Affordable housing - A Love Story
In June and July of this year, three condos in a triple-decker sold for $295,000 each. They are about 600 square feet each, with 4 rooms and 1 bedroom. For a buyer with 10% down plus closing costs (about $35,000), that obligates them to a monthly mortgage payment (with tax and insurance) of about $1885.
In the summer of 2006, this same triple-decker sold for $580,000. This buyer had over $100,000 down payment. She carried a monthly payment of about $3200 until they were sold. She also paid for renovations and broker fees.
It has been 22 years, this week, since I moved out of the third floor of this very same triple-decker in Cambridge. When I lived there, the market-rate rent was about $500. My love and I had a combined income of about $28,000 a year. We both worked in human services.
I stayed in touch with K. after we broke up. We were both nearly 40 when we bought our first (and only) multi-family homes. When I look at two- and three-family home purchases now, the income generated by rentals frequently does not make them profitable. This makes me wistful for my rental days, as well as the time when two-family homes were a way into home ownership.
(This entry is dedicated to K.R.P., of Philadelphia)
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During my home search, I've found that multi-families provide a slightly more affordable alternative in expensive towns like Newton. However, In my opinion the burden of being a landlord isn't worth the privilege of being a homeowner, especially when a few months of not being able to rent a unit might lead to strained finances due to the larger mortgage and possibly foreclosure.
Your perception is correct. IMHO
I didn't make myself clear enough in the second paragraph. The woman who bought this three-family for $580K was carrying a $3200 monthly payment. If she rented all three, she'd just about break even. Her way to financial gain was by selling off as three condos.
Owner-occupied two- and three- family homes are a good thing that is now much less economically feasible.This due to sale price inflation which outstripped rental inflation.
I mourn that loss. People like me and K.R.P. benefited from a real estate environment that has disappeared in the last inflationary wave.
I didn't think about it that way. Even though you don't make money on the monthly rent, you end up making more on the sale than if you bought a SFH or condo since the multi-family is worth more to begin with. That would require holding the property for a long time of course, and I wouldn't want to subject myself to such a high mortgage for a long time unless I could afford it w/o the rental income from the additional units. I'm not old enough to remember the old days of when multi-families were bought to own and rent, rather than to convert into condos. If I was (old enough), then I wouldn't be looking at multi-family units and condos to begin with. I'd already own a SFH! =(
"I'm not old enough to remember the old days of when multi-families were bought to own and rent, rather than to convert into condos."
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I could have afforded an SFH in Philly, the multi allowed me the choice of a much safer & convenient neighborhood which also appreciated at a far greater rate than where I might have bought an SFH.
I doubt I'd have ended up an owner had I stayed in the greater Boston area - I think I'd have been priced out of the market. You don't see those tiny condo associations you seem to have - most people here would be very reluctant to accept the level of risk a three condo association suggests.
This blogger might want to review your comment before posting it.
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