Area Real Estate News & Market Trends

You’ll find our blog to be a wealth of information, covering everything from local market statistics and home values to community happenings. That’s because we care about the community and want to help you find your place in it. Please reach out if you have any questions at all. We’d love to talk with you!

July 16, 2018

How to Build a Massive Real Estate Portfolio w/o Going Crazy

We're gonna talk a little bit about building a massive real estate portfolio without going crazy and how to use leverage. What exactly is leverage and how do you use it?

So, a lot of landlords, a lot of rental property investors, get into the business, they buy a property, they buy their second property, or maybe it's just their first, and they immediately become an accountant, a maintenance person, a landscaper, a bookkeeper, an attorney.

When you're buying your first and second property, you tend to do a lot of things yourself to keep costs low. You're cutting the grass, you're trimming the hedges, you're collecting rent, you're knocking on doors, you're negotiating with tenants about rental increases.

You're doing all of these different things yourselves, and you're driving yourself crazy. It's hard to keep up with, and in order to continue to build your portfolio, there's no way that you could ever operate like that.

So, we're gonna talk about four ways to leverage yourself, or use leverage, to continue to build. Number one, we'll get right into it, number one would be building systems. The system is a, a perfect example would be McDonald's. A McDonald's restaurant would never be able to be as big as they are without systems.

When you go in and you work for McDonald's, you knew immediately from day one, or within the first week, how long a hamburger should cook for, how long the fries should be done. They're not hiring people and second-guessing, or people coming and trying to figure out how long the fries go down for. There is a system, a manual, a handbook in place that already tells you exactly how long those fries should be down for.

So, creating your business or building your rental property business like McDonald's, and creating systems and checklists for everything for yourself, would be step number one, or excuse me, leverage use number one is systems. Going in and, if you do something correctly, if you do something well, you're creating a move-in checklist for your tenants. Your tenant's moving into the apartment, you wanna walk through each bedroom, you wanna walk through the kitchen, you wanna turn on the dishwasher, you wanna make sure all these things are working in a good working order. You create that checklist, and now that checklist is something you can hand off to somebody else in the future, so you can do something more important later on.

So, if you're one of those people that believe you do everything right yourself, and you do it yourself because you do it right, that's great. Document what you do, and then hand that system off to someone else later on. Create a repeatable process for yourself, and you can do that with almost everything.

Number two, use tools. Tools as a form of leverage. Just like a plumber uses a plunger, he's using a tool. He or she is using a tool to unclog that toilet, or that tub, or whatever it may be. Use tools in your business to build that portfolio as well. An example of a tool would be accounting software.

If you're using, if you have one property right now, or two properties, and you can use a yellow legal pad to take all of your income and expenses down, that's great. But you're never gonna get to 30 units or multiple properties, 30 properties, doing it that way.

So, implement an accounting system into your business now while it's small, to allow yourself to grow. A good accounting system are things like QuickBooks, Quicken, and then personal finance software, like Microsoft Money, can also help you out with a lot of your rental property stuff as well. And then management software as well, using a system to track your leases.

When are your leases due, when are your tenants going to need to renew, stuff like that can all be taken care of with some type of tool, some type of software for your rental property business. I would say, last but not least, on the tools note, is potentially building a website for yourself. Websites are very easy to build nowadays and they're very cheap.

Two things that you can do with your website are to help you collect rents, if it allows that feature, if that website allows tenants to do so on the website, and then two is continuous marketing. If you are trying to build now, you can put photos of your rental properties on this website, and people can go and they'll see when the lease is being renewed, it's up in September. They look at the photos, maybe there's a spot for an application to be filled out right on your website as well.

So, leverage point number three would be using people. People leverage. So, instead of trying to do everything yourself, if you are great at accounting, but you suck at cutting the hedges, or landscaping, then shell that job out to someone else. If it takes you four or five hours to do landscaping work at your rental property, but you can shell it out to someone else who's gonna get it done in an hour, yes, of course you have to pay them, but that's four or five hours, or three hours, or whatever it may be, that you could be doing something else that you're actually good at and that you enjoy doing. Maybe it's going out and looking for other properties, or maybe it's taking care of the books, or something that you can actually do efficiently.

