All Forum Posts by: Dan Smith

According to MA Security Deposit law, you're supposed to keep the deposits separate. Commingling is a big no-no in Massachusetts.  That can definitely be a cumbersome problem to solve for a landlord, but I've had excellent luck with using Santander's Landlord account.  Effectively - the Landlord account is an escrow account that holds each of your security deposits in separately tracked accounts under one master umbrella account.  

They maintain monthly reporting that is sent to each individual tenant and because the money is held in escrow, you don't need to claim the interest as your own taxable gains (as you would be expected to if you just maintain your own account). They also disburse the interest at the end of every year automatically, which is another requirement of holding tenant's money.  

There's no fees for the account, and you also get a dedicated support center for when you've got questions.

Source: I'm a MA Landlord

Hey Joe!  Welcome to BP :). I too had heard lots of horror stories about MA, but the funny thing is that all of these horror stories seemed to come from people who had never actually been landlords before.

We've had a 3-unit in Haverhill for a little over three years now and I've had no real issues.  I definitely echo the concepts of having tight paperwork and screening heavily. 

You can make your life easier by making sure you get a good property.  The most impactful piece of advice I've gotten so far is to only buy a property if you would live in it yourself.  Don't rush into anything (buying a property or signing a tenant) and you'll be fine in MA.

You should start by providing a 30 day notice to quit - you can find plenty of templates for a Massachusetts specific one online.  In MA they have either 30 days to move out, or the end of the following rental period, which in this case is a month.  Make sure that when you present the letter to the tenant you bring two copies.  One for her to sign (if you're hand delivering) that acknowledges the receipt of the letter, and one for her to keep a copy of.

Source: I'm a MA landlord and have gone through this process before.

Hey @David R. - MA Landlord here!  You are correct that any leases that were in place when you bought are still in effect.  If they are TAW or M2M then you are free to make changes with appropriate notice, if they are in a lease with an end date, then you're stuck with whatever that lease says until the end date.  Depending on what you want to change, all you technically need is a 30 day notice to make any changes that you want to make.  (A notice would be 30 days, or the start of the next month, whichever is longer).  

BUT before any changes or notices, I would recommend you consider the following:

1) If you want to make a change to the lease, how much trouble will that stir-up with the tenant?  Is it worth the potential conflict?

2) If the potential conflict is greater than you want to deal with, is it best to just end the tenancy and find new ones? (only applicable if TAW/M2M)

3) Make sure you present the document with either i)- certified mail, or ii)- get a signed copy from the tenant.  Since you live there, it's easiest to just present the document and have them sign a duplicate saying they received it. PM me if you want an example.

4) Think about how long the tenant has been in the property (and how they will perceive your changes), when I bought a property with tenants that had lived there for 8 years - they certainly felt as if the property was theirs to do as they pleased, long story short - the changes I made to both rent and expectations of non-unit areas upset them greatly and it was best to just end their lease and let them move somewhere else.

Happy to help further if you have specifics!

@David R.

Welcome!  You're doing exactly what I did!  We bought our first property, which was a 3-family, in Haverhill, MA back in 2015.  I now live in CA and am so glad that I lived in my property for two years before moving, because now I know what to expect out of managing tenants.  I manage my property from CA and I plan to continue buying in MA as the prices here just don't make sense for cash-flow.  I hope to see more of you on the forums, there's a lot of good knowledge to pull from here.

My one piece of advice on these forums is to take everyone's ideas with a grain of salt when asking for help.  Everyone will come across as positive that their advice is the best, but they often don't actually know your specific details, so just be smart about how you apply their guidance.

I'll send you a PM so that we can connect!

It sounds like you need to take the time to assess your situation and your specific needs.  If you've never managed a property before, I would suggest not starting out with something out of state.  I currently own a MF in Massachusetts that I purchased and lived in for 2 years, but moved to CA and have been taking on the management while I live out here.  Even with all of the systems I have in place from when I lived in MA, the reality of being out of state makes everything more difficult (but not impossible).  From finding new tenants, to turning over a unit, to dealing with issues as they come up- I'm fortunate enough to have a friend who helps me out in MA with physical needs, but it's never done as well as I would personally do it.

Your situation is going to be unique to you, for instance - your daughter. I'm fortunate enough to not have any children that depend on me, so I probably have a little more free time than you to dedicate to this stuff, so what I say is best might not be for you.

I would recommend that you continue to save up for that down-payment, but also set aside time each day or week dedicated to learning about out of state investing vs investing in a market in CA.  Also remember, depending on your threshold, the further from LA you get, the farther your money will go, but also your commute.

To start your education, I would recommend Long Distance Real Estate Investing, by David Greene - it's not the most concisely written book, but it would certainly give you a look into what it takes to be successful at it.

