Property Investors Reset Return Expectations

Local Investors are competing with international buyers that are changing the returns in this demanding marketplace.  

Most investors in past years have been looking and obtaining investment properties at an average of a 10% rate of return. Over most recent months during this low inventory market, Investors have had to reset and adjust their expectations. 

Most properties online or offline are selling with a 5%-7% on average rate of return*. Local Investors are competing with international buyers that are changing the returns in this demanding marketplace. 

Many international buyers are calculating the returns over a multi-generational period instead of the way most local investors calculate, usually between a 10-15 year basis. Because of this, Investors need to change financial projections and pro-formas to compete with the many buyers flooding the current investment landscape. 

In other words, 7% is the new 10%.

*Stay tuned for a more detailed breakdown of average cap rates sold within the City of Boston in the past thirty days!