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Updated over 7 years ago, 07/19/2017
Attracting Tenants - Ideas
Steve DellaPelle I don't mean this to sound harsh,
But not collecting a deposit is an awful idea. If you're okay being out that amount of money just take it off the first month of rent (I would personally not do either). The most attractive thing is a beautiful well cared for property. Second to that have professional photos taken and take the time to leverage all the online postings (Zillow, Craigslist, etc).
I owned rentals a few years back in MA, and I don't find tenant deposit requirements that onerous. You can only collect 1 month for security and but back then, I get also get 1st and last months rent. In MA, you have to place the deposit in some escrow account, and I have no problem with that.
I agree not charging for security is an awful idea. I do credit checks, but the best indicator if the tenant is credit worthy is how he handles the deposit, If he says no problem, no hesitation, he's OK". But if he hems and haws, then I know I will have a problem. I been doing for 35 years, tenants who needs a few months to come up with a months deposit will always be behind in rent, sometimes for years, during their tenancy.
I find this to be a better indicator than the credit score.
For the type of rental you're buying, I find some fellow owners to be cheap, lazy or both. I find that freshly painted, spic and span units go fast. I always personally interview tenants and one question I always ask is how does my unit compare, and I answer I get is the they saw units that were not painted and cleaned and they would have to take a week off from work to get the place ready. With mine, you just move in.
So my suggestion is, collect the deposit, spend some money and time cleaning up, and have the place looking nice.
Thanks for the replies!
The attorney's rationale was that they are still liable for damages to the property.
I was considering it but I can definitely see how the upside of collecting a security deposit outweighs the downside of not collecting it.
All in all, I still plan to put money into the vacant units and clean it myself to ensure everything looks high quality.
Thanks again!
They're still liable, but you have to collect. If you have a deposit, at least you have that much money in hand.
I'm wondering if the lawyer had some other advice to make up for a lack of a deposit? Seems like something is missing from that story.
Originally posted by @Steve DellaPelle:
Thanks for the replies!
The attorney's rationale was that they are still liable for damages to the property.
I was considering it but I can definitely see how the upside of collecting a security deposit outweighs the downside of not collecting it.
All in all, I still plan to put money into the vacant units and clean it myself to ensure everything looks high quality.
Thanks again!
Not collecting a security deposit is a horrible idea. I can guarantee that your attorney has never been a landlord before :)
The best way to attract renters is to be just slightly below market and have a property that shows well or a premium property at market.
You'll get multiple applications and you can choose the best fit for you.
-Christopher
To all the posters from outside of MA: MA is one of the most tenant friendly states in the US.
The MA rules for handling of the security deposit are very restrictive (read that as overly ridiculous) and mishandling of that deposit routinely results in triple damages to the landlord. Deducting damages from the deposit improperly can result in the same. So in an area where rents might run 2500, for example, and a security deposit might be the same, if you mishandle the deposit and resulting interest payments due the tenant will result in a fine to you of $7500, returning of the security deposit to the tenant, and the inability to use any of it to cover damages. And you might still be required to house the tenant, if you were trying to evict.
MA is so tenant friendly that we have an entire class of professional tenants who know this very well, and who get free legal representation as well.
So, it is actually a common practice in MA to NOT take a deposit, just to avoid the deposit rules.
@Steve DellaPelle, I suggest you join a landlord group so you have access to people who deal with this every day. Masslandlords.net has chapters around the state, but also NWCLA is very good, as the leadership is very knowledgeable.
As for attracting good tenants, rentals are in high demand right now. Price your rent properly, fix any old worn out lights, fixtures, etc, and clean and paint if appropriate, and you should be fine. Posting on Craigslist and Zillow is all I need to get a steady stream of good applicants.
@Steve DellaPelle - Agree with the no-security deposit is very scary. And to me, it would attract the wrong kind of tenant. I know in north Chicago-land it was big, but I would personally never do that. (And it was large buildings where maybe it would be okay.) Starting out feels like a bad time to do it!
To get to your question, around here, local Facebook groups work very well. Most people here don't even go the craigslist route because it works so well.
Also, I'm a believer in nicer, updated spaces and slightly higher than par rents. And what everyone else said, check credit score and do your due diligence. As an agent, I've been representing the renter in a transaction and think they are clean and tidy and would be great tenants and I'll walk by the house a few months later and find waist high grass and trash *everywhere*. So maybe if you're like me and live in a bubble, assume the worst until they prove otherwise! ;-)
And of course, in certain markets, listing with a realtor is a good way to go, it's heavy price (usually 1 months rent that is split between the listing and renter's agent) but I feel like there's more quality people who even think of checking through there.
Good luck!
Adding to my comments, as I mentioned in my earlier answer above, how they they handle the deposit request is a giveaway to how credit worthy they are. For this reason alone, asking for it gives me confidence.
There are people out there, living paycheck to paycheck, has absolutely no savings, and the landlord deposit is about the only savings they have. I see many posts here where on move out, the tenant ask to use the deposit to pay the last months rent. And predictably the landlord points out according to the least the tenant cannot do that.
Being a landlord of 35 years, don't you think I had tenants requesting this? Of course, plenty of times. The reason is this paycheck to paycheck guy has no other savings, he had to move for whatever reason, and if he pays you the last month's rent, he can't put a deposit down on his next place. He is stuck. So are you.
Now you can accuse me of being a softee, I would tell him, against my better judgement I'll do it, but make sure the place is in excellent condition, and often they are thankful and go the extra mile. If I decide to be hard nose, he can't pay anyway, and he owes me no favors. So I always wonder to myself, if I didn't ask for one month security, will the tenant owe me two months rent when he goes out the door?
I rarely deduct from tenant security. I spend a few bucks during turnovers, and I never had a case where it's totally trashed. So no matter how strict laws in MA is, I don't think I would run afoul of it.
So to me, the deposit serves a purpose other than covering damages. It's mainly for the good of the tenant if you really think about it.
Originally posted by @Frank Chin:
So no matter how strict laws in MA is, I don't think I would run afoul of it.
There is a little more to Security Deposit management in MA than just not overcharging the tenant; you have to provide them with the account number and the address of the bank the deposit is kept at, you have to pay them interest at the actual rate paid by the bank or some minimum rate if the rate is not disclosed to them, as well as some other processes.
That said if your proverbial ducks are in a row, it's not all that difficult to do without exposing yourself to too much risk. The key is staying on top of all the regulations and following them to the letter.
Originally posted by @Frank Chin:
Great to hear about your tremendous success up here! Your point about having form letters furthers my initial point that it is only as difficult as knowing the regulations and putting systems in place to ensure you're in full compliance.