What do I Need to Know as A New Landlord? 10 Tips for Property Management Success

First Time Landlords: Key Steps

OK, let's get the disclaimers out of the way.
1) I'm not an attorney, and this should be construed as helpful, but not legal, advice.
2) It's targeted at Landlords in Massachusetts. Laws in other states may differ significantly.

OK. So here we go:

Vacancy Is the Enemy

Market your property slightly below market and get it rented fast. Better to have less than maximum income than no income at all. Raise the rent to market rates when the lease is up.

How do I find GREAT tenants

Every new landlord has very high tenant expectations. I'm only going to take great credit! No smokers! No pets! Not to burst your bubble, but most of those folks don't rent. They own. So let's bring down the expectation level a bit. The key is to find someone who will A) Pay you B) Take good care of your property. Those two are hard enough. Here are some tips.
1) Income is more important than credit. Always look at the credit score, but go deeper. Find out why the credit may have non-payment history. Sometimes, it's a recent divorce, or job loss, but now your tenant is on the mend, and will resume their previous good payment history. A score doesn't define a tenants life - so
Each New Tenant is A Risk:
Work Hard to Minimize It
look deeper, and ask questions. Always call the main office of the employer and ask to speak to the employee. If you get voicemail - or the applicant - odds are, they work there. That's a good start. W-2 (if possible) and bank statements (if necessary) should show regular deposits - paychecks - which he'll need to pay you.
2) Double check everything with the self-employed. It's very hard to validate income of the self-employed. But you must.
3) Be wary of anyone offering to pay you several months in advance. People with regular income streams don't need to do this.
4) Learn what you can about them - and call past landlords where possible. Find out why they are moving, and ask the old landlord if they were tough on the house.

No matter how much you scrutinize, there are no guarantees with tenants. If you can't handle that uncertainty, you should probably not be a landlord for very long.

Don't Discriminate Or Exclude Tenants Unfairly

Truth is, many landlords cherry pick their tenants - and they get away with it. But when they get caught, it's really painful, and expensive. It's not worth the risk. Know the laws in this area, and follow them. If your unit is not compliance with the lead paint laws be prepared to bring it into compliance or sell it if you have a tenant who needs to be in a lead safe unit.

Be Careful of Taking Deposits

Taking deposits before you evaluated a tenant can create confusion - and potential legal issues. Evaluate first, take the checks later. And just because they have a dog, you can't collect a pet deposit over and above a security deposit. That's not legal in MA. One months rent is the limit, and that deposit must be in a separate account that bears interest.

Have A Good Record of the Condition of the Property when they move In

Take a video of the unit - with the tenant if possible (make sure you capture them in the frame). It's hard to dispute video evidence, which is much better than a one page "statement of condition"

Get the Utilities Separated

I'm in so many buildings where the landlord is paying for heat and hot water, and sometimes electricity, because the utilities aren't separated. Not only will this make your units more valuable on resale, it also will allow you to charge higher rent (on a net basis). Tenants don't leave the lights on when they pay the bill. They don't run A/C when they aren't home. And they don't turn the heat up to 80 and then open a window when its their money. There is no downside here.

Check In When You Can - and Often if you Must

Keeping an eye on the tenants is a must, to see that they are taking care of the place. You don't have to wait until the end of the lease to check for damage, and if you find damage (a ripped carpet or painted wall) you can charge them to fix it. Most landlords don't want to cause trouble, but you need to be clear about the rules - and be clear that you'll enforce them. Now, don't be petty: Normal wear and tear isn't damage in most cases. We should be talking about things that are hundreds of dollars - not small items.

How do I get rid of tenants who are a headache?

Some tenants expect hotel like service from their landlord. If you have one of these, charge them hotel like prices for the service. Notify them (in advance of the lease end date) that the new lease will be far more expensive than the old one, to help pay for expenses related to their tenancy. They'll move.

What if the Tenants Stop Paying me?

First, know your rights. Second, know your obligations under the law. There are a lot of statutory (legal) obligations that you MUST follow to keep your options open. Some of them cost money, but are way cheaper than a tenant who isn't paying you for six months. Whatever you do, do it fast. Many landlords beg, plead, ask, accept promises and the like. These rarely solve the problem - they just extend your losses. If you think that the non-payment issue is going to last more than a few weeks, get serious and buy them out - pay them to leave. While this is very painful, if you screen your tenants carefully, you will not have to do this often - but you should always be prepared to do it. Evicting someone is always an option, but it makes people angry, and doesn't solve your cash flow problem. Getting them to leave voluntarily is faster, puts your property less at risk, is less stressful, and often cheaper in the long run.

Have Cash for Emergencies

Things happen, and money fixes them. The faster they get fixed, the less they cost. Don't get caught strapped for cash - that's when you'll need it most.

