Income rental property is in high demand, but where can real estate investors and apartment building owners find the leverage to maximize their portfolios and new opportunities?

Demand for income property, especially multifamily is booming. Billionaire investor, Sam Zell’s predictions that home ownership in the U.S. could drop another 10% to barely over 50% has only added more wood to the fire. This surge has led to a significant jump in new multifamily construction. Yet, savvy property investors are still finding much of the best bargains and returns in renovating existing buildings, and upgrading assets already in their portfolios. This is especially true in well-established regions of the country around strongholds like Boston, MA.

The big question is not should maintenance be tackled fast, or whether the increased cash flow and wealth is in value-add improvements, but how to intelligently leverage capital to make repairs and complete remodels.

Fortunately, there seems to be no shortage of capital eager to get into real estate investors’ hands, even if it isn’t flowing freely from yesterday’s big banks.

It’s virtually impossible to touch on real estate finance today without mentioning crowdfunding. Hard Rock’s recent foray into this form of fundraising for its Palm Springs resort hasn’t just brought crowdfunding mainstream, but established it as one of the preferred financing tools for both sides.

On May 18th, 2014 fund giant Blackstone revealed the sale of five major Boston, MA office buildings for $2.1B. This follows on from $8.9B in office liquidations by Blackstone last year as the largest private equity real estate investor restructures to flow capital through new arms like B2RFinance for rental property owners.

Innovative commercial mortgage lenders like Rental Home Financing are going even further in rolling out aggressive loan products for investors, with some $4B in capital to funnel through to the front lines.

In the case of Rental Home Financing, new loan programs specifically for investors offer refinancing for cash out, as well as expanding portfolios of income investment property. Just hitting the market now are loan options which include Stated Income features and non-resource borrowing for foreign nationals investing in the U.S.

Multifamily apartment building investors seeking distressed and under-market opportunities can also take their pick from mini-perm loans which provide funding for acquisitions on underperforming properties until they can be turned around.

In summary, access to working capital shouldn’t be a stumbling block for rental property investors looking to maximize property value and cash flow in 2017. It’s just a matter of connecting with the right lenders.

Going Green helping investments

Going green is no longer for tree huggers. For commercial real estate investors in MA, it is increasingly clear that green properties and management means more green in the bank too…

According to Globe St. both Freddie Mac and Fannie Mae are working on marketing green-taqged or rated multifamily securities, and may have already been. Other investment firms like Skanska are also launching ‘green corporate bonds’ in the hundreds of millions of dollars range.

While it would be great if every firm, individual and commercial real estate investor was compelled to go green out of a desire to improve the environment, this isn’t a pre-requisite for engaging in more eco-friendly and sustainable investments.

Some of the many benefits of going green in multifamily, office and retail real estate include:

  • Adding value and increasing salability of buildings
  • Improving the ability to raise additional capital and attract partners
  • Attracting premium tenants and increasing the premium on rents
  • Creating healthier spaces which reduce liability and boost productivity
  • Keeping ahead of regulations which would otherwise require expensive tune ups
  • Potential to receive grants and other monetary incentives from federal and local gov.
  • Reduce ongoing costs to drive up income spreads and net returns

Fortunately there are many ways for today’s MA commercial real estate investors and landlords to go greener. In fact, virtually every step and process can be made greener, dramatically decreasing the impact on the environment, and improving the health of the bottom line at the same time.

Many investors are embracing new building due to low rates, low land prices and anticipated increases. These parties clearly have a clean slate when it comes to developing, with more and more working towards constructing buildings with neutral carbon footprints. Some smaller projects are going as far as engineering their own energy sources and at least generating and purifying some of their own clean water in order to reduce expenses and to become less reliant on government.

It may be harder to ‘buy green’ as an investor, especially in areas with a high density of existing older buildings. However, in turn these areas also offer office, retail and multifamily apartment building investors significant opportunities to renovate green and add a lot of value in equity and income potential.

