Recently one of my Real Estate Colleagues sent me the following email looking for advice in buying their first Massachusetts Rental Property. The following exchange is a reply to that inquiry that you may find helpful as well.
And all of this was written from memory before my morning coffee. %^))
As always, good to see you again at last week’s NEREIA meeting. You always keep the presenters on their toes! I have a favor to ask. I am in the process of purchasing our first (MA) rental property and was wondering if you have any documentation or advice I can use?
Lots of advice to give. When shopping the property or completing your due diligence you want to visit city hall with the address of the target property. Stop in to visit:
1. Police Department: Are there many or any calls to this property or neighborhood?
2. Fire Department: Is this building on a watch list for violations?
3. Board of Health: Any existing or past violations you should know about? Stop in and ask to look through the property folder.
4. Building Department: Stop in to review the folder for pulled permits then see if they match the property. Work performed with out a permit may not be covered in an insurance claim. You also may need an updated 110 Inspection if not posted on the property. Check everything.
From the rent rolls, get all of the residents names and run them through the state wide eviction database at http://www.masscourts.org
You will need an estopple form for each resident that identifies:
1. Verify All Occupants
2. Verify TAW or Lease
3. Verify Date moved in
4. Verify Rent amount
5. Verify Security Deposit
6. Verify Move In Condition form if received Security Deposit(s)
7. Verify Last Month Rent
8. Verify any Lead Paint certificates
9. Verify Lead Paint Federal Notification
You want a home inspection to identify deferred maintenance which may affect your offer price.
For documentation, must haves are:
1. Solid Rental Application (see Belaire Rental Application)
2. Solid Screening Process (see outline of upcoming November MassLandlords.net presentation)
3. Massachusetts Lease or TAW agreement
4. Security Deposit Receipts
5. Move in condition statement form
6. Federal Lead Paint Notification Form
This looks a bit overwhelming, but please do not think of rental property as an investment even though it may yield those results. When buying rentals, you must remember you have just started a customer service business. If you do not really want to be hands-on, you can still be a passive investor to collect rents.
This is where I would make the shameless plug to hire a good property manager. I may or may not be interested in managing the property based upon your findings in the above checklists and the location from my base of operations. It depends. However, if you think you might like to have the discussion, I love to talk about rentals (but you knew that).
I hope you found this information helpful. Always happy to discuss rental properties.
Do you have any ideas on this topic you could share to help our online community? Please chime in to share a comment or review.