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We have a unique opportunity that’s just come into our office. We have a client looking to sell a 4000 square foot lot in Dorchester with approved plans to build a 3 family home. The building would consist of 3 bedroom, 2 bathroom units and would include one parking spot for each unit. The seller is looking for $195,000 or B/O. The Dorchester multifamily market is still red hot and this deal is not expected to last long. Please email us at Contact@MandrellCo.com for more information and/ or a copy of the city approved plans.

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Are you a landlord in the Boston area or are thinking about getting into the rental business? If so, make sure you fully understand the required and optional insurance coverage available to you. Having the right insurance in place could mean the difference between a well run real estate business and financial ruin.

Here are several insurance policies every Massachusetts landlord should be aware of:

Owner Occupied Coverage – If you purchase a multifamily building and you intend to occupy the property as your primary residence you’ll be required to obtain homeowners insurance. This insurance will typically cover the building itself as well as all the buildings fixtures. This policy will not cover your tenants personal belonging (or yours if not specifically written in the property).

Rental Property Insurance – Let’s assume you initially purchased a Boston triple decker as your primary residence and then you decide you want to move out and rent the unit you’re currently occupying.  It would be a very good idea to contact your insurance agent prior to doing so. When you initially purchased the property you paid for insurance that covers you as an owner occupant, but not as an investor. Once you move out of that property and it now becomes and investment and no longer “owner occupied”. Investment real estate requires different coverage and you’ll need to discuss these changes with your agent. If you don’t switch your policy after moving out, and attempt to make a claim, the insurance company may argue that you had improper coverage and deny any payments to you.

Vacant Property Insurance – If your property ever becomes entirely vacant for an extended period of time, make sure you alert your insurance agent. There is often a different policy needed for a property that isn’t being occupied due to a higher risk of damage. Vandalism, rodents and frozen pipes are just a few of the many things that are more likely to take place in a vacant building. Make sure you’re fully covered.

Renters Insurance – One of the best things you can do as a landlord is alert your tenants about renters insurance. If there is ever a flood, fire, break in or anything that results in your tenants loosing personal property, they are not covered under your homeowners policy.  It’s a good idea to alert them of this fact (during move in) and encourage them to get coverage. Renter’s insurance policies can be obtained for as little as $300 annually for approximately $10,000 in coverage.

Email us (Contact@MandrellCo.com) and we can send you the form we use to educate our tenants about the need for renter’s insurance.

Umbrella Insurance – If you own more than one rental property, you should speak with your insurance agent about an umbrella policy. Simply put, an umbrella policy protects you from any losses that exceed the coverage amount in your property’s policy. Ask your agent if this type of coverage would be right considering your future investment goals.

Anytime you make a significant change to the occupancy or the structure of your investment property, you want to be on contact with your insurance agent. It’s also a very good idea to review your coverage amounts and deductibles to really understand what your policy covers…and what it doesn’t.

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REDUCTION IN FHA MONTHLY MORTGAGE INSURANCE!

I hope all is well!  I wanted to let you know that FHA has recently announced that as of January 26, 2015, the monthly mortgage insurance on FHA loans is being decreased from 1.35% to .85% on loan to values between 95.01% – 96.50% and from 1.30% to .80% on loan to values at 95% or less.

On a $100,000 loan, for example, this reduction in monthly mortgage insurance will reduce the monthly mortgage insurance payment from $135/mo to only $85/mo.

On a $400,000 loan, for example, this reduction in monthly mortgage insurance will reduce the monthly mortgage insurance payment from $450/mo to $283.33/mo.

Not only will buyer that need to use FHA loans be able to save more money monthly but they will also be able to afford a much higher purchase price due to monthly MI reduction!

Please let us know if you have any current FHA mortgages that you would considering refinancing and we can connect you with our mortgage specialist! Of course if you’re considering making a home purchase, give us a call and we can make the connection.  The FHA 30 Year Fixed rates are as low as 3.125%. Other than FHA he also has access to conventional & mass housing loans with as little as 3% down with NO PMI!.

Here’s to a prosperous 2015!

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Proper Water Use – This one is pretty straight forward. I’ve had past tenants wash their cars in my driveway and go as far as bringing friends over to wash their cars as well. I had to stop that immediately.  People who’ve never owned property may not understand (or care) that water isn’t free. When they shower and flush the toilet the landlord is paying for it which is reasonable and required by law. But what isn’t required is that you fund their outside water activities. Make sure you address what is/ isn’t acceptable within a clause of your lease.

Trash Removal – Have you had a tenant move out of your rental unit and leave large amounts of trash behind expecting you to take care of it? Here is the specific clause we use in our leases to make sure it’s clear that this needs to be done prior to move out!

Trash removal is your responsibility. If there are large items you need to dispose of, please do this prior to move out. We will not be responsible for removing trash from the unit, the basement or taking trash from the side of the house to the street. This also applies to an excessive amount of smaller items and anything that overflows the trash bin provided to you at move in.

Additional Occupants – Make sure you have a clear statement in your lease agreements that addresses additional people occupying the property after the lease is signed. It’s amazing how many people attempt to sign a lease with one or two individuals and afterward try to move in 3 or 4 people…or more. You always want to make sure you know who’s occupying your property.

Direct TV Dishes – Have you ever driven down a street in Boston and noticed a home with 10 satellite dishes hanging off the side? Did you ask yourself how many people live there and why do they all have their own TV service? Well the problem isn’t the number of occupants, it’s Direct TV. The service provide provides a new dish for every first time tenant while never bothering to come remove old dishes from tenants that have moved.  Why does this concern you as a landlord? Well lets say you’ve own a 3 family home for the past 10 years and between those 3 units you’ve had 15 different tenants. If half of these people chose to use Direct TV as there provider you may have up to 7 stat dishes drilled into the side of your home. Not only does this looks horrible and increases the chances of physical damage to your property.

So how do you address this? You take care of it within your leases. You would ideally insert a clause stating that the tenant must you cable or some other service that doesn’t hang dishes and damage your property. You could also state that the tenant must have the dish removed at their expense prior to moving out (or receiving their security deposit back).

Be sure you’re within legal guidelines when inserting clauses in your lease agreements. As a landlord I keep a Landlord/ Tenant legals guide handy and always consult my attorney if there is anything I’m still unsure about.

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