Boston Average Condo Property Net Operating Income
Boston’s condo market has exploded over the past decade as dozens of new large multi-unit developments have been built. This has added thousands of new townhomes and luxury condos to Greater Boston’s housing inventory. Combine that with the shortage of single family homes in Boston, what you have is a market that is dominated by condo sales.
In fact, in 2021 Boston condos recorded 5,890 condo sales in the city alone. That is over 5 times the number of single family home sales (1,110) and 7.5 times the number of multi family sales (764) in Boston during the same period. In a market like this, many property investors are eyeing condos for potential long-term property assets.
Calculating Area NOI (Net Operating Income) for Investment Research
Condos can vary greatly in terms of NOI (net operating income) for property investors. Factors like sales prices, HOA fees, location, and average rent prices can make or break a property in terms of profitability, but with so many condo listings in Boston, there are bound to be a few potential winners in the mix.
In fact, even factoring in the added expenses for HOA fees, average NOI for Boston condos typically come out on top when compared to that of single family homes This is mainly due to price differences in the two property types. So let’s have a look at Boston’s average condo NOI based on current average rent and median condo prices.
Our yearly expenses for the NOI estimation will be based on 1 year median sales price, a standard loan (30 years, 30% down, 3% APR), yearly property taxes (at current Boston tax rate), yearly homeowner’s insurance (at city-wide average), and a $300 estimation in HOA fees. To be clear, all of these expenses can vary greatly for individual properties, and our estimation applies to a neighborhood as a whole and not any individual properties within that neighborhood.
Our yearly revenue for the NOI calculation is derived from taking the average rent price for Boston apartments and multiplying by 12.
Looking at the city of Boston’s condo data on its own, it looks like the average NOI is running a yearly loss of -$6,635 for condo properties. If we isolate the same condo sales data for the 17 suburbs closest to Boston, we see a slightly more optimistic market with an average NOI of -$5,474. So investors looking for condo investments in the suburbs may have a slight advantage on those looking in the city.
If we look at the best and worst Boston neighborhoods by Condo NOI, we get a good sense where our best markets to look might be.
There are 8 neighborhoods in Boston that have a positive condo NOI, and they are a pretty even mix of suburban areas, border neighborhoods, and core areas. The areas with the worst projected NOI are made up entirely of Boston's most expensive real estate markets.
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