Now, the couple other people you'd wanna have on your team, to consider hiring, is a property manager and snow removal. Again, is it worth your time to go out and shovel snow, when you can potentially get neighborhood kids to do it, or a professional company to handle that for you? A handyman, a personal assistant, a bookkeeper, and then a rental agent.

You find a lot of landlords are still taking calls on their vacant rentals. Here in the city of Boston, I would suggest that you hire a rental agent. They are going to do the lease for you, they are going to do the tenant vetting for you, they are going to do the showings, and take the calls, they are going to vet the tenant out in terms of background checks, and all the other, employment verification, and everything else that is taking up a lot of your time, and doesn't allow you to grow. Doesn't allow you to build that massive portfolio, if you were doing all those things yourself.

Last but not least is financial leverage. Money leverage. So, building a massive portfolio takes money. It takes some money, and most people say, "Well, I don't have any additional cash to invest." So, using financial leverage in terms of, maybe potentially finding partners. Maybe you have $20,000 to invest, and you can find another partner with $20,000, or maybe multiple partners with $20,000, and now you are all in a similar space, where your portfolio hasn't been able to grow, but combining together your resources, your financial resources, you are able to take that next step.

You could also barter for services. Going back to, hey, I'm really good at accounting work, I'm really good at keeping the books, but I don't like the psychical aspects of landscaping or snow removal. But do you have another landlord within your network, or another friend, that you could barter for services? Maybe you do their taxes or help them with some of their accounting work, and they do some snow removal for you, creating that barter opportunity there, versus you trying to, and them trying to do everything themselves.

So, in conclusion, decide what you're good at, decide what you like doing. Decide what you're not good at, decide what you do not like doing, and then shell out those things that you don't like doing. Stick to what you're good at, you can be really efficient at, and use leverage. Leverage is, again, systems. It's tools, it's people, and it's financial leverage. If you do those things, you'll ultimately grow a massive real estate portfolio. 

July 16, 2018

5 of the Best Things You Can Do to Build Wealth in Real Estate

Number 1: The number one thing that you can do is work on patience. Wealth in Real Estate is not built overnight. You have to continuously think about the long game, continuously look at the future, and stay focused. True wealth isn't built in a couple months. It isn't built in a year. It takes time. It takes continuous focus over the long haul to get to where you want to be in Real Estate. So, that's number one. Staying patient, staying focused, looking at the long game.

Number 2: Probably the most important is good credit. Good credit if you don't have it, work on it, improve it. Good credit is imperative to success in Real Estate and long-term wealth building. And the reason being, a lot of deals, people look at real estate as, "Well, I can't succeed in real estate, or I can't buy real estate because I don't have enough of a down payment, or I don't have ... Even if I get the first one, how do I get the second one?" Good credit is often a bypass through a lot of the hurdles. Good credibility. If you have credibility within a market, you can solve a lot of financial problems using leverage. So, making sure that you understand what your credit score is, how credit is affected, and paying attention to your credit score over the long term can really help you build wealth through Real Estate.

Number 3: Continuously searching for opportunities. Telling everyone you know what you do. You're a Real Estate Investor. You buy real estate. You're looking for opportunities. So, always, whether it be at a Super Bowl party, a baby shower, whatever events you go to, working with your local Real Estate agent, finding a good Real Estate agent, and letting that Real Estate agent know this is exactly what I'm looking for. I'm an investor. I'm constantly searching for opportunities. Again, even if you don't have the money at the moment, people say, "Well, I don't have the money, so I don't want to go out and search for opportunities." Things will work themselves out if you are continuously being presented. You don't have to take every opportunity, but if you're continuously being presented with good opportunities from your network, this is one of the keys to building wealth long term.

Number 4: Continuously educating yourself. There is so much to learn in Real Estate, and what separates a lot of successful people from the people that don't quite make it is their continuous hunger for education, a continuous hunger for knowledge. So, I'll give you an example. It's not just about reading Real Estate books all the time, but within Real Estate, you're reading sales books on negotiating techniques. When you're buying, and you're selling, you want to be very versed in the sales field. You want to read some legal. You don't have to become an attorney, but especially if you're buying rental properties, you should know the basics of landlord-tenant law. So, you want to spend some of your time reading a little bit and staying up a little bit about legal matters that have to do with Real Estate.

