Landlord's Guide to Renting
Starting out as a landlord can be extremely challenging. From attracting and screening applicants, to dealing with maintenance requests, and abiding by Massachusetts Tenancy and Fair Housing Laws, there’s a lot that requires attention and due diligence on your part. With this guide, we hope to help landlords understand the importance of not only working with a knowledgeable broker, but also having systems in place to help mitigate risk and avoid common pitfalls when renting out your properties.
1) Preparing Your Property for Rental
As a landlord, you’re expected to properly maintain your property in order to prevent unnecessary depreciation as well as attract potential renters. If the home is vacant, you should have it professionally cleaned and inspect it for any necessary repairs before listing it for rent. You or your broker should take photos of each room, as well as the exterior property space, with plenty of natural light to showcase your rental at its best. For higher end spaces, you can even have it professionally staged and photographed to make the best impression. If you have current tenants living in the property while you search for applicants for a new lease, you can simply coordinate with them to have the space cleaned before photos are taken. Then, your broker will take care of creating a detailed and enticing listing on apartment search websites.
2) Pricing Your Rental
Before renting any space, it’s imperative to understand the market you’re working in. Boston’s rental market is very competitive, with many similar options available to prospective tenants - especially during the peak rental season (May-September). Conversely, there is less demand for rentals from late October-February, so you might need to offer incentives to attract applicants, depending on market fluctuations.
To properly price your rental, you’ll need to compare to other currently available rentals in the area. Think about what sets yours apart. Perhaps you can offer more than just 1 parking space, or you don’t mind having pets on the property. Differentiating yourself and understanding current availability can be the information you need to understand how competitive your option is on the market. This is often the most challenging part of renting, especially for out-of-state investors who don’t have as accurate of a pulse reading the market. Working with Nobee can make a huge difference! Our thorough market analysis will give you the information you need to properly price your rentals, while also consulting you on whether certain renovations may be necessary to help you maximize returns.
Scheduling showings for many interested parties can be a chaotic process. Unless you have flexible availability, you’ll find that you’ll have to make many accommodations to ensure you give everyone an opportunity to see the listing. It’s hard to predict when people will want to see homes, especially with how busy and diverse the city of Boston is. Some people work late and are only available to see spaces after 7pm, while others can only do early morning showings. A lot of renters reserve weekends for viewing potential homes. Either way, sacrificing a well deserved weekend is the last thing you want to do! Luckily, when you hire Nobee, we take care of showings for you, allowing you to focus on work and other commitments with the peace of mind that we’re representing your best interests and getting top dollar for your rental. We’ll walk each prospective tenant through the property while also thoroughly vetting them and explaining the application process, always abiding by fair housing laws. Once we’ve answered all of their questions, we’ll shut off all the lights to conserve energy and double check that all points of entry are thoroughly secured.
4) Tenant Selection Plan
Choosing the right tenant is the bread and butter of the rental process. A bad tenant can cause excess wear and tear, cause a nuisance to other residents, have a higher likelihood of defaulted rent payments, affect the overall aesthetic of the property, and ultimately decrease your returns on your investment. For these reasons, it’s important for every homeowner to thoroughly screen applicants and to operate their rental property as a business, always upholding Massachusetts Tenancy and Fair Housing Laws. Please note that these laws prohibit discrimination based on family status, disability, race, gender, sexuality, etc.; we recommend familiarizing yourself with these requirements before the screening process. In addition, it’s important to be aware of the eviction process and to have an attorney in place in case the situation calls for it. Most of our landlords choose to work with Nobee due to our stringent tenant selection process. From meeting every prospective tenant at the property, to thoroughly screening and verifying reported information, our goal is to make the right match to ensure a smooth tenancy period.
Here are some common minimum qualification standards:
- Interview Process: Meet every resident prior to tenancy to properly detail expectations.
- Income Verification: We’re looking for at least 3x the monthly rent in household earnings verified via IRS docs, employment letters, or 2 recent pay stubs. We will also reach out to their employer to verify they are still working.
- Credit History: Tenants should ideally have a minimum credit score of 650 with no defaults. The only exception would be in the case of students, who may have little to no credit. In cases like that, it would be prudent to request a co-signer to ensure that another trusted party could be held liable for rental payments in the case that the tenant couldn’t pay.
- Landlord Reference: It’s a good idea to reach out to prior landlords to clarify a few questions. Why are the tenants moving? Would the previous owner rent to them again? Did they pay on time? Did any issues arise? This can help ease your mind that your renters have a good track record at previous homes.
