As a Boston property owner, you’re probably well aware of the typical rental cycle in the city. Roughly 65% of tenants on a September 1st cycle and a few outliers – like June 1st, for example. With those dates quickly approaching (although the weather may seem to differ) you may be asking yourself some questions:
■ When should my tenants renew my leases?
■ How much time to give my tenants to sign?
■ Should I be raising the rent? What is the property value?
With a combined 15 years in real estate and management, we’ve answered these questions for several property owners in the Greater Boston Area. In our experience with rentals, renewals, and management, the best time frame in the Boston market to send rent renewals is between 120-180 days in advance of lease expiration. At first, that number can sound crazy – 120 to 180 days? That’s just about the same amount of time it takes my tenants to move in and get settled.
Boston Rent Renewal “Golden Rule”
But hear us out. We facilitate over a hundred rentals a year and what we’ve learned with our rental clients is they know the rental process in Boston is competitive. And to combat that, and still land a stellar apartment, they are reaching out to real estate firms almost 4 to 5 months before move-in. And depending on the neighborhood, it could be upwards of 9 months in advance.
In short, if you wait too long to send out your renewal notices and one of your tenants choses to move out, you’ve put yourself at risk of finding a good candidate for an optimal market rent. So put yourself at ease and follow the “golden rent renewal rule” of 120-180 days.
If you’re already in that “danger zone” time frame get your renewals out as quickly as possible. If someone doesn’t choose to renew, call a broker to get it on the market as soon as possible. At MerGo, we’re always happy to have a conversation and help you especially with our resources as real estate professionals on the Walker Residential Team at Berkshire Hathaway.
Next Steps: Reply Timelines, Rent Increase, Non-Renewals
After sending renewals, give the tenants 10-14 days to reply. Again, you might be thinking, “is that enough time?” Yes, it is. Most people know if they will stay or go. If you give your tenants a renewal without a timeframe for replying, you risk ending up in the situation where you have a tough time re-renting the unit.
As for how much you should increase the rent, we usually recommend around 3-5% of the current rent amount, factoring many different aspects found via a comparative market analysis, which can be performed by an experienced real estate professional. Some other questions to consider with rent increases could be…
■ Does the unit require repairs or upgrades? Unless those are completed, you most likely shouldn’t increase your rent
■ Similar, what is the status of the overall building?
■ How much did taxes, water, and sewer increase (gas if you pay for heating and hot water), among other things?
These are just a few circumstances that you should be taking into consideration when you are deciding rental price.
In the rare and unfortunate case that you have a tenant that chose not to renew a lease with, it’s important to speak with an attorney who specializes in landlord-tenant law. Regardless if you raise the rent, send a rent renewal, or send a non-renewal notice, prepare to hear from the tenant and be able to explain any changes made.
Set Yourself up for Success
In sum, you want to be a fruitful and prosperous property owner and landlord. And while on the surface that may seem easy, it’s also important to be aware of the unpredictability and risk you experience as a landlord. So, we urge you to err on the side of caution and take action regarding the recommendations mentioned within this post so you can set yourself up for success now and the future of your property ownership endeavors.