Financing. The more you understand about financing, and financing is big. It presents a lot of opportunities to you when you understand different types of mortgage from FHA to commercial mortgages to interest-only to balloon payments. Knowing and understanding what all of these things are allows you to create different opportunities for yourself and allows you to understand how you could finance opportunities that are being presented to you.

You should also be educating yourself a little bit about the construction process, the renovation and rehab process, and then marketing as well. If you are continuously networking and putting yourself out there, finding a good Real Estate agent that you can work with, that's great. But you can also do some marketing yourself and go out there and find deals directly, too. If you're a buyer, potentially people that want to sell, and if you're a seller, potentially people that want to buy.

Number 5: Again, one of the big ones is taking action. If you're doing the first floor, you're staying patient, you are working on your credit, you're continuously educating yourself and searching for opportunities, then it just comes down to taking action. When an opportunity is presented to you, and you've done your research, you've educated yourself, and it's now time to pull the trigger. It's now time to stop overthinking it and listen to your gut at some point.

So, those are the five things that you can do to continuously build wealth in Real Estate. Again, it's being patient, working on your credit, always be searching for opportunities, continuous learning, and then finally, last but not least, taking action. 


July 3, 2018

When Standard Isn't Enough: 5 Lease Agreement Clauses You Need to Know

So you finally found the perfect tenants to rent your property (yay!), and now it is time for them to sign the lease agreement. Before you let the ink dry on that, it might be good to consider these few extra details. Most landlords opt to use the standard Boston lease agreement, which in most cases, suffices. But as time passes by and tenants settle into their new surroundings, you may find that their habits fly in the face of what you had originally intended for your property. Hanging laundry on the porch? Not so good for curb appeal. What then can you do to avoid having these potential conversations once the lease has been signed, sealed, and delivered?

On the whole, our approach is to be proactive, rather than retroactive. We talked about 5 key lease addendum clauses that every landlord should consider in an earlier post, but here are 5 more items you can make explicit to your tenants about how to (peacefully) inhabit your rental.

  1. Basements: To Store or Not? – Depending on your preference as a landlord, you may choose to allow your tenants to use the basement as storage space. In that case, be clear about the space that they are allotted by designating bins or shelving for each respective tenant’s use. Remind your tenants to keep these areas clean and free of clutter, particularly if they are near access points for utilities. What is more, tenants should respect each other and contain their belongings in their own space.
  2. Pets and Pet-Sitting – Many standard leases make some mention of a tenant’s pet ownership i.e. type of pet, size, registrations, and vaccinations. But something to consider adding to the lease would be a specific statement about pet-sitting. While this may not seem like a big deal, think about it from a legal standpoint. Say one tenant’s friend’s pooch is an absolute love-bug and you are totally fine with it, but what do you do if the tenant brings around a less friendly or larger animal? Avoid any confusion and potential damage by letting your tenants know your stance on pet-sitting g. absolutely no or yes, with conditions, etc., for their sake and those around them. Give as much detail as you can, and you’ll never have to worry about your tenant’s pets or them sitting again.
  3. Rent Payment: All for One, One for All – This is always a good sentiment from The Three Musketeers to keep in mind when dealing with tenant groups. What do we mean? Well, let’s say for example you decide to rent an apartment to a group of 3 friends for the price of $2100 per month. They, in turn, ask if you would accept 3 checks in the amount of $700 from each of them. Same thing, right? Actually, no. It can be far more difficult to receive and track payment from 3 separate sources that are consistent AND on time. The same goes for the couple that (unfortunately) splits up partway through the lease, and one of them decides not to pay his/her share of the rent. Skip the hassle and headaches by letting your tenants know that one rent payment is expected from all of them, as it is one lease agreement that they will sign.
  4. Subleasing aka Subletting – Your tenants may find themselves with an extra room or an extended period of time when they won’t be living in your rental property. In times like these, they may turn to subleasing (leasing the rental to a third party/subtenant) to fill these voids. Additionally, services like Airbnb present tenants with attractive ways to pay their rent and earn extra income, especially when they can’t live in the space themselves. Definitely address this in your lease addendum, particularly whether you will allow it, and under what circumstances.
  5. Renter’s Insurance – We typically recommend that our tenants obtain this additional policy to help protect them against any loss of personal belongings that may occur in the apartment i.e. theft, water damage, fire. If tenants don’t have this type of insurance and the worst case scenario happens, they may look to you for reimbursement of the items lost. Even if you don’t believe they would, encourage them to get renter’s insurance anyway because it really can help to smooth the transition from a terrible event to normal life. Most major insurance companies offer this type of coverage, and some even bundle it with auto insurance for fewer complications.

