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So you just bought your first rental property? Well, congratulations on the purchase and making a huge investment into your future. Now that you’ve become a new landlord, are you wondering what your next steps should be? Here are 8 helpful tips to get you started on the right path.

1. You’re now running a business and you have to treat it as such. This means getting your house and financial documents in order. It’s probably a good idea to buy a file cabinet or safe if you don’t already own one. Make sure you file mortgage, insurance, tax, water and tenants files in a safe place. It’s also a good idea to keep a digital (scanned) file back up somewhere as well. If your paper documents are lost or damaged, it won’t be difficult to replace them if you have an electronic back up.

2. Make contact with your new tenants. You need to introduce yourself as the new owner, provide them with your contact info and collect each tenant’s personal information. This may be a good time to talk with them about any issues the building may have and a little about your plans going forward.

3. Consider establishing separate banking accounts for your rental business. Ideally, you would like to have rental income come into one account as well as rental expenses paid out of that account. You want to keep rental records clean for tax reporting purposes. If you’re combining rental and personal business into one account it can make things more complex for you and your tax preparer. You may also want to consider a separate savings account (reserve fund) or credit card for your rental business as well. You always want to be prepared for rainy days!

4. While you’re at the bank, you may also want to open your tenant’s security deposit account(s). If you’ve collected or plan to collect a security deposit from your tenants, YOU MUST HOLD THESE FUNDS IN AN INTEREST BEARING ACCOUNT AT A LOCAL BANK. Just tell the customer service rep you want to open a “landlord/tenant” account. Before you’re able to open this account you’ll need to have each tenant sign a W9 form. This is so the taxes on the interest paid are reported under the tenant social security number and not you as the landlord.

5. Buy yourself some basic home improvement tools. You don’t have to be very handy to solve many problems in a home; you just need to have the right tool. I would make sure you own a power drill, screw drivers, hammer, tape measure, and a decent size ladder. One $40 tool that will save you thousands is a toilet auger! It’s very simple to use and will help you avoid some hefty plumbing bills when a tenant’s toilet is clogged.

6. Buy a few books for yourself and make sure you have a basic understanding of landlord/ tenant laws in Massachusetts. You don’t have to read each book cover to cover but you should have some type of reference available to you for when things come up. Don’t rely on Google for your answers. The law is different in each state and there are tons of “gurus” on the internet giving bad legal advice. NOLO has an excellent book selection and they’re always up to date/ easy to read. Grab yourself a book on landlord tax deductions as well. There are so many tax write offs for landlords and you don’t want to be missing ones you should be getting. Don’t assume your tax pro will tell you.

7. Create a maintenance plan for your property. A systematic maintenance plan is the best way to keep each of your properties in top shape and avoid costly repairs. Each landlord will have a different plan based on the properties you own, but your schedule may include the following:
a. Changing out the apartment air filters once every 6 months
b. Hiring a rodent exterminator every 6 months
c. Changing out smoke detector batteries every 2 months (important)
d. Cleaning out the gutter in the spring and the fall
e. Cleaning out heating systems in preparation for winter
f. Covering your AC units before the winter months
g. Sweeping, mopping and changing light bulbs in common areas every month

8. Have your real estate agent send you monthly rental comps for your area. So many landlords leave money on the table because they don’t know what’s happening in their local rental market. They buy a new place and allow tenants to stay in the unit without ever increasing rent. Not only are they leaving money on the table, but they are also hurting the value of their property. When rents are on the rise you want to be in the know. Make sure your agent is sending you rental statistics for your area at least monthly. These reports are automated and easy for your agent to set up.

 10 must have forms for all new landlords! Click here to download FREE rental property forms! 

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Are you a current or aspiring landlord in Massachusetts? No matter how many years you have in the rental business, fully understanding your local market is one the most important thing you can do to ensure your long-term success. Receiving regular market updates will help you determine when’s it time to buy and when it’s time to sell. It will also allow you to see what your apartments rent for in comparison to your neighbors. Should you be increasing rents?
Here’s a preview of Roslindale’s multifamily sales and rental market statistics for the month of September.

