While a good many Boston millionaires will agree that their fortunes were made in downtown Boston real estate, the honest ones will also tell you that they’ve probably lost a few fortunes in downtown Boston real estate along the way. This is a risky business and every Downtown Boston property purchased doesn’t always pan out to become a successful investment. There are many risks involved in Boston real estate investing and you would be going to battle unprepared if you didn’t take a moment to carefully study these risks and work to avoid them when planning your property investment strategy.
Unfortunately, there are very few one size fits all risks for downtown Boston real estate investing, as each type of investing is inherently different. This means that each type of real estate investment will involve a new set of risks. Below you will find a brief overview of different styles of investing and the common risks that are involved in each.
If the Beacon real estate market in question cannot achieve an adequate monthly income to cover the expenses of operating the property then it is not a solid investment.
Other risks include the risk of getting bad tenants for your Beacon Hill apartment for rent. This is particularly hard on first-time investors. Bad tenants are costly and in some cases destructive (which leads to even greater expense). Vacancies are another risk for Beacon Hill apartment rental properties. These properties are only costing money as they sit empty rather than earning money as they were intended. Short turnovers are in your best interest as are long-term tenants.
This is one of the most enjoyable types of Downtown Boston real estate investments for many ‘hands-on’ investors. This allows the investor to roll up his or her sleeves and take an active role in creating the masterpiece that will eventually bring in serious revenue (at least that is the hope). This is also one of the riskier investments, particularly when trying to turn a profit in what is known as a buyer’s market.
The risks are simple but often overlooked and they can have a significant impact on the overall success or failure of the project. First of all, the biggest risk is in paying too much for the Beacon Hill condo for sale. Other risks include underestimating the costs of repairs, overestimating the ability of the investor to do the work him or herself, taking too much time, experiencing a down turn in the Downtown Boston real estate market, becoming overly ambitious, and getting greedy. Sometimes it is much better to walk away with a lesser profit than to end up losing money by holding out.
Keep in mind that your Beacon Hill condo is essentially an investment. The intention is that your Beacon Hill home will gain in value over time and that equity in your home will build as you age. There are risks involved in this transaction as well. Buying a Downtown Boston Condo that is in a ‘borderline’ area or one that is not showing obvious signs of growth is one of the biggest risks. This puts your home in the position to lose rather than gain value. This can make your home a burden rather than the investment it was intended to be. Other risks involve is becoming involved in a loan situation that is not at all beneficial (such as an adjustable-rate mortgage or an unreasonable balloon payment)..
For those seeking to turn impressive profits in short order, Downtown Boston real estate is one way in which this can be accomplished. It is in your best interest however to be aware of the risks that are involved and take careful steps to minimize those risks. Taking these steps now may cost a little more on the front end but in many cases the pay off for doing so well outweigh the expenses.