 While this list is not exhaustive, it is a good place to begin, regardless of your experience as a landlord. If you feel like you don’t have the skills or the language to draft a lease addendum, reach out to a lawyer and have them help you get it done. At the end of the day, adding these types of clauses to your standard lease agreements will make your life easier when speaking with your tenants, and save you from (some) awkward conversations.

July 31, 2017

Curious About Local Real Estate?

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Curious about local real estate? So are we! Every month we review trends in our real estate market and consider the number of homes on the market in each price tier, the amount of time particular homes have been listed for sale, specific neighborhood trends, the median price and square footage of each home sold and so much more. We’d love to invite you to do the same!

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You can sign up here to receive your own market report, delivered as often as you like! It contains current information on pending, active and just sold properties so you can see actual homes in your neighborhood. You can review your area on a larger scale, as well, by refining your search to include properties across the city or county. As you notice price and size trends, please contact us for clarification or to have any questions answered.

We can definitely fill you in on details that are not listed on the report and help you determine the best home for you. If you are wondering if now is the time to sell, please try out our INSTANT home value tool. You’ll get an estimate on the value of your property in today’s market. Either way, we hope to hear from you soon as you get to know our neighborhoods and local real estate market better.

Posted in Market Updates
July 17, 2013


Whether you are a life-long resident of the Greater Boston area or new to the city, here are some helpful hints to assist you with your apartment search:

  • Good apartments rent quickly! Largely because of its enormous student population, the greater Boston rental market explodes beginning mid-January and continues until August 31st. Unless a real estate office has exclusive rights to rent a particular apartment, showings for the units are shared by MANY Real Estate offices.  Competition, therefore, can be fierce and apartment availability is an ever-changing process, often hour to hour. The best strategy is to look at as many apartments as possible during a short period of time and be prepared to put down applications and a check for one month’s rent to take the best off the market.  
  • Many landlords require 24 hours notice to show an apartment so try to call your agent at least a day or two before you want to see places and plan around your work/school schedule, accordingly.
  • Narrow your search to 2 or 3 areas at most. It’s helpful to physically explore, and speak with others about the neighborhoods you intend to rent prior to viewing apartments there, especially if you’re from outside of Boston. This will help your agent to do a more detailed search of only the apartments in your top areas. The following is a link to an informative Boston Neighborhoods descriptive site:
  • Learn the price range you should expect to spend in the areas you are considering. If you are considering areas outside of Boston you will always get a better deal there, so eliminate those areas first before looking in the city. See the Boston area rental chart below as a good guideline to what you should expect to spend. If you are on the lower end of the price range you probably aren’t going to see newly renovated places, so if you need a really nice place it’s important to know that you will need to spend a bit more. 
  • Pets: Almost all landlords will permit cats. Your rental options, however, will be dramatically reduced if you have, or plan to get, a dog. About 85% of landlords do not allow dogs. Some buildings are “Pet-Friendly” and may require an extra monthly or annual fee, while others may exclude certain breeds (e.g., Pit Bull) or dogs over a certain size (e.g., 40 lbs).  
  • Communication and staying connected with your agent is paramount in helping your agent to serve you best. Phone responders, especially early in the process, will have a better chance of getting updated information on apartments, communicating your changing needs, and being served in real time amid a long queue of apartment seekers with whom the agent may be working.  
  • Financials: If you are a student you will be required to get a co-signer/guarantor. If you are professional you will have to show good credit and the rent cannot exceed 40% of your income for most apartments. Boston area landlords generally require 2-3 months rent (first, last, and security deposit) prior to moving into the apartment. Occasionally, a small key deposit and/or lock change fee may apply. The first month’s rent, applications, credit reports, copy of ID’s, Fee Disclosure, and co-signer forms might be required to take an apartment off the market. Once you are approved, the lease and any required paperwork are submitted along with the remaining funds
  • Broker’s FeeSome landlords will pay a full month's broker's fee, some will pay a portion (½ paid by landlord ½ by tenant), but most won’t pay any especially during the busy season from mid-January – end of August. In other cases, a landlord may be willing to negotiate. Always ask your agent what the fee arrangement is for each apartment you see. 