Total Multi-Family Listings SOLD: 31
Average Living Area by Square Feet: 2,874.00
Average Listing Price: $532,735
Average DOM (Days on Market): 53.87 Days
Average Sales Price: $520,680
Average Rent for 1 Bedroom Units: $1,367
Average Rent for 2 Bedroom Units: $1,664
Average Rent for 3 Bedroom Units: $2,161
Average Rent for 4 Bedroom Units: $2,400

Want to get a FREE Sales and Rental Market Report for your specific area(s)? Just send a quick email to Contact@MandrellCo.com to receive your monthly report. In the title put the words “FREE Boston Sales Statistics” and in the body, add the up to 3 areas for which you’d like to receive data . Your name and email will be added to the next monthly reporting cycle. It’s that simple to stay up to date and ahead of the curve!

Please call us directly at 617-297-8641, for custom reports or questions above the data provided.
Report data provided by MLS Property Information Network, Inc.

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Are you an investor or are you in the business of speculation? Investors typically look for a cash flow return on their investment based on a sound cash flow analysis. They purchase a property when the projected ROI make sense compared to other investment options. Buying a property with little to no cash flows and hopes of appreciation is called “speculating”. There are no financial predictions, but rather a hope that the market will continue to rise and you will make a financial gain the in the future. There are two main problems with type of investing which are as follows.

1. What happens when the market goes south? If the economy tanks and your property values decrease will you be forced to sell at a loss? An investor with a cash flowing investment isn’t affected as much by down turns in the market. Despite a loss in value, the investor is still putting cash in her pocket every month when their tenants pay rent.

2. What happens when the property needs repairs? If you’re investment isn’t putting cash in your pocket and you need a new roof where are those funds coming from? You’ll now be forced to dip into your personal funds and make a further investment into the property rather than the investment taking care of itself.

Want to know how to evaluate rental property in Boston? Watch the video above and download our Cash Flow Analysis. If you have questions about the form or the video, please give us a call at 617-297-8641 or email us at contact@mandrellco.com

Download the Cash Flow Analysis here!

 

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Understanding local rental rates in your Boston neighborhood is extremely important to your success as a landlord and real estate investor. There are three basic stages to any investor’s career, which are the buying, holding and selling stages. In each phase your knowledge about the current rental market will determine if you come out on top or not.

To give you an example, let’s assume we’re considering at a rental condo in Boston’s Beacon Hill.  When you’re evaluating whether or not the property is a good deal, an obvious factor is the potential rental income the property can generate. You must understand the Beacon Hill market, the tenant base and the length of time or DOM (days of market) of your average rental. It’s also a good idea to understand what your tenant base is looking for in a rental. Is the area dominated by families, single professionals, students or is it and older community? This knowledge will help you determine the types of finishes and improvements you’ll need if any.

There are many investors who’ve had tremendous success in the rental business and have been able to hold onto properties for a number of years. When these landlords eventually go to sell, they’re in a less than perfect position despite their past success. The reason for this is that they’ve failed to keep up with current rental rates in their markets. Often, landlords with long-term tenants will keep rents low despite the steady increase in values throughout the neighborhood. These landlords do this in fear of disturbing “a good thing”. They have a great tenant who’s been paying rent consistently and they fear of increasing rents would possibly disrupt that consistent flow of income. While this is a valid concern, what most investors don’t realize in that they are devaluing the property. The easiest way to put this into perspective is to pretend you’re a potential buyer and you’re considering two identical rental condos. The condos are identical in every way and they are both coming with the existing tenant base. If condo A has rental income of $1700, while condo B has rent income of $3200 (current market rate), most potential buyers are going to value condo B higher despite the fact that it’s identical to unit A. If we assume our Beacon Hill Investor owned unit A, s he would have to take a lower sales prices than her competitor selling unit B, not to mention all the additional rental income she didn’t collect over the years.

The best way to combat this potential scenario is to consistently monitor your local rental rates. Have your real estate agent send you regular reports like the one attached below. The report will tell you what apartments have rented, how long they’ve been on the market, and the average price  those rentals have rented for.

The example report is for a landlord in the Beacon Hill area. She has a 2 bedroom unit with 850 square feet. The report shows activity in the area for the last 3 months.

Beacon Hill 2 Bedroom Market Report

Would you like a FREE rental and sales market report for your area? Simply email Contact@MandrellCo.com with your criteria and we can have it out to you within 24 hours! You can also call us at 617-297-8641.

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