Be Prepared for Headaches at the Worst Times

It can't be helped: Property management usually means you'll be bothered when you can least afford to be bothered. Property management isn't risk-free, and it certainly isn't effort free, although sometimes it feels like that. Recognize it's part of the job and you'll get better at it. As the years move by, you'll see that your effort has been rewarded with a significant second income stream, and that might just make it all worth it.

Real Estate Sales for Hudson, MA - Home Sales and Real Estate Market Report (Sept, 2014)

The Hudson Homes For Sale Market Report

On to Hudson. Remember, we had a surprise up report in Clinton, that usually means good things for Hudson:
Can’t see the chart? You can find it Here .
What do we see? Well, we see rising inventories of homes for sale, but we also see very strong transaction volume. The HSI has stayed steady, in the low 130s, and that makes 5 reports above 120. That should translate to rising prices, and we see them in this report, with a big jump in prices from $171 to $163.  This report isn't the big rise from Clinton - but it's very strong, and although the rise in properties for sale is about to break 50, that looks pretty healthy to me.  75 maybe not so much, but 50 is OK.

What should active home buyers do in Hudson?

Buyers may be looking at the chart and thinking: "Maybe prices will slide this fall like last year?". Well - it's possible. But the other way to look at the chart is to see that high water market from last year as an outlier, and then you see steady rising of prices. I'm more inclined with this view - for the simple reason that the reports have been so steady, so strong in Hudson that I would think most of the "bottom" is gone, and as prices recover you see nicer homes come on the market, and they have higher prices. Buyers have choices, but they still need to be aggressive, or the right house will go to someone else. This is also getting to look like a good "flip" market, with prices moving in the right direction.

What should potential home sellers do in Hudson?

Well, its a good time to get out there. Prices are strong, and buyers across the board look motivated. Most sellers are optimistic prices are going up, and I am too.

Hudson Houses For Sale and Sold Market Statistics - Raw MLS Data

  • Hudson‘s “Home Seller Index” (HSI): 133 Last Report: 132
  • There are 48 homes listed as For Sale.
    Home Prices are hot in Hudson, up 5% from the
    last report.
  • There have been 116 houses sold in the last 6 months, and 72 homes sold in the last 3 months in Hudson.
  • The Average number of Days on Market was 79 days for just SOLD homes.
  • There is an Average Market Time of 100 days of theHudson homes For Sale (currently for sale).
  • The amount that was paid in Dollars per Square Foot averaged $171 (vs. $163 )
  • Current sellers are looking for $182 /sq foot
  • There was an Average Sold Price of $329,514 for sold homes.
  • Hudson,MA, has 1 properties advertised as lender owned or foreclosure (typically foreclosure) .
  • There are 3 properties advertised as a short-sale is going to be needed by the lender.

*All statistics are for Single Family Houses and based on data in MLS. Matt’s HSI is proprietary, and is designed to offer town-by-town information, instead of large scale trends. (That means you won’t find it anywhere else. Take that, Case-Schilling!).

Realtor Matt's Top Read Real Estate Posts

Real Estate Sales for Hopkinton, MA - Home Sales and Real Estate Market Report (August, 2014)

The Hopkinton Homes For Sale Market Report

OK, on to Hopkinton as we start to look at the middle of my geogrpahic area.

Can’t see the chart? You can find it Here .
Let's see. Chart shows it was a good spring. But the key line to watch is the number of homes for sale. It's up, and up quite a bit. Sales transaction volume is very, very good - so the HSI remains high, at 132, but the market is far more balanced, then it was say, about 13 months ago. With the pressure off, prices are flatlining, (although still up marginally). A normal, rising market.

What should active home buyers do in Hopkinton?

Buyers have choices - but many of those choices are at the upper levels in Hopkinton. The more inexpensive properties are well picked over, and good values are harder to find. Buyers looking under 500K are going to find few real gems, as that market is getting tougher east of 495 all the time now. There are still nice homes, to be sure, but they are smaller, older, and some will have other issues.

What should potential home sellers do in Hopkinton?

Knowing where you fit in the market is key to your success! Prices are up - at $218 a square foot - but the sellers that are on the market are asking $237/ a square foot. That's why they aren't sold - as a group, they're asking too much, and are way ahead of where this market is. Buyers know it, and aren't chasing them. If you position yourself in a competitive range for where you belong, you can sell - while they sit.