Finally, as a courtesy, let your agent know if you’ve suspended your search for any reason (found an apartment on your own, via another real estate office, or have postponed your move/search plans).

Best of luck! We look forward to helping you find a great place!

Still have questions? Want to know what rental listings are available in your area? Contact us at

July 16, 2013

Should You Require Your Tenants to Have Renters Insurance?

Should you require your tenants to purchase Renters Insurance? Here are a few things to consider:

  1. Your home owner’s insurance policy will most likely not cover tenant personal items in the event of a loss. Most policies pay out to cover the repair or replacement of the building itself but not the personal items inside. Your tenants should be made aware of this fact at move in and reminded of it on a consistent basis.
  2. Most tenants do not purchase renters insurance for a variety of different reasons. Some tenants believe the policy premiums will come at a cost they cannot afford or they may believe that the value of their belongings is not worth buying coverage.  
  3. Renters insurance can be paid in installments and can be as low as $10-$25 per month for approximately $25,000 worth of coverage. You may also buy coverage for your tenants and consider including it into the price of their rent.  Policies are not hard to find and can usually be purchased at the same companies that offer auto insurance.
July 11, 2013

Improve Rental Cash Flow & Retain Good Tenants

As a rental property owner, you understand that tenant turnover can be very costly. Every time a tenant moves out there will be a period of loss rent, repair cost for the vacated unit as well as the cost associated with finding a new tenant.  As a landlord, it’s in your best interest to retain good tenants as long as possible and to do that you need to provide your tenants with comfortable and convenient living arrangements. Here are a few items every rental property owner should consider for their property.  


Create a place for your tenants to store personal items they don't want to keep in their apartment. Often you can build several storage bins in the home's basement and assign one for each apartment. If you decide to use a common area like the basement, make sure each bin has a door and the tenant has the ability to lock their items away. This type of system does not need to be very fancy and can often be done with 2x4's, plywood and a padlock.    


On-site laundry is a big plus for many tenants, especially during Boston's cold winter months. On-site laundry can include providing a washer and dryer to each tenant or just providing a washer and dryer "hook-up" for each tenant to access. In either case, you will need to hire the services of a plumber an electrician. If your tenants pay their own utilities then you’ll want to make sure your contractors are making electrical, gas and hot water connections with each separate unit. If you happen to pay utilities for your tenants then you should consider the added cost to adding this service in comparison to the added value. You may consider adding a couple coin-operated machines in this case.

Outdoor Space:

Yard space, a terrace, patio, and roof decks are all value-added items here in the city. Any type of personal and private outdoor space you can provide your tenants is going to bring higher rents and long-term tenants.


Off street parking in Boston can go for big money. If you have land attached or near your rental property that can potentially be converted to parking spots, this could be a really nice opportunity to earn some extra cash. We often meet landlords that spend a few thousand dollars leveling, paving, and marking out 2 or 3 parking spots, which they turn around rent for $150 per month. Before a full year is over the spots have paid for themselves and everything going forward is profit.

Intercom & Alarm Systems

Safety and convenience is the name of the game. There are so many different types of intercom and alarm systems out and the prices are really responsible. If your rental property has more than 2 living levels, consider investing in an intercom system.  Many of them allow tenants to “buzz” guest in and some of them come with video capabilities so the tenant can view the individual at their door. Alarms systems are always a good idea. Anything to make your tenants feel safer is a good investment.

