Boston serviced apartment: does $5,221/month justify $735,000?

[eva.wells]

The 8.5% gross figure is attractive. My concern is how much of it survives the serviced-apartment costs.

The property is a 3-bed in Boston priced at $735,000, with expected rent of $5,221 a month. I have budgeted for management, normal upkeep, vacancy and a major repair, but I still need firm figures for property tax, insurance and building or service charges. Tenant turnover may also bring cleaning, utilities and furnishing replacement that a general maintenance allowance misses.

Before deciding what return is adequate, which of those items would you verify first, and would you model $5,221 as tenant rent or only as owner income after operating deductions?

 

[xavi_flint]

Property tax and insurance are the first figures I’d verify rather than estimate, but the service-charge breakdown may decide this. Ask what it includes and whether owners face additional building expenses. Also clarify whether $5,221 is rent paid by the tenant or the amount reaching the owner after serviced-apartment operating costs. Those are very different starting points.

 

[vale.sunny]

I wouldn’t choose a target net yield until financing is included. The gross annual rent is $62,652, but that says little about cash flow after debt payments and owner costs. Stress-test a lower rent, extra vacancy and higher service charges separately; otherwise one broad maintenance reserve can hide the real sensitivity. I’d also ask how often tenants turn over and who pays utilities, cleaning and furnishing replacement.