Even the vendors commercial real estate investors work with and their own internal operations down to methods of rent collection and communication can simultaneously make a difference for the environment and the bottom line.

It’s become harder and harder to find excuses to go green.

Massachusetts real estate remains a key cornerstone in #Fightfor15 minimum wage debate. And those who invest in MA property will play a pivotal role in finding a solution, while ensuring they never even have to work for as little as $15 an hour again.

It’s not easy getting by in Boston on minimum wage today. There is no denying that. Even at $50 an hour you’ll barely be able to afford to rent the median priced rental. Getting by on $9 an hour is a challenge to say the least. That gets dramatically harder as a guy trying to financially support multiple homes, or a single mom having to come up with cash for childcare to be able to get out to work. Even a two income earning household at $10 an hour each doesn’t bring in enough. And rents aren’t likely to get any cheaper in Boston any day soon.

Yes, there are many arguments about businesses not being able to support as many jobs, at a higher minimum wage. The ignorant and those that don’t have time for compassion can simply put down the $9 an hour worker to being lazy, unwilling to get educated, or lacking innovative thinking. There is nothing lazy about working 10 to 12 hours on your feet in a kitchen which can top 100 degrees, while being treated like dirt all day.

So we have an income issue and a housing price issue.

Real estate just happens to be the apex where these two meet. Real estate investing can also be the best solution for those earning surplus amounts each month and that need to invest capital. And for those needing to boost their earnings.

Those with capital to invest in Massachusetts real estate, will find it some of the most profitable income property in the world. Even to the extent that they can choose to offer more affordable, safer, and healthier rental housing. For some investors, the rewards of this will far exceed the monetary returns. Investors and landlords can even choose to pay people that work for them a little more. You don’t have to go as far as the CEO of Gravity Payments and give everyone a minimum of $70,000. But could there potentially be any perks of paying a little more in the long run?

Real estate investing can be a great solutions for those desperate to break the cycle that minimum wage creates too. Investing in real estate can dramatically boost earnings without having to go back to school and do four years to get a degree. You may still have to put in some hours, find a way to learn, and commute to other areas like Worcester, MA for affordable deals and opportunities. But is sure beats traveling two hours to work at Burger King for $9 an hour, before taxes, only to still end up short of diapers and baby formula for your two newborns. For those not ready to make the leap all at once; perhaps there are real estate industry jobs to be found to earn while you learn. Just don’t forget to help bring others up once you are on top.

For MA real estate investors coming from both of these angles property management will be key to success. Who is going to manage your income properties?


While Massachusetts remains one of the world’s favorite property markets and commerce hubs, multiple trends are working together to drive direct investment in real estate outside of Boston.

Jobs Chasing Talent

According to the PWC Emerging Trends in Real Estate global report one of the major forces in the market is businesses chasing workers. Unfortunately; while Boston is a hot city that many talented workers would love to live and work in, it is simply becoming unaffordable. Recent coverage of America’s affordable housing crisis via the Mesocore blog shows that the salary needed to afford the median priced home in Boston has now topped $80,000. According to Zillow renting in Boston isn’t any cheaper either. In fact; a new Zillow infographic shows the minimum hourly wage needed to rent the median priced unit in Boston hitting $50 an hour. That’s twice the wage of Dallas and Las Vegas, and more than Seattle, New York, and Los Angeles. That makes it difficult for companies to hire the great talent they need, and stay competitive. More will move further out to places like Worcester, MA.

Oil & REITs

A new article from crowdfunding platform KC iFund, along with coverage from Forbes, and data from Google Finance shows publicly traded REITs taking a hit in the first quarter of 2015, while analysts fear too much exposure to oil, and current soft oil prices and loss of oil jobs will further hurt REIT performance. Unfortunately those investing through these vehicles have no control, and often little knowledge over where their funds are being invested. Those investors that want the best performing properties in their portfolios and want control over their investment performance are going to have to invest directly, or at least more selectively through smaller partnerships.