July 10, 2013

Massachusetts Home Buying Timeline

As a future home buyer, it's a good idea to understand as much as you can about the process so little comes to you as a surprise when you get started. Many first-time buyers or buyers who have been out of the market for awhile often think the process takes much longer than it does, while many others think the process happens much more quickly than it really does.  

The Offer to Purchase:

Once you’ve lined up your financing and found a home that suits your needs, the next step would be to make an “Offer to Purchase”. You and your real estate agent would discuss what you think the property is worth and if that number is what you're willing to pay for it. When the OTP is submitted to the selling parties, it will have the price you're offering as well as several contingency clauses. Contingency clauses are stipulations in the OTP that protect your interest and prevent the purchase from moving forward if they are not met. Two of the most common clauses inserted into the offer are the “Home Inspection” and the “Mortgage” contingencies. We will discuss each of these.

At the time of your initial offer, a small deposit ($500-$1000) must be submitted to the selling party. This deposit is to “bind” the offer and is fully refundable if the seller does not accept your offer or if one of the contingencies are not met. The buyer will typically allow the seller 24-48 hours to respond to the offer with acceptance, rejection or a “counter offer”. If the seller counters your offer you will negotiate back and forth until both parties have an agreed upon price & terms or decide to walk away.

Home Inspection Period:

Once you’ve come to an agreement with the selling party on price and terms, you will enter the “Home Inspection Period”.  This period typically lasts about 10 days and during this time you are allowed to hire a home inspector to professionally review the property you intend to purchase. The home inspectors job is to walk through the property with you and bring to light any current issues with the home as well as things that may arise in the future. She will also provide you with a full written report of her findings after the inspection is completed.

There are 3 paths you can take after the home inspection takes place.

  1. The inspection reveals there is nothing wrong with the home and everything is in great condition. At this time you would inform the seller that you will be moving forward with the purchase.
  2. The inspection reveals there are some minor issues with the home and based on these issues you would like to lower the price you initially offered the seller. You may then go back and forth with the selling party until both parties have again agreed on a new price.
  3. The home inspector found issues with the property that are beyond your comfort level and you no longer wish to purchase the home. At this point, you will inform the seller that you are backing out the transaction. The initial deposit will be refunded to you per the home inspection contingency.

Purchase & Sales Contract:

Assuming you selected to move forward with the purchase of the property in either case 1 or 2 above, you would now move into the purchase and sales contract. The "P&S" is the contract that further lays out the details of the purchase. These details will include dates, times and "to do list" for both the seller and the buyer. Some of these items will include:

  1. What date the buyer will need to have his financing in order for the purchase
  2. What items of the sellers are included in the purchase and which are not
  3. How tenant finance will be handled (if the property is a multifamily building)
  4. What  date will the buyer take possession of the property (the closing date)  

At the time of the purchase and sales agreement, the buyer will be required to place an additional deposit with the selling party. This deposit will typically be 3-5% of the total purchase price. This is again to bind the contract and will be refunded if for some reason the buyer failed to be approved for the mortgage. This return of the deposit is outlined in the purchase and sales "Mortgage Contingency".

The Closing:  

The closing day usually takes place about 45-60 days after the initial offer to purchase was accepted by the seller... assuming everything goes smoothly. The closing day is when both the selling and buying parties get together and make the transaction official. As the buyer, you will need to bring any final money due to the table. The seller will need to make sure any outstanding bills in connection with the house are paid off allowing you to take over with a clean slate. On this day the transaction will be recorded with the local registry of deeds and the buyer becomes the new owner.

Still have questions? Please call us and one of our agents would be happy to provide you with some assistance! 617-297-8641 or email

July 8, 2013

Do It Yourself - Pest Control

We recently hired a pest control professional, after one of our tenants mentioned spotting a mouse. Though she had only seen it once, she could tell it was still present in her apartment. A couple of days after the first sighting, I’m there with the exterminator and the whole time I’m thinking, I could do this myself. The exterminator came prepared with a homemade peanut butter decon powder mix. The mice swallow the decon which causes them to have a great need for water, forcing them out of the house. Mixing it with peanut butter was a great idea because it’s more appealing to mice. He started in the basement by placing the mixture in small openings in the ceilings and other places where only mice could reach. He continued to all the apartments including the one where the mouse was spotted, placing the poison in vents, behind large pieces of furniture and behind kitchen cabinets. Places that mice would find easily accessible, but children and small pets would find hard to get into. The total cost was $225 which in my opinion is well worth it. However, next time, I will be the exterminator. This was definitely something I could do myself. Something anyone could do. If it’s keeping money in your pocket, it’s worth a shot.

