First Time Landlord - Renting out 1st Floor Unit

[Jonathan Umana]

Hello, I am a new member of the forum.

A brief background is provided. I reside in Massachusetts and have recently taken on the role of landlord for my parents' house as they have aged. The first-floor unit was consistently rented at a low rate to my family members to provide assistance. Fortunately, they have acquired a house, and now we can rent the first floor at market price.

As I begin this new journey, I would like to ask some questions that I hope more experienced landlords and investors can answer. The first floor features a two-bedroom apartment complete with a living room and a bathroom. The basement has consistently been linked to the first floor, which features an extra bathroom, a living room, and a spacious office. I am considering converting the basement by installing an egress window, which would cost around $7,000, and adding wired smoke alarms. This would allow me to create an additional bedroom and potentially live in the basement while sub-leasing the first floor. I am inclined to this option as it would allow me to return home to assist my parents and save money while pursuing my law degree.

- Does anyone think this is a sound idea? I recognize that this is a matter of personal opinion, but I am particularly interested in exploring the concepts of lease and sub-lease.
- What measures can landlords take to ensure protection while renting, and what steps should be considered prior to seeking a tenant?
-Should I consider hiring a realtor for assistance? Can I manage this myself to save on expenses?

I appreciate your assistance and I'm pleased to be a part of this community.

Sincerely,
Jonathan

[Ozzy Sirimsi]

I would suggest to check with your local laws first.

Most likely you will need permit ( I guess you can get away without, obviously not suggesting that :D)) but possible) , also check your zoning.

If not possible to create separate unit legally, I suggest not putting an oven in the basement, and rent it without, or live in it yourself

[Zachary Gray]

Id say the first step is to confirm with the city if the zoning allows for you to make this a separate unit. if it does great.

if not there is another idea. Lease out the basement and the first floor unit on one master lease. This will allow for you to pursue legal action "eviction" if ever needed for non payment or negligence as a tenant. if you rent out the basement separately but it is not a legal unit, the court will not allow you to pursue an eviction. You can outfit as a full unit and still have two separate tenants per say but a master lease would provide the most protection to you 

when fielding applicants use MA housing court data base to run applicants through to see if they have any prior housing court claims

[Henry T.]

Its a sound idea. Make sure your lease stipulates its a "shared property" and list all the rules to make sure they toe the line, garbage, one vehicle(where parked), noise, no personal items in yard, everything you can think of or choose/whatever. Join a local landlord group. On this forum search screening,  deposits, utilities. Make a move in condition list signed by the tenant., take pictures of everything. Read your local laws.  (btw, get more quotes on that window)

[Lien Vuong]

So happy to hear that you're able to help your parents with this and get to experience landlording for the first time. 

- Does anyone think this is a sound idea? I recognize that this is a matter of personal opinion, but I am particularly interested in exploring the concepts of lease and sub-lease. Yes if the cost is merely $7k, you will be able to re-capture that cost within 1 year and most importantly, increase the value of the home. 
- What measures can landlords take to ensure protection while renting, and what steps should be considered prior to seeking a tenant? Running background checks on tenants, criminal, eviction, employment history are some way to determine if this is the right tenant for you. 
-Should I consider hiring a realtor for assistance? Can I manage this myself to save on expenses? A realtor is not needed for this if its just one unit and a smaller ADU in my opinion PLUS that is not really an agent's job rather a Property Manager. Since this is a family property you likely know it inside and out during your ownership so it should minimize the number of calls you get and glitches in the unit. Worse case, hire one if you find it too taxing for you after a few months. 

Best of luck!

[Colleen F.]

@Jonathan Umana    First a couple questions.  Is the kitchen for this apartment on the first floor and you intend to rent the 2 bedrooms on that floor? Are you planning on another unit (with kitchen) in the basement or just a crash pad for you when you are in town? I am thinking your parents live on the second floor.   Regardless add the egress window, as you will need two means of egress.  What is the laundry situation? Can the first floor access laundry in their unit or in the basement without going through your potential space? Is it possible to get from the basement to the second floor without going through the first floor unit? If those are possible I think it is a viable solution. The easier solution is to make the basement technically part of the 1st floor even if you won't use it that way, getting a third unit approved is not something that will be easy. 

I don't know if a relator is what you need. You may need a property manager if you are going to be busy in law school. Also be picky with tenants and know the landlord tenant law especially if your parents live there you want them to be comfortable with who is in the unit. For example if they don't want animals state that upfront. Good luck

[Michael Smythe]

@Jonathan Umana you can typically get away with a lot more if you are living in the property.

Example, the basement. Most cities won't care if the owner lives in the basement, they only care if it's tenants.

The egress window is also a good idea for increasing future sales price. With it, you can typically add a legal bedroom in the basement - confirm with your local municipality.

[Douglas Snook]

Sorry to be a little late to the party, but I am not clear on what exactly you want to do.

Do you want to separate the first floor from the basement and then use the basement for a crash pad for when you visit?

Or are you looking to live in the first floor and basement but then rent out some of the rooms?

If the basement is not a permitted space you are asking for trouble renting it out (or subleasing it with the first floor) I personally would perhaps think about moving your elderly parents into the first floor so that it is easier for them instead of going up stairs all the time. That way since there is a connection to the basement there is not issue with you crashing down there.

If you don't want to do something like that, I would cut the basement off from the first floor and just rent the first floor, leaving you the basement to crash in when you want.

Or see about getting the basement made into it's own separate unit now that ADU are allowed in Mass (although the law may not kick in until the new year)

Also your town may now require a certificate of occupancy to be issued before you can rent it out and they may have something to say about this basement connection anyway.

Just my two cents as they say.