As for me - Since I moved to LA a year ago, I have realized that the cash flow game isn't one that I feel I can do successfully and I'll continue to buy MF's back in MA in a market I know better.

Good luck and feel free to PM me if you have any questions!

Welcome to the forum @Marc Massery!  I love the Berkshires, my wife and I met at UMass and got married at Berkshire East :)  It sounds like you're thinking about things the right way, you've minimized your cost of living and you've been able to consistently save a nice little nest egg for yourself.  The first piece of advice that I would give you is to recognize your audience- I would imagine the overwhelming majority of people on this forum would push you toward buying property vs index funds due to the topic of BP. 

That being said, I fall into that same category of people! My wife and I started investing a few years ago with a 3-family, purchased with an FHA loan. We had the benefit of having a larger sum of income than you, but depending on location in the Berkshires, that might not matter as much.

It sounds to me as if you're still very much in the learning phase, so I would recommend reading more books and doing more research on real estate investing to see if it makes sense for you.  This type of investing isn't as hand's-off as index funds, but I think it's much more interesting.  Check out posts here on BP, read blogs dedicated to real estate, maybe attend a real estate agent training course, (only a few hundred dollars in MA), and see if you get excited about buying, fixing, and renting property.  It's definitely not for everyone.  I lurked and educated myself on real estate for 3 years before I had the comfort to go and buy our first property.

As far as next books that I would recommend reading:

Set for Life by Scott Trench - He's a millennial, like us, his book is a good foundation builder for the thought processes that go into seeking financial freedom.

Long-Distance Real Estate Investing by David Greene - I recommend this one because I'm not sure that the Berkshire area is the best to invest in, with regards to multi-families and this book helped me to feel more comfortable with buying out of state, though this approach definitely isn't for everyone.

I also recommend any of the BP published books as they tend to be some of the better written real estate books I've seen lately. BP Bookstore Found HERE

Good luck on your journey and I hope we see exciting things from you in the near future!

Hey Justin,

To answer the first part of your question, I think it is beneficial to familiarize yourself with the laws and process that a real estate agent is going through to help an investor close a deal.  I personally took the classes to get a license and was planning on actually completing my license, (though never did because I moved to CA), in MA for a few reasons. 

1) The cost was low, I think I only paid about $400 for the course.

2) The time commitment was low, you only need to complete 40 hours of instruction.

3) If I wanted to get a license, I could do so and hang it with a broker simply to help myself with my own process of accessing the MLS and being more self sufficient.

Having completed the course I can tell you that you will learn nuances to real estate that you didn't already know.  You will also learn to appreciate when a real estate agent is actually doing their job correctly, vs the large number of agents who just show up and do the bare minimum.

What prompted me to take the course was that my first agent was not very good, but I couldn't actually truly assess and understand that without knowing myself, now I can confidently say that she wasn't very good, (lucky me, lol).

Short Answer: There's not a glaring reason I can think of to not educate yourself on it, even if just for education's sake.

I can't provide info on the 2nd part as I'm just not as familiar with specific MA to CT reciprocity and requirements.

Echoing what @Douglas Snook is saying, don't take that "cleaning fee" from the current owner, that was an illegal fee to charge on the front end of a tenancy.  That being said, it's likely not your problem if you don't assume it in the sale and the owner gives it back to the tenants.  As for getting a security deposit, you would likely have to wait until the lease is due for re-signing again, and in your new (likely improved) lease you would require the additional security deposit.  

To what you said about being a little overwhelmed by MA security deposit laws: It's honestly not as bad as it sounds, but it's in your best interest to let a bank like I mentioned above take care of it so that you don't find yourself in a pickle!  I'm glad that you're getting the help you're looking for in this forum!!

@Liane Cochrane - For getting the estoppel's filled out, I would present the form to the seller and ask them to please get those filled out.  They should be signed by both the seller and the tenant of each unit.  You want as much detail in there, specifically about what the tenant own's, and what is officially part of the property (appliances, window coverings, etc).  Let the current owner deal with getting that from the tenants, as they should be signing it as well.

When we bought, the owner said that they didn't want us calling or emailing the tenants, so we just showed up one early evening with cookies to talk to them and introduce ourselves, (that just happened to be how we could get around what they were saying).

On the matter of security deposits - The recommendation I got from my lawyer was to have the owner pay out the current interest back to the tenant.  The only amount that you want to take from the owner is the actual security deposit, you'll want that written somewhere and signed by the owner that they have settled with the tenant on interest.  Lots of landlord's don't actually handle interest correctly and that could technically come back to bite you even if it's not your fault.  This is especially important in MA, where our security deposit laws are so strict.  Make sure you understand all the rules about security deposits too (like paying interest every 12 months, and keeping them in separate interest bearing accounts).  For that, we actually use Santander bank, which has a landlord specific escrow account for security deposits that I would urge you to seek out, whether at that bank or your own.