July 4, 2013

Building Long-term Wealth Through Real Estate

Real estate is an excellent investment vehicle for building wealth, especially here in Massachusetts where we have a large number of multifamily buildings. The 3-family home, as an investment, tends to make a ton of sense when it comes to the balance between the purchase price of the building and rental income you can achieve from one of these buildings.  Let’s take a quick look at a recent purchase made by one of our clients.

Purchase Price:  $500K    Down Payment: $100K    Mortgage: 15 Fixed @ 4%

Expenses: (Mortgage, Taxes, Insurance, Water, & Misc):  $3,800    Income:  $4500 ($1500 * 3 Units)

Monthly Cash Flow:  $700

$700 monthly cash flow is great, but the real financial benefits come from the long-term effects of this investment on my client’s portfolio. If you noticed above she opted to take a 15-year loan and pay off her debt sooner than the typical 30-year plans. Let’s take a look at where she is financially in 15 years:

Debt Pay Down:

As you make your monthly mortgage payments the principal balance is slowly decreasing. This debt pay-down is called the “amortization” of your mortgage. If you look at a mortgage amortization chart (which is usually provided with your loan documents) you can pinpoint what the principal balance on your loan will be at any given point over the term of the loan. This assumes you are making all your payments on time and only paying the minimum amount due each month. As your mortgage balance decreases your net worth increases. With the above scenario, my client is done paying or has “fully amortized” this loan in 15 years.  She will receive a discharge notice from the bank and no further payments will be due. Her tenants will have essentially paid off a 400k debt for her and increased her net worth by that much.

Property Appreciation:

Appreciation is the increase in your property’s value year after year. The rate of appreciation you will receive in future years is impossible to predict but history tells us that property values tend to increase at a rather consistent rate over time. Removing recent market adjustment years (2006-2011), US real estate values have appreciated at a rate of approximately 6% annually, with Massachusetts falling right in line with an average rate. If we take our property from above with a current market value of $500k and assume we achieve at least a 5% rate of appreciation over the next 15 years, we would be looking at a property value of $1,039,000.

Rent Appreciation:

Rent prices tend to move upward with inflation. Just like the cost of bread and gas, rent rental values always go up. With that said, the same $4500 per month ($54,000 annually) my client is collecting in rents today will be much higher in the future.  If we assumed rents in her building also increased at a rate of 5% yearly, she will be collecting $9,355 per month after 15 years. That’s over $100K annually in passive income!

Net Worth & Passive Income:

If you take these numbers as a whole, that's when things start to get exciting. 15 years from now this mortgage will be completely paid off and it will have been done by someone other than my client. Her tenants are paying off the debt every month with their rent checks. Not only is she getting the debt paid off but she will be putting $700 (or more) per month back into her pocket over the next 15 years. At the end of the 15-year term, her debt will be gone and her rents have now grown to $9355 per month, which she can put in her pocket or use to go out and purchase other investments.  Her property has also appreciated to over 1 million in value which will be a major contribution to her total net worth number!

Building Wealth Takes Time:

My client is not very special …in the sense that anyone can follow this wealth building model and achieve exactly what she has done in the past and is in the process of doing again. Don’t have $100k to invest? You don’t need it. There are ways to achieve the same with a whole lot less. Don’t have time for tenant issues? Hire a property management company! With this model, my client is achieving $700 in cash flow. I’m sure for $700 per month you can find a company to manage your tenant issues. Long story short… there is really no reason why this can’t be done by anyone.  15 years is not a walk in the park but the earlier you start the sooner you’ll get there. If you only had this one building and invested in nothing else during the next 15, you would still have a net worth of over a million dollars and earning over a $100k in passive rental income! Imagine if you bought several of these investments!