Finance Blog

Cambridge MA Average Property NOI

If you had invested in a rental property in Cambridge 20 years ago, you’d likely be sitting on a pretty valuable piece of real estate at this point.  Both average rent and real estate prices have been outpacing the metro average for some time now in Cambridge, and it is now the most expensive suburb to rent an apartment in Metro Boston, surpassing Brookline in 2020.

Even in terms of median sale prices, Cambridge holds the 7th highest median price for single family and the 10th highest condo median sales price.  Homes for sale in Cambridge sold at a 1 year median of $1.93M while Cambridge condos sold at a median of $892K during the same time span.  With prices like that, you may be fooled into thinking that an investment in Cambridge is not the right choice.

However, if you dive a little deeper into the data, you’ll find that there are actually opportunities for profitable real estate investments in Cambridge for smaller property sizes.  Before we get into this, let’s look at how we measure an area’s profitability based on average NOI (Net Operating Income) for Cambridge.

Calculating Average NOI for Cambridge

To calculate an average NOI for Cambridge, we’re taking the median sales price of various property types and sizes and projecting what yearly operating expenses you would incur as an investor.  These expenses include mortgage payments based on a standard loan (30 years, 30% down, 3% APR), property taxes at the Cambridge property tax rate, average homeowners insurance cost, and 10% maintenance on a single-family or $300 monthly HOA fee for condos.  To calculate yearly projected revenue, we’re taking the average price of apartments for rent in Cambridge and multiplying by 12.

Cambridge Average NOI by Property Type

So if we apply this math to the aforementioned median sales prices for single family homes and condos in Cambridge, we get the following NOI Projections:

Cambridge

Avg. Rent x 12

Estimated Annual Expenses

NOI

Cambridge SF

$33,184

-$81,120

-$47,936

Cambridge Condo

$33,184

-$41,704

-$8,520

If you go buy property type on its own, there doesn’t look to be much investment opportunity in Cambridge.  In fact, single family average NOI in Cambridge is the 6th worst out of all neighborhoods in Boston.

Cambridge Average NOI by Property Size

If we break down average net operating income by property size, we can finally find some opportunities for Cambridge property investors.  Thanks to relatively low prices for smaller properties in Cambridge, studio, 1 bedroom, and even 2 bedroom properties present some areas of opportunity:

Cambridge

Avg. Rent x 12

Estimated Annual Expenses

NOI

Cambridge Studio

$23,616

-$17,806

$5,810

Cambridge 1BR

$26,628

-$26,121

$507

Cambridge 2BR

$32,436

-$35,238

-$2,802

Cambridge 3BR

$40,488

-$52,509

-$12,021

Cambridge 4BR

$50,340

-$75,594

-$25,254

Cambridge 5BR

$68,676

-$99,330

-$30,654

So if you’re like one of the many investors in Boston who would love to add a Cambridge property to your portfolio, your dream is not out of reach.  If you focus on smaller properties starting out, you’ll likely find a lot of opportunities in Cambridge, especially for condos.

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