Buying a Multi-Family Home in Stoughton? Here’s What to Know First

Founded in 1726, Stoughton is found a mere 20 miles from the hustle and bustle of downtown Boston. During its heyday, Stoughton was renowned for its shoemaking industry. Today, it boasts an eclectic array of restaurants and buildings and draws families from all over who want to be close to Boston without living in the city.

New England's only Craft Museum, as well as Borderland State Park, are both accessible from Stoughton. Alternatively, pop over to Boston on the MBTA to shop in the Prudential Center or explore the Boston Commons. Stoughton is just a stone's throw away from all the action. With more and more people moving to Stoughton, it’s a great time to invest in multifamily Stoughton luxury homes. Read on for a guide to choosing the right home and some tips for setting yourself up for financial success.

When investing in multifamily properties, location is paramount. Multiple units mean multiple renters must find the locale desirable; therefore, investors should focus their search on areas that are high-growth and offer high yields with a preference for neatly maintained, prestigious neighborhoods.

Investing in these upscale locations will lead to more reliable demand from tenants and yield greater returns over time. Consider Stoughton homes close to downtown, with easy access to amenities and nightlife or commuter hubs like the train station.

Evaluate the property as a whole. Of course, owning more units will typically lead to higher income, but it also means a higher down payment upfront and higher maintenance costs. A solid option for low risk and high reward is the duplex (two-unit), triplex (three-units), or four-plex (four-units) model. These multifamily home styles rarely fail those who invest in them.

When buyers look for a multi-family home, the primary concern is typically regarding how much income the property can generate. You may be able to determine how much it's been rented for in the past from listing services. If not, look at the prices of similar properties in the Stoughton area.

Evaluating these current rental trends will give multi-family home buyers insight into how much to set the rent at in the future. It also provides a general idea of how much you may be able to make in gross income (expenses not yet included). Consider that not every unit will always be filled, but that with a multi-family home, it's unlikely ever to be completely vacant.

If you are hoping to increase the value of a multi-family Stoughton luxury home, consider making a few simple cosmetic improvements. Upgrading the interior design can make a significant difference in the unit’s appeal, from new appliances to new floors and a fresh coat of paint. Any cosmetic repairs that make a multi-family home look nicer usually lead to a slight hike in rent, making it easy for a landlord to scale the income they've been making over time.

When it comes to multi-family home buying, a conventional loan is most often the best course of action. These give buyers a bit more freedom than an FHA loan. Conventional loans are issued by private lenders at a rate set based on income, debt-to-income ratio, and credit score. Some lenders will offer better rates, so it’s essential to shop around.

There are other types of loans, such as a home equity loan, private money loan, and hard money loan, that buyers may be presented with as options when looking at a multi-family home purchase as an addition to a primary residence. A financial advisor can provide guidance on those.

To identify lucrative deals, it is critical to crunch the numbers and gain a rough idea of how much profit a multifamily property can yield. Utilize these calculations to evaluate the disparity between anticipated income streams (rental payments, storage fees, parking fees) and expenses (maintenance costs, repairs, and more).

To calculate Net Operating Income (NOI) without access to comparable properties in Stoughton, use the 50% rule: take the projected income and divide it in half. This figure is then your expected expense number.

Subtracting these estimated expenses from the total anticipated revenue gives you NOI. Knowing what the net income is likely to be after expenses are paid for will start to give you a better idea of whether or not a multifamily home is worth buying and how much money is necessary to invest.

After calculating net income, buyers have started to get a sense of how much money they'll need to invest and what kind of initial monetary losses they're looking at. The tipping point in deciding whether to buy a multifamily home usually comes when the mortgage is factored in.

To accurately determine your potential monthly profit, subtract the property's mortgage from its total net income. You can then gain a better insight into whether or not investing in this particular asset would be worth it.

Multi-family homes are one of the best real estate investments a buyer can make and serve as a wonderful addition to any real estate portfolio. However, they cost a lot of money upfront. Therefore, the best thing a buyer can do is make sure that they have enough money saved up to pay for a down payment, closing costs, day-to-day costs, and other expenses associated with any properties they own. Overall, financial readiness is absolutely key.

If you’re ready to purchase a multi-family Stoughton luxury home, reach out to the experts who know how to get results. Contact the leading team at William Raveis Elite today to learn more about starting your investment journey. Before you know it, you’ll be working toward your future goals with confidence and competence on your side.

_{*Header photo courtesy of William Raveis Elite}