VCs Scare Tech Investors

Mark Cuban’s latest rant warning of an impending tech implosion that could be even worse than the last is sure to have sown some seeds of uncertainty. And if the past several bubbles have taught us anything it is that it is a quick and slippery slope once fear sets hold. This is only likely to add more dollars to the billions of dollars in capital pegged for investment in US property in 2015.

Increased Appetite for Expansion

Whether it is increased tolerance of risk in exchange for better yields and growth, or being tired of being too conservative investors want to expand their holdings in 2015. And real estate in this region, outside of Boston is very appealing to accomplish this without taking on unnecessary risk.

Smart Property Management

The recent massive blizzard is a fresh reminder for MA income property owners to be strategic and prepared for anything in their real estate investment portfolio. So what smart moves can help Mass. investors better secure their performance?

Major snow falls, wind storms, and other natural disasters can bring a variety of threats to real estate investors. Aside from the direct threat of property damage, there are risks of being injured trying to get out and manage properties, and interruptions to income. With this in mind here are just some of the considerations and smart plays for MA real estate investors to make to reduce risks and maximize long term returns…

Smarter Acquisition Strategy

In order to minimize risk and ensure consistent results investors should start with a smart acquisition strategy. This will take into account the strength of individual properties to weather storms, as well as ensure diversification. Rather than putting all eggs into one basket consider more properties and units. For example; those investing in Boston, might be well advised to diversify with properties further from the coast in Worcester County.

Proactive Maintenance

A proactive approach to property maintenance will help Mass. landlords to stay ahead of the game, and minimize the financial impact and anxiety when storms are approaching.

Get Insured

Even if paying all cash for investment properties in Massachusetts, or holding them free and clear, insurance is just wise. In addition to basic property insurance this might also include business insurance, gap insurance to cover cash flow shortfalls, and requiring tenants to have their own insurance too. Remember to review insurance coverage regularly and adjust as needed. With allowing policies to lapse being one of the most common issues when investors need to make claims; look to direct deposit, or other systems to automate payments so that you are never left exposed.

Planning & Preparation

It’s important for income property investors to have a plan for dealing with severe weather and natural disasters in advance. Who will get out to prepare properties in advance, and who will be the first out as soon as it is safe to clean up properties and secure them? How will records be kept secure so they are not lost?

Reserves and Proper Expectations

One of the biggest pitfalls of blizzards and hurricanes is that most investors aren’t prepared for the potential income interruption. Retail tenants can be hit if consumers can’t make it out to shop. Office tenants can suffer if communications, or banking services are down for extended periods of time, and residential tenants might be snowed in and unable to work for several days or weeks. So expect to have to negotiate and work with them, and for income to stall and come in more slowly.

Professional Property Management

Fortunately MA real estate investors can alleviate most of the above, and skillfully and successfully navigate the potential issues while staying warm if they have professional property management in place well in advance.

Massachusetts Property Investors

As the Massachusetts property market grows and evolves real estate investors are finding premiums in focusing on developing and leasing niche multifamily housing projects. So what are some of these niches those looking for new acquisitions might find helps them best capitalize on the market

While it seems the only direction for rents and yields is up, there is still a substantial difference in the premiums and spreads achieved. A well-positioned property with a clearly identifiable niche certainly has its advantages in achieving leading yields. With this in mind; here are 5 options to consider…

1. Student Housing

Student housing has begun attracting smart money and investors that see the high available yields, opportunities for elevating this niche with luxury living and amenities, and the advantages of establishing branding earlier in the housing lifecycle. Providing landlords take advantage of professional property management to handle these assets and the sometimes more intensive daily management and maintenance requirements the net income can be far superior to other options.

