Blog

By Jen Sierchio 9/14/2024

With the craziness that is the Boston rental scene, one of the unique quagmires renters find themselves in is the downpayment on rentals. In Boston this typically includes first month’s rent, last month’s rent, and a security deposit. If either the renter or the landlord chooses to use a rental agent, that cost is usually put on the renter and can be up to a full month’s rent. With the average rent in Boston/Cambridge/Newton north of $3900 per month (see below), that’s a lot to ask a renter to bring to the table up front to secure an apartment (over a whopping $15,600).

There is a recent proposal in Massachusetts to put broker’s fees back on the landlord. It is not an unfounded proposal – in most other places in the US, landlords cover a broker’s fee if they use an agent to help find a tenant. This immediately means that Massachusetts landlords have a choice to make: eat the cost of a broker’s fee and watch their costs go up or take on finding tenants themselves.

In Greater Boston, finding tenants for either June 1 or September 1 leasing tends to be much easier than finding tenants off-cycle. This is because most people are on a June 1 or September 1 cycle to begin with, so there will be a plethora of potential tenants. But there is still a lot of competition to get good tenants. Screening tenants still involves: 1) listing the apartment for rent on sites like Zillow and Craigslist, 2) showing the apartment, 3) collecting applications, 4) checking references, 5) running credit and background checks, 6) verifying income, 7) drafting the lease and signing, and 8) setting up accounts to hold the security deposit.

It’s a lot of work and for landlords who want or need to be hands off, they may find themselves scrambling to get all of this done quickly before the annual cycle windows close. Paying a full fee could be worth it in a number of circumstances. For example, if the landlord owns the property outright (i.e., no mortgage). With mortgage rates where they are, it may not be cost-effective to pay a full broker fee if the fee would mean the mortgage and expenses are higher than the rent collected. Another circumstance is when the landlord is extremely busy or otherwise unavailable to properly screen tenants. Finally, the landlord has been burned before by poor tenants who ended up costing thousands in repairs or eviction proceedings and would rather have an agent identify someone who is not likely to cause issues.

For us at Mystic River Real Estate, we can take all of the pain of this away and still have it be cost effective for landlords with mortgages. With our low one-half month’s fee and our low vacancy rate, we can find good tenants who stay for the long term and not cause huge property damage or need to be evicted. Over twelve months, the average fee comes to $162.50/month. That decreases as tenants stay longer – on average, tenants for properties under our management have stayed for a minimum of two years.

https://www.patriotledger.com/story/news/2024/04/24/rent-boston-ma-newton-cambridge-housing/73367619007/
https://www.bostonglobe.com/2024/07/12/business/brokers-fees-landlords-tenants-beacon-hill/#:~:text=A%20provision%20tucked%20into%20the,in%20most%20cases%2C%20the%20landlord.