So you've got a property under contract, and you're excited that you're going to finally become a landlord. While it can be a financially and personally rewarding investment, there are lots of things to do in preparation for your new career as a lessor.
At the home inspection, make sure to really take a hard look at what needs to be repaired or replaced once you take ownership of the property. The most common tasks include changing out the toilets to low-flow models, strapping the water heater, changing the door locks, fixing broken doors or windows, repairing damaged drywall and probably just a good old-fashioned scrubbing of the entire property. If the flooring is made of hardwood, you'd probably want to wax and mop it out first to make sure it gleams when the site goes on previews.
Even before you close escrow, you should start making a list of the above items and others that need to be fixed. This will allow you to go home improvement store shopping to canvass and figure out a better budget than you previously estimated. It should also assist you in determining who will be doing the work and getting bids for projects. Also, if there's a good tenant already in place, you've done yourself a huge favor because you'll get a security deposit and rent at closing. So you possibly don't have to go in and fix a bunch of items.
Once you take ownership of your new property, chances are you'll need to make changes in these three areas:
Water: Because water issues are prevalent in rentals, it's a good idea to have a plumber assess or change out all the water valves, hose bibs, water supply hoses, washing machine hoses, dishwasher hoses, etc. In Boston, most buildings are dated and it's probably time to replace them, and doing so before a leak occurs -- especially because the property will be occupied then -- is just a good move. At average, set aside $250-$750 into your budget for this.
Door locks: You should change out the door locks when you takeover the property and after each tenant moves out. There are numerous smart key systems that allow you to rekey the door knobs in place every time a new tenant arrives and is priced similar to normal door locks and knobs.
Flooring: If you need to change out the carpets (which is unlikely for most Boston properties), take a look at laminate wood flooring as an alternative. It will cost more upfront but should last you a long time and is consequently a good investment. Many are turned off by laminates, but manufacturers have since come out with newer versions that look awesome on any decent-sized apartment. Laminate will also save you the hassle of having carpets cleaned during turnover, arguing with past tenants over the cost and having new tenants complain about stains.
You'll need to get a lease application and lease agreement. Your real estate agent can provide you the standard documents, but be sure to add any terms or clauses that you feel are important to you. Once you find a prospective tenant, you'll need to pull their credit report and conduct a criminal check. Usually, your agent has access to this sort of background checks.
Finding a tenant
It's wise to get in touch with a real estate agent to find a tenant for you. In most cases, agents already have a roster of people who are or will be looking for apartments at the end of their current lease. This also gives you a good indication of when to buy an income property: either in the dead of winter (to give you time to refurbish and improve), or just when the market is going to be hot (in the case of Boston, this is usually in the Spring months - just before schools start back up). Going to an agent won't cost you a cent, as the future tenant will be the one to cover their cost. It's just a matter of finding a reliable, well-connected, and trustworthy realtor that can get you the right hook ups, from contractors to clients.
But if in the case that your listing doesn't get inquiries, you're probably asking too much for your property. Connecting with an agent also gives you this advantage: they know what's the best deal you can fetch on your rental. Remember, they also make money off of it, so they won't be quick to underprice your property. Once you think you have a prospective tenant, it's always wise to interview them and ask them the basic questions.
Once you find a good tenant, move quickly to get a lease signed so you don't lose them to another landlord's property.
And finally, realize that being a landlord is a business, and your tenant is your customer. Just like any other business, the better you treat your customer, the more likely you will have a successful business venture. Consider asking your realtor if they also manage properties since most of them do, and for cheaps! They'll actually play the role of property manager for you so that all you need do is sit back and let the rent checks come in.