- Government Issued ID: Verify that the tenants are who they say they are.
- Request an application deposit: Make sure you’re not wasting your time and that this person is serious about renting your home. The deposit, which is at most one month’s rent, will bind them to your decision and dissuade them from submitting applications to multiple rentals, lowering the possibility that they would turn away from your tenancy acceptance.
5) Prepping for Move-In Day
Once you select a suitable tenant, we recommend collecting up-front move-in costs, including the first month’s rent, last month’s rent, and a security deposit (usually equivalent to one month’s rent). It's important to follow the law when managing a security deposit. The security deposit is to be placed in an escrow account by the landlord for the duration of tenancy. It’s important for you to share with your tenant a receipt detailing the bank where the deposit is held, the account information, the yearly interest, and the amount of the security deposit. You should also give your tenant an Apartment Conditions Statement form, which should be returned to you within 15 days. This will allow the tenant to detail any existing defects on the property, and give you a reference to rely on in the event of the tenant causing damage during their lease. Collecting images of the space is also an option, as this can help settle disputes should they arise in the long run. Finally, we advise drafting up a welcome sheet for your new tenant to provide easy access to key information as they get acquainted with their new home. This will eliminate unnecessary calls at the start of their tenancy as they get themselves oriented. Here are some examples of information to include:
- Utilities: Contact information for setting up utilities such as Gas (National Grid, Eversource, or oil company), Electric (National Grid or Eversource), Internet (XFinity, RCN, Verizon, etc.)
- Trash/Recycling: Information about trash/recycling collection, detailing bin location and what days trash and recycling are picked up. You can include the city website to detail which holidays delay collection.
- Parking Information: Detail which parking spots are dedicated to your tenants’ vehicles, or city information for getting a residential parking permit if they require permit-only street parking.
- Laundry: Information about laundry access, whether on-site or locally available, as well as how they can pay to use the appliances (unless they have in-unit laundry).
- Emergency contact information: Adding a locksmith’s contact can help your tenant gain access to their home in the event of a lockout without bothering you for a spare key. Alternatively, digital keypad technology can make it easy for homeowners to send their tenants single-use codes granting them access to the unit.
Once your tenant is well-oriented, you're ready to hand over the keys. Congratulations on your new tenant!
6) Tenancy Laws
The importance of familiarizing yourself with Massachusetts Tenancy laws is probably the most important takeaway from this article. MA is a pro-tenant state, and any legal infractions will not be taken lightly in court. For this reason, we advise that you seek the counsel of an attorney or visit mass.gov for more information on complying with state and federal tenancy laws.
Discriminations against tenant applicants is the most common offence landlords commit. While federally, there are only 7 protected classes (race, color, religion, national origin, sex, disability, and familial status), in Massachusetts there are an additional 10 (age, marital status, sexual orientation, gender identity, gender expression, veteran status, religious creed, public assistance status, ancestry, and genetic information). Penalties for fair housing law violations are severe. HUD fines can be up to $16,000 for a first violation, $37,500 for second offence, and up to $65,000 for repeat offenders. In addition to reporting to HUD, a claim can be filed in federal court within two years of the discrimination taking place that can lead to criminal penalties and no limit on damages. With this being said, we highly advise landlords to take a course on Fair Housing Laws to ensure a fair tenant selection process. NEHMA and HUD offer courses year-round and are worth pursuing to help you understand the dos and don’ts.
7) Maintenance, Service Requests, and Upkeep
Having a team in place for repairs and upkeep will help eliminate the stress of scrambling to find the right laborers to address the necessary cosmetic issues at hand and speed up the turnover process. Your team, at the minimum, should include a handyman, painter, cleaner, plumber, electrician, landscaper, and HVAC tech. As a landlord, it’s important to be transparent about repairs and upgrades. Be upfront with your tenants to prevent issues down the road; don’t promise a prospective tenant you’re going to upgrade an appliance or paint an apartment prior to moving in if that’s not your plan. Transparency goes a long way in building a healthy landlord/tenant relationship! At the end of the lease, once your tenants move out, if any significant damage is found that both you and your tenant agree merits repayment, you can pay repairs out of their security deposit and return the remainder within 30 days of the lease end. Make sure you familiarize yourself with the legal requirements of the security deposit process, and seek attorney counsel if needed.
Every rental property is different and comes with a unique set of challenges. We can't stress enough the importance of abiding by state and federal tenancy laws. As a licensed brokerage in Massachusetts, we support and abide by Equal Housing Opportunity Laws. Reach out today for more information on how Nobee can help you accomplish your landlord goals.