In the city of Boston, and the surrounding suburbs of Brookline, Newton, Cambridge, and Somerville, being a landlord can be an incredibly profitable venture. Holding onto a property in a city with increasing property values and rent rates means that you have your money in a relatively secure investment, and can pull in cash month-on-month. What's not to love?
Obviously, there is a certain level of responsibility that comes with owning an income property: you have to make repairs on the property itself, and you must abide by local and federal regulations when it comes to renting your home. Whether it's a full- time gig for you, or it's your side hustle to earn some extra income, there is a lot to think about and understand if you want this venture to be successful. First and foremost, you need to ensure that you find the best tenants possible. You can do this by following 5 simple rules:
Contact Previous Landlords
One of the quickest and easiest ways for you to know if you have a reliable tenant on your hands is to ask their previous landlords. Simply ask if they pay rent on time, were respectful of the space, and were easy to work with. Past experiences usually hold the key to future experiences. This is also helpful because sometimes outstanding tenants don't look great on paper--this might help you in determining what to do about applicants on a financial threshold.
Run a Credit Check
Running a credit check will give you a quick and easy overview of how seriously a renter takes their debts. You'll want someone who pays rent consistently in full and in a timely manner. Seeing their patterns of making payments on credit cards and loans will give you good insight into their ability to pay rent on time. Generally, you want tenants who have a credit score above 700 and have no recent history of delinquency. Note that past damages can hang on credit reports for a very long time, so ask tenants to explain old red flags--they may have been young or made a silly mistake, so give them a chance to show you they are reliable now (speaking to past landlords is a good way of knowing this).
Verify Income & Employment
The application for renting your property is ultimately filled out by the tenant, who may or may not be a trustworthy person. Part of knowing whether a tenant is qualified to rent your space and will remain qualified is knowing their financial situation. Call their employer when time allows, and verify their employment status. You don't want to rent a $4000 apartment to someone who just lost their job. You can also request recent pay-stubs to make sure their income matches what they've represented. Generally, you'll want a tenant whose gross annual pay is 36x the monthly rent.
Request a Copy of Photo ID
Many times, all it takes is something small to deter dishonesty. Requiring a photo ID can be enough to encourage someone interested in fraudulent behavior to move on to another target. It is not a guarantee, but it does make the process more challenging for those with impure motives. This also makes it easier to run credit successfully and quickly as you will have a verified address and full name on hand in case a tenant goes by a nickname or something of that sort.
Meet Tenant in Person
The last thing you want as a landlord is a tenant that is hard to work with. It's an extra step that will go a long way in determining the relationship you'll have with your tenant. Take the time to meet them if possible so you can get a feel for how they communicate, how they act, and if the relationship is likely to be easy-going or tenuous.