You may think it’s only the tenant who has a hard time paying the rent, but as a real estate investor or landlord, there may be times when it’s hard paying the mortgage on your end as well.
This is especially true in Massachusetts, where a lot of homeowners are also landlords. This is due to the large number of small multifamily properties in our state.
Here are some things you can do to avoid trouble paying the mortgage in Massachusetts.
Keep Your Units Full
While it may sound overly simplified, this is the most obvious first step for ensuring you’ve got rent money coming in each month to cover your property mortgage payments.
Don’t allow yourself to get slack on advertising for new tenants, and don’t put off screening applicants or filling your properties because you get busy or overworked.
Recognize filling your vacancies as a major aspect of your REI business success and deal with it quickly and efficiently every time.
If you aren’t having a lot of showings, you might want to use a listing syndication service such as Zillow which will list your apartment over a number of rental websites.
Find Great Tenants
In Massachusetts, it’s really important to find and rent to great tenants. While you want to keep your properties full, finding good quality tenants is key.
By “good” it means they pay their rent on time, keep the property maintained and don’t abuse the lease.
Make sure you are checking their background and credit scores so you can weed out the bad applicants quickly. By using background and credit checks, you can find the best tenants available and thereby do what’s possible to keep your rental fees coming in regularly, which will help you pay the mortgage when it comes due.
It’s also important to do an eviction record check with the Massachusetts court website (masscourts.org).
Get Long Term Tenants
It is getting more popular to offer short-term rentals with services such as Airbnb, but in general, you want to avoid these. Here’s why:
Turnover costs you money. So, the more often people move out, the more it costs you to clean and lease the unit again.
While many short-term tenants may be great tenants, you want to opt for longer-term tenants. If you do accept a short-term rental, make sure you charge a significant premium on the rent (often $100-$200/month increase).
Stay Current on Maintenance
If you want good tenants, long-term tenants, and tenants who pay their rent on time, do your part to keep them!
Deal with maintenance issues quickly to keep the residents happy and make them want to stay.
Upgrade appliances or at least ensure the ones you provide are in good working order.
Respond to your tenants’ calls quickly. If you can’t, make sure they know it’s on your schedule to accomplish but will take some time.
Know the Laws in Massachusetts
Massachusetts has a unique set of landlord/tenant laws, and landlords in Worcester County need to understand the laws. It’s a simple but sad truth that violating just one small law could land you in court and allow tenants to go months without paying the rent.
Some of the big laws you need to know about in MA to run your rentals properly are:
You should only take a security deposit that is no more than one month’s rent. Also, it needs to be maintained in a separate account and be accompanied by an inspection that has very specific language that’s required.
Another sad fact is that late fees are basically illegal in MA. You cannot charge a late fee until the tenant is 30 days late. The reality is you will be well into eviction proceedings by then.
You also cannot do a “reverse late fee” by offering a discount for on-time payments. This is specifically prohibited.
Pet fees are not allowed in MA. There is nothing wrong with charging more rent, but you cannot charge a specific pet fee or deposit.
It’s All About Relationships
Being a good landlord will go a long in way in developing lasting relationships with your tenants, which will in turn, help you keep them in your property longer. Often a tenant and landlord relationship can turn an average tenant into a great one simply because they want to keep that relationship intact.
On the other hand, handling a tenant the wrong way can convert a great tenant into a nastyheadache real quick.
In a tough economy, it’s important to do all you can to avoid facing the difficulty of paying the mortgage. That applies just as much to an REI professional as it does to the average renter. These simple tips can help as you work to develop lasting, longterm, rent-paying tenants to keep your properties bringing in the income you need every month.