2. Millennials

While many in the real estate industry are still debating and trying to figure out what it is that millennials really want from housing (versus what they are being told they should want), there are ways to cater to them with niche housing. Zillow predicts that 2015 is ripe for a housing boom as millennials grow into become first time home buyers. However, while they might be old enough, be forming families, and be experiencing rising incomes not all are ready to make the commitment, or can obtain mortgages. Cater to millennials’ needs in multifamily rentals and investors can find great returns, while grooming them to move up to their single family home investments, and graduate into investing with them.

3. Live-Work

It may be another seven years before live-work spaces are blazing hot with developers and amateur real estate investors again. However, this makes now the perfect time for forward thinking investors to establish themselves in this nice and see equity bloom, while income provides yields and steady cash flow. Both Gen. X and Y love this set up, and expect Generation Z to embrace this as the norm.

4. Senior Housing

Senior housing can take on many forms. However, while some might skip apartment renting, student housing, or live-work arrangements; the majority of individuals will end up in some form of senior housing at some point. And we are only living longer. Incredible spreads are being seen in providing luxury assisted living, while there is no question about the huge and urgent need for affordable assisted living too.

5. Multigenerational Housing

Many builders and MA property investors have already begun to neglect this extremely notable trend that emerged out of the crises. Considering the data from NAR, and current fundamentals behind the media fanfare perhaps more should be focusing on this niche. Multigenerational housing may be most obvious in terms of family homes being held on to, but with foreclosures still in the works, and multiple generations of families barred from buying and qualifying for mortgages rental homes which can accommodate them comfortably could be an extremely profitable niche. When you can fit 3 or more generations of even part-time income earners, and even couples into a unit there is great spread and premium potential as well as security. Those willing to brave going against the trend in micro-lofts and apartments might find this a great move.


There are many options for serious MA investors to boosting yields and property value even further if they choose a good niche. If you aren’t sure which is the best direction for your portfolio, or area, talk to a local property management expert that can lend you’re their expertise and data insights.

Both Massachusetts renters and their landlords are finding themselves hard hit by the cold weather. This year reports more tenants upset with their property owners, and taking action than before. Unfortunately real estate investors and income property owners aren’t entitled to take off for ‘snow days’.

In Boston alone the Code Enforcement department is reporting figures coming close to 1,000 complaint calls about landlords each day. In just 3 weeks in February 2015 this hit almost 3,000 more calls than normal.

Tenants are turning in their landlords for a variety of reasons. Some of the most common in 2015 appear to be failing to clear snow from sidewalks, and addressing leaks. Functional heating and frozen pipes can also be a major issue at this time of year. Mass. landlords are legally bound to provide safe and acceptable housing. In fact, they have just 3 hours to clear snow from sidewalks after a storm passes. That’s not much when a DIY landlord might have several properties around town, and the snow could stop in the middle of the night.

Failure to stay on top of property maintenance, even during severe weather and cold can bring a world of expensive problems for real estate investors. Ongoing leaks, the weight of snow on the roof, slips and falls, and resulting structural damage, damage to tenant belongings, and even health issues from mold can bury multifamily, retail, office building, and single family rental property owners under mountains of paperwork and costs quickly.

Aside from the calls to the authorities and ensuing fines and liens, and lawsuits, tenants can withhold rent, while a property is falling further into disrepair daily. Many renters will also be forced to up and move, and they’ll choose better maintained apartments and premises, even at a premium. Some perhaps could cut their landlord’s some slack, especially when the area is dealing with historical weather conditions. Yet, sooner or later they’ll look for new landlords, and one who shows they are serious about providing good housing by employing a professional property management firm from the start.

For existing landlords and real estate investors seeking to make new MA income property acquisitions while interest rates are low there are two smart tactics that can aid in minimizing risks and financial loss. The first is to retain professional property management ASAP. This will relieve the maintenance burden on yourself, and instill confidence for tenants, while avoiding the costs of not keeping on top of maintenance. Secondly it is worth considering how you train tenants. Do you train tenants to know that they’ll only get a reply or help if they stop paying rent, call the city, or file a lawsuit? If so you can’t really expect them to do anything different. Or do you show them that you are immediately attentive to their needs and concerns and voluntarily work to do all you can to remedy issues without the threats? If you do this, this odds are that if you are a little late clearing that snow they’ll cut you a break.

