We all know that the Boston real estate market is hot right now, but what does that mean if you are thinking about selling your multifamily property? It means that your property is worth more than it was last year. Currently there are a few trends that you need to be aware of that have a direct impact on the value of your multifamily property. The first is that rent prices have continued to rise since 2010. The most recent data shows that rent prices from 2011-2012 have increased an average of 7% in metro Boston and concurrently, the vacancy rate is continuing to fall and is now in the low 3% range. These two indicators combined mean that your multifamily property should be fully occupied this year for increased rent, or atleast have the gross potential rent increased, which means that your Net Operating Income is increased and your multifamily property is now worth significantly more than it was last year! Isnt that great news? Wait, it gets better…. As you know, Boston is one of top investment markets in the country and investors are flocking to the market for its return and relative security. The result has been a huge increase in Demand that has far out paced supply and in turn a driving of cap rates lower. As you know cap rate and price are inversely related so this is great news if you are thinking of selling your multifmaily.
Rents ↑ + Vacancy ↓ +( Demand ↑/supply ↓) = Capitalization Rate ↓ == Value of multifamily ↑