How to Succeed in The Highly Regulated Landlord Business
REDUCE IT ALL TO WRITING.
- The lease agreement creates the contractual relationship between you and your tenants. It must be carefully drafted, reviewed, and retained.
- No matter what is agreed, tenants cannot waive their rights.
- It lays out the responsibilities of each party, the rent due, the manner of payment.
- Be sure to include federal and state mandated disclosures.
DO THE FINANCIAL CALCULATIONS BEFOREHAND.
- Landlords pay:
- the mortgage principal, mortgage interest, insurance and taxes.
- Landlords pay for Repairs, improvements, extermination.
- Landlords pay for tax preparation, credit checks, and legal advice.
- Water and sewer, common area utilities, supplies needed to clean, paint and maintain.
- Supplies needed to clean, paint and maintain.
- Does the rental payment offset these costs enough?
- Landlords pay:
- Employ a checklist for potential tenants.
- Follow anti-discrimination laws.
- Employ a credit check, CORI check, and seek past-landlord references.
KNOW THE INS-AND-OUT OF RETAINED MONIES.
- Know that you must be VERY CAREFUL with monies you retain from your tenant.
- The retainment of Security Deposits and Last Month’s Rent have statutory requirements – their violation, innocent or not, can result in penalties and an award to the tenant of treble damages.
HONE UP ON YOUR HANDY-MAN SKILLS.
- Keep the premises habitable. You are required to do so.
- Remember, a tenant can withhold rent monies for your failure to repair, or repair themselves and deduct what they owe you.
- The law in Massachusetts requires you to hire a licensed plumber or electrician for plumbing and electrical repairs.
- Many repairs that are legal and practical for you to attempt on your own
THE BOTTOM LINE:
Remember, you are extending credit to your new tenant(s) when you decide to rent to them, they are your customer. Treat them with respect, attend to their needs, put it all in writing and in every way, be business.
Real estate is important and worthwhile. The tax advantages are significant. Owning real estate diversifies your portfolio and land itself lasts.
Identify an attorney that can help you to draft an appropriate, and legal lease. It will save you in the long run if you get counseling before you take on the landlord role. An ounce of prevention at the beginning will save you pounds when and if the relationships sour.