Financial Tips for Boston's Newest Landlords
August 23, 2017
There are a lot of folks becoming new landlords, both as first time investors and as a group we at BPC call "accidental landlords", or people who bought their home but are now moving and don't want to give up the option of returning in the future, thus renting it out in the short term. With real estate investment in Boston predicted to climb steadily, it’s a great time to begin generating income via homeownership and learning how to best do that.
Spend Now to Save Later
“Don't go cheap” on property upkeep, warns Al Norton, our rental manager with more than 10 years of experience. Yes, it may seem easier on your bank account to make your tenants do their own snow removal, but “if there's any sort of issue with someone getting hurt on snow/ice on your property, they're coming after your deep pockets, not the tenants”.
As far as lawn care goes, how it looks impacts your bottom line in the short and long term way more than it does your tenants. Besides, taking care of all of that kind of thing can allow you to charge more in rent, as there are tenants out there willing to pay more for the convenience.
Pay Attention to Your Insurance Policy
A big thing that most landlords miss? For those who were living in the unit previously, you will need to reach out to your insurance company for a policy change. Since the property is no longer an owner occupied unit, your insurance provider needs to be updated of the change in case of liability. Not doing so can be disastrous: if landlords submit a claim for damage done by tenants, the insurance company may not cover it because they had the wrong kind of coverage.
Reduce Stress with Property Management
Some may think that being a landlord just means cashing checks every month. However, unlike stock market dividends or accruing bond interest, real estate investment is not a passive income stream. Landlords deal with property upkeep as well, which includes repairing appliances or fixing other issues as they arise.
For many landlords, using a property management company is worth avoiding the hassle. While this service again costs money, it also means that the landlord is spared from everyday frustrations or emergencies. “The landlord isn't the one getting the call at 11:30pm on a Friday night about a clogged drain, or, worse, getting woken up a 3am because of burst pipes,” Norton says.
Save Big with Real Estate Agents and Tax Breaks
The best advice we can give is to use an agent. A licensed real estate professional will do the job for you, “the job” being all of the following:
- Marketing your property
- Showings for prospective tenants
- Collecting applications
- Completing financial and background checks to ensure the tenant is a good fit
- Writing the contracts and ensuring all other paperwork is completed
- Confirming that the process is done in accordance with the law
In the current market of high demand and low inventory, using an agent’s services may not even cost anything. Even if you do end up paying them some part of the rental fee, that's a tax deductible expense: your house or condo is now a business, and therefore eligible for certain deductions.
For more tips on real estate investing or long-distance landlording, we’re always available at info@bostonpropertycare.com.
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