US rent receipts rose by tens of billions of dollars over the last 12 months. So have rental rates in Mass. finally hit the ceiling? What do recent trends mean for MA investors and renters?

According to the latest data from Zillow gross rents have been soaring by billions thanks to falling homeownership rates, the fallout of the foreclosure crisis, and skyrocketing rental rates. The National Association of Realtors and other analysts anticipate rents will only continue to rise, even though Zillow proclaims renting is half as affordable as buying and owning a home today.

According to the Zillow Rent Index in order to afford the median priced rental in Boston tenants would need to make a minimum hourly wage of $50. While that might seem outrageous to most it is still better than the $103 minimum wage required to rent in Menlo Park, CA, or $234 on Miami’s Fisher Island. However, Boston’s wages needed to rent are markedly higher than in Chicago, Las Vegas, and even New York City.

Of course, if you make $50 an hour, you probably aren’t going to be too excited about renting one of the most modest apartments in the city, if they would even work for your transport and lifestyle needs. That means you may be plowing far in excess of 50% of your monthly income for a rental you’d actually be willing to live in, if you can find a landlord that will approve such high ratios.

Additional government intervention could be in the works. American cities are in the fight of their lives. Not just for financial survival, but to remain competitive. A huge part of this is being able to attract and retain talent, and keeping it affordable enough for businesses to keep the best workers, as well as keeping affordable workers for the public sector. A lack of affordable housing can be a hindrance to these efforts. Local governments may have to step in and curb rents in the hottest urban hubs.

For some real estate investors this may create great opportunities to collaborate and receive various breaks for providing affordable housing within reach of dense urban areas and business districts.

Still, the overriding trend demands that both renters and investors need to look outwards for affordable rents, capital growth, yield spreads, and security. If rents cap out it also caps income property values.

For many in Mass., and the Boston area this means moving out to Worcester. If you aren’t sure how local rents impact your investment goals consider reaching out to a reputable local property management company that can clue you in.

Giant retailer Target just filed for bankruptcy and is closing all of its stores in an entire country. So what does this multi-billion dollar fail teach commercial property investors today? How can retail and mixed-use property landlords better build in sustainability and the ability to command top returns for the long term?

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Target just announced it will be closing over 100 stores in Canada and shedding 17,000 jobs after losing over $2B on a big expansion bet and retail war with Wal-Mart. A number of factors are likely behind this major fail including; a lack of competitiveness, scaling too large too fast, and not ensuring sustainability. So how can Massachusetts commercial property owners and investors both avoid being hit by failing tenants, and ensure their own sustainability?

Tenant Mix Choosing multi-tenant properties, and maintaining a good tenant mix is smart. Big brand name ‘national credit’ tenants can seem attractive, but Target has proven this isn’t a bullet proof solution, and they lower yields and concessions may soon make them increasingly unattractive.

Rents & Leases Increasing motion towards government intervention on rent control and stricter rent control laws appear to be inevitable. Investors need to keep this in mind when making multifamily and mixed-use acquisitions. When evaluating potential investments it is also critical to review leases. Many of the landlords that Target is leaving still had over 12 years left on leases. Some wisely made the US head office sign on to guarantee those rents. So check leases, what guarantees and in place, and any provisions for rent increases.

Financing Refinancing now while interest rates are low could be one of the best moves commercial property investors will make. It’s likely the last opportunity most will see like this for the next 20 to 30 years. For those that can’t get the mortgage deals they want on new acquisitions due to buying distressed or non-performing properties, don’t give up. Shop around, and consider mini-perm loans, short term hard money, or crowdfunding until the property is optimized.

