling frustrated. I haven't walked most of these properties in person so my rehab numbers are based off the pictures, but it definitely seems like there's some value to be had here. Feel free to let me know what you think and post some more deals if you find them!

78 Endicott St, Peabody – A 4-unit property with all 2BR/1BA layouts and off-street parking in a prime location near Route 128, the commuter rail, and Salem—just a 30-minute drive to Boston.

Investment Breakdown:

• Purchase Price: $900K
• 20% Down Payment @ 7% Interest: $180K → P&I = $4,790/month
• Renovation Estimate: $200K ($50K/unit) → Total investment: $340K
• Operating Expenses: ~$18K/year (taxes & insurance)
• Stabilized Rents: $2,300/unit (market comps)
• Cash-on-Cash Return: 9% when stabilized

This deal checks a lot of boxes:

• Max units for residential financing – You could live here & house hack
• Cosmetic rehab potential – Flooring, cabinets, counters, appliances, paint (~$50K/unit)
• Strong long-term ROI – Factoring in principal paydown + 2% appreciation, a 5-year stabilized ROI of ~75%

Pre-pandemic, these deals were more common closer to the city, but now we’re looking slightly further out—yet they still work as wealth-building assets.

Hi @Lauren Frazer! Sounds like you're on the right track for areas to find deals. I feel like there's still people trying to make BRRRR deals work close to the city and the truth is it's nearly impossible given prices, rates, and the cost of construction. Pushing into other, close-by, markets is the best (and maybe only) way to make it work. You may want to find a good agent in the southern NH area as I'm hearing that market is prime for investment with people moving up from MA, but your other markets might be just as solid.

Also, since you're already an agent, it's pretty easy to get your reciprocal license for NH or RI. Could help you save some serious $$ if buying and selling there and can also get you access to their MLS systems. I did it for NH, it was very easy!

Hi @Liam Mallon - not a lender, but would you mind sharing your thoughts on how best to utilize Zillow as an agent? I've heard differing opinions on it, especially in the MA area. Thanks!