Hopkinton Houses For Sale and Sold Market Statistics - Raw MLS Data

  • Hopkinton‘s “Home Seller Index” (HSI): 132 Last Report: 112
  • There are 73 homes listed as For Sale.
    Markets don't go up like crazy for long; they
    find balance, and prices stabilize, which we see
    in Hopkinton.
  • There have been 167 houses sold in the last 6 months, and 113 homes sold in the last 3 months in Hopkinton.
  • The Average number of Days on Market was 72 days for just SOLD homes.
  • There is an Average Market Time of 176 days of theHopkinton homes For Sale (currently for sale).
  • The amount that was paid in Dollars per Square Foot averaged $218 (vs. $217 )
  • Current sellers are looking for 237 $/sq foot
  • There was an Average Sold Price of $631504 for sold homes.
  • Hopkinton,MA, has 1 properties advertised as lender owned or foreclosure (typically foreclosure) .
  • There are 0 properties advertised as a short-sale is going to be needed by the lender.

*All statistics are for Single Family Houses and based on data in MLS. Matt’s HSI is proprietary, and is designed to offer town-by-town information, instead of large scale trends. (That means you won’t find it anywhere else. Take that, Case-Schilling!).

Realtor Matt's Top Read Real Estate Posts

Top Ten Ways: How to Save Money on Your Home

Homes are places to live - but also investments

Paying a mortgage for most people is way better than paying rent. But that doesn't mean that all the associated costs that we get from home ownership are equally embraced. There are lots of costs in owning and running a home. Here are my top ten tips for controlling those costs.

#1 - Get MassSave out to your home ASAP. MassSave is structured on an interesting concept. Get the utility companies to pay a fee into a general fund that is then used on home consultants and processes to save that homeowner money. How much does it cost to have MassSave out to your home for an energy audit? NOTHING. And you'll almost certainly get free light bulbs out of it. I got over $70 in light bulbs (that will probably save me $10/month) for free, plus $1500 in discounts for certain upgrades on my equipment. They'll also come out -again, for free - and plug up holes in your house, and weatherstrip doors and windows. There is generally no cost to the homeowner for the basic service, and the savings add up every year.

#2 - Get good at yard work. Having the pros come to your house will help your lawn looks its best - but that cost comes at a price. A few years of doing it yourself can add a lot to the bottom line, even after you've bought all the tools for the job. Of course, lawn and leaf clean up is another story - the cost/value matrix is more favorable here for those who have a lot of leaves and not a lot of time.

#3 - Learn to paint. Buy nice brushes, good quality paint, and you are halfway to being a successful painter.
Learning how to paint yourself saves money AND can
build equity.
Learning how to be a good painter can keep your house looking fresh, and it's a fairly easy skill set to pick up, with inexpensive tools to help do the job. With a cost that can be $300-900/room, a little practice painting can make your house more valuable, and save on expenses. I don't recommend complicated paint jobs for homeowners, like painting cabinets and changing from oil paint to latex paint, but room colors and the exterior painting is pretty easy.

#4 - Check your assessment. Make sure you aren't over assessed. It doesn't happen often, but when it does, those tax dollars are coming from you unnecessarily. Keep an eye on your assessed value, and make sure you know what your biggest asset is truly worth.

#5 - Refinance. If there's a drop in rates and you can take advantage of a re-fi, you should.
Controlling both PMI and Financing
Costs is a huge step to improving
Anything more than 1/3 of a point should be considered, or anything with a 6-9 month payback after charges.

#6 - Drop PMI. With home prices going up, many people will be able to shed their PMI payment. My clues as to how the system works will help you drop it as soon as you can. With PMI payments often hundreds of dollars a month, shedding it as quick as possible can be very helpful.

#7 - LED Bulbs. Prices are dropping every six months now, and these bulbs are game changers when it comes to electricity consumption. Buy 'em during sales when they are less than $10 a bulb, and put them in the highest use areas first. Here's why!
These little bulbs can add up
to big savings.

#8 - Pre-pay 65% of your oil in August, when prices are low. Right now, I see oil prices at almost 20% cheaper than they were in February last year. Pre-paying for oil can save you hundreds of dollars if you time it right. No caps, no contracts - all of which are pretty expensive right now for the protection they offer.

#9 - Stay on top of water damage. Don't ignore wood that needs paint, or places where you know the flashing isn't working. Wood that gets wet rots, and the more it rots, the more it costs to fix it. This is a cost that grows exponentially over time - so don't ignore it.

#10 - Bid, Bid, Bid. Time to get some work down? I know Joe the plumber is a good guy, but just to be sure, call four of his plumber friends and compare estimates.
Get those bids in writing!
Be clear about what you want,
and have them be detailed about what
you get.
It is common for contractor charges to vary as much as 100%, and while I'm not a fan of picking the lowest bid (in the 'too good to be true category'), multiple bids gets you a chance to meet the person who'll stand by the work, and learn about the problems your job may entail. You work hard for you money - and so do they - so keeping the dialogue open in the beginning is huge to control costs AND getting what you want the first time.