Energy Efficient Improvements With energy making up such a substantial portion of operating costs making energy efficient improvements can go a long way toward building in environmental and economic sustainability for investors. Taxes Most commercial real estate investors continue to allow their net returns to be drained by a variety of taxes. Consider challenging property tax assessments and using self-directed IRAs.

Reserves Scaling is great. Leverage is great. And taking advantage of the amazing deals on the market is great. However, don’t forget to consistently build up reserves for the unexpected.

Pro Property Management Today’s tech savvy, performance focused property managers can be incredible partners in minimizing expenses and liabilities, while maximizing net income and property values.

Summary Making sustainability in all of its meanings a main focus in 2015 will separate the long term winners from the Targets. Large companies may even need to delegate a sustainability ambassador or Chief Sustainability Officer to guide their organizations going forward. Individual investors and small firms on the other hand may be able to defer much of this to great property management firms which share their vision.

When it comes to commercial real estate returns design and branding are far from frivolous. Those that know how to leverage these elements for their investment properties are proving to easily secure double digit improvements in performance.

So how can commercial property landlords apply these factors to their investment property portfolio?

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How Design and Branding Became Everything in Commercial Real Estate

Even though the US rental market has become incredibly tight, and there are still deals on distressed foreclosure properties, renters and home buyers continue to vote for better design and the lifestyle they desire with their dollars.

We are seeing prime new construction sell out well above market value, even while foreclosure properties have sat idle for years, trendy coworking spaces maximizing occupancy at rates above private offices despite availability, and premium retail properties trafficked by plenty of consumers even though the data suggests over a third of Americans are barely making it from pay check to pay check.

In prime developments from the South to West Coast and Northeast well branded commercial properties are achieving growth and revenues at high double digit premiums compared to other spaces. In many cases this difference can be directly attributed to design, branding and marketing alone.

This doesn’t necessarily have to be at the top end of fashionable brands either. Yes, the most affluent global buyers and investors share an appreciation for art and fashion in property. However, even mid and low end properties can elevate their performance with the right improvements and story.

Much of this traction today also comes from consumer immunity to advertising, and the trend to inbound marketing. To win leases and shopping dollars the most successful are realizing they need to do more to simply attract and become magnets, rather than spam.

In Multifamily Property Investing

Consultant to some of the most notable developers in the sizzling South Florida region, Kaya Wittenburg has recently been revealing some of the secrets to creating the most in demand condo and mixed use buildings. Via Realty411 Magazine and G-Code Magazine he has said investing in the design of lobbies and common areas shouldn’t be underestimated, and can make a huge difference in results.

For Retail Properties

Recent commentary on the retail property market from the CCIM Institute and the ReDev Group in Canada suggest that shopping plaza owners will do far better in attracting a better tenant mix by upgrading curb appeal and incorporating features which show the landlord and property is connected with new technology and shopping trends, like including parking spaces for those picking up goods after ordering online and from their mobile devices.

For Industrial

One firm just went incredibly bold with a 500,000 square foot industrial space on spec. Many cities are also finding they have been able to make incredible come backs by promoting the revitalization of art districts, new ‘hipster’ neighborhoods, and attracting players in the Maker Movement.


The office sector is experiencing similar demands and trends. No longer is just providing space enough. What will your address and building do to enhance productivity and profit for tenants?


Even in the single family rental market stories and positioning can make a difference at all levels too. Positioning as both smoker friendly or prohibited units, pet friendly units, short term lifestyle rentals, and even units providing renters with less than great credit and enabling them to gain traction in moving back to their dream lifestyle can all make a difference in leasing rates and NOI.

While this may all sound a little over whelming and like a lot of work for the many passive income seeking investors that just want easy cash flow and above market returns it doesn’t have to be. With the aid of a savvy property management firm even small tweaks to verbal branding and simply more intelligent choices in value add improvements can go a long way.