Boston City Council Imposes Strictest Rules Yet for Airbnb Rentals. How Will This Affect You?

On Wednesday June 13th, 2018, the Boston City Council imposed the strictest rules yet in the nation regarding the Airbnb rental industry. In a move meant to control the popular short-term rental business and help regulate the tough housing market, the Boston City Council enacted numerous rules and regulations meant to slow down the increasing number of Airbnb rentals in Boston. The rules prohibit investors and tenants from renting their home through short-term rental websites such as Airbnb. However, homeowners and owner-occupants are allowed to continue operating short-term rentals through their property as they please. Mayor Martin J. Walsh first proposed this bill in January, and is now prepared to sign it into law.

What is Airbnb? 

Airbnb is growing company which operates an online platform allowing people to offer short-term leases and rentals from their home. Consumers have the ability to rent short-term apartments, home-stays, holiday cottages, and condominiums. Airbnb has swept the nation in popularity, becoming an affordable alternative to hotel stays in expensive areas, and a lucrative way to generate side money.

How Will This Affect You?

Supporters are thrilled about the new laws regulating Airbnb's, hoping the legislation will decrease constraints from Boston's tight housing market. Currently, an estimated 2,000 apartments are being rented on a nightly basis through Airbnb in Boston, instead of through a traditional 12 month lease. After nearly three years of evaluating the subject, the Boston City Council decided it was time to enact serious rules and regulations.

The new rules officially take effect on January 1st, however current Airbnb hosts (who are not homeowners or owner-occupants) have until September 2019 to continue operations. This change was enacted to prevent landlords from facing numerous apartments vacancies, while also giving the hundreds of renters hosting Airbnb stays to find a new source of income.

The new rule also requires short-term rental hosts to register with the city of Boston annually, and pay a $200 fee. The registration and fee is meant to give city officials a clearer picture of the short-term rental business, to better understand and improve the future of Boston's housing market.
SaveSave

Soaring Taxes on Newbury Street Causing More Vacancies

Walking down Newbury Street, you may notice the dozens of vacant buildings and storefronts, which were once full and bustling with shoppers. Soaring property taxes and rents might be to blame, as store owners struggle to maintain steady profits. For decades, Newbury Street has been one of Boston's main attractions, home to some of the biggest names in retail fashion, luxury retail boutiques, and prominent restaurants. Rising demand for Boston's famed shopping area has caused a high increase in property values, leading to higher property taxes and rents for businesses. One of the most recent businesses to move is Hempest, who has been on Newbury Street for over twenty years. Hempest was forced to change store locations due to soaring rent costs, and has moved one block away from Newbury Street.

Newbury Street has become a great way for realtors to generate income, however many store owners have been struggling to manage the soaring rent costs and ability to maintain profits. Furthermore, Boston's retail scene has been changing in recent years. Established retail stores that would traditionally flock to Newbury Street are finding new opportunities in other fashionable Boston neighborhoods, including Seaport District and Downtown Crossing. 

Building values on Newbury Street have increased an average of 29% compared to the average 11% throughout the rest of the city. Commercial property tax rates are based upon building values, leading to increased rents. Financial analysts have linked the empty storefronts to the increased rents.

Despite increasing property taxes and rent prices, storefronts and restaurants located on Newbury Street enjoy enormous advantages. Back Bay's Newbury Street is one of Boston's most famed tourist destinations, and attracts large amounts of foot traffic. Newbury Street also commands considerable amounts of foot traffic and attention around the holiday season. Furthermore, a CBRE New England market outlook expects rents to stabilize in 2018.

With Sea Levels Rising, Boston Harbor May Need Barrier Wall Protections

As sea levels dramatically rise, reports have been spreading on the idea of creating a colossal, multibillion dollar wall in Boston Harbor to protect the Seaport Neighborhood and nearby Boston neighborhoods from coastal flooding damages. Extreme flooding is expected in the coming years and decades, as climate change causes sea levels to rise.

A research team at the University of Boston is researching harbor barriers to protect the city from damaging floods. The smallest barrier proposed, would connect Logan Airport in East Boston with Castle Island in South Boston, thereby safeguarding the city's inner harbor and downtown from detrimental tidal floods. The wall barrier was also recommended in Boston's Climate Ready Boston report last year. The report stated that the barrier could potentially work well in Boston's shallow waters, but it would have to be created in a way that minimizes negative impacts on navigation and the environment. Another one would stretch 3.8 miles from Winthrop to Hull, and cost between $8 billion and $11.8 billion to build.

Another study suggested that Boston embrace the water, and convert streets into canals, similar to Venice. Researches have also suggested solutions taking place on shore, which would cost a fraction of the proposed protective barrier wall cost. These suggest shore-based systems include protective flood walls, on a small smaller scale than the proposed harbor-wide barriers. Other shore-based solutions include changes to zoning laws, and raising of the land using berms. Another great benefit of shore-based solutions would be the much smaller time frame the projects would take to reach completion. Shore-based alternatives could be built in a matter of years, while the proposed harbor-side barrier stretching from Winthrop to Hull, would most likely not reach completion until 2050. If the city of Boston decides to move forward with protective harbor-wide barrier plans, it could potentially take decades of planning and billions of dollars spent before barriers are built.

The True Difference Between Renting and Buying

Both owning and renting have their advantages, but ultimately the decision comes down to your personal circumstances and financial situation. Home ownership is a serious financial commitment that requires you to plan ahead and reflect on where your life is going. One large part of home ownership which many people neglect to address, is the risk associated with owning a home. This powerful factor will help determine if you will be satisfied as a long term renter, or future home buyer.

Renting offers a risk-free lifestyle, where if you are unsatisfied with your landlord you can leave within 12 months of signing your lease. If your taste in apartment style changes, or you decide you need more space, you can quickly find a new home after finishing your lease.

Furthermore, there are established legal protections for renters, promising that broken roofs and gas leaks will not leave tenants penniless and homeless. If you decide to purchase property, you are opening yourself up to large risk and liability factors. Unexpected repairs and maintenance issues can quickly drain your bank account. Furthermore, taxes can change quickly and without notice. Even if you decide to purchase a condominium, homeowner's association's fees can increase monthly, only requiring a majority vote. Rentals can also generate unexpected expenses and increases, and may cost more (in the long run), however renters are paying a premium fee to live without financial and monetary risk. Ultimately, your financial situation and comfort level with the risk factors associated with home ownership, will guide your decision.

4 Growing Rental Market Trends for 2018

As we journey through 2018, there are a growing number of changing trends in the real estate industry, which are altering all aspects of the rental market. Real estate investors, real estate agents, and property managers should all study these growing real estate trends and make the necessary adjustments to their current business strategies, in order to meet tenant expectations and ensure success.

1. Affordability Factors Changing the Rental Market

Two major forces driving the rental market are population shifts and affordability. Affordability has become an increasing issue for many Americans, causing the government to continuously offer affordability programs and tax credits. Many states already posses laws that require a certain fixed ratio of every new apartment building to offer affordability programs and tax credits. For example, the city of San Francisco is spending $44 million for a teacher housing initiative, which will enable more teachers to live and work in one of the most expensive cities in the country. 

One of the biggest changes in affordable housing is the growing emphasis on housing choice voucher programs, rather than public housing. This will require property managers to understand and successfully manage affordable housing programs. 

2. Technology Shaping the Rental Industry

The use of technology and AI software will bring immense shifts to the rental industry. Technology will alter the rental industry from property valuation to property management. In property management specifically, the use of AI robots are becoming increasingly popular. AI robots can offer tenants better and quicker service, while automating maintenance issues.

Voice technology is also becoming a growing part of property management, allowing renters to pay rent by voice and immediatly make maintenance requests. Technology has also allowed real estate agents to give potential tenants virtual apartment tours, and closing rental deals without the tenant ever stepping foot in the property. Conclusively, real estate professionals who can successfully adapt to growing technology changes and use technology to their advantage, will experience growing success in the coming years.

3. Flourishing Market Opportunities 

While the media has focused on trends in moving to particular cities, like Nashville, the truth is, the entire Southeast and Northwest are becoming preferred living destinations. Popular rental markets tend to follow job and population growth. Other growing non-geographic real estate opportunities are senior housing and affordable housing. The population of U.S adults 65 and over will more than double by 2060, hitting 98 million. That will be nearly one quarter of the population, which signifies a substantial demand for senior housing. Many developers and investors have been converting multi-family complexes into independent senior housing communities to prepare for this growing trend.

4. Occupancy Rates Falling

While rent demand is strong in major metropolitan cities, rent demand is slowing in most areas of the United States, especially single family units. As occupancy rates slump, property managers will have to aggressively recruit new tenants, while keeping current tenants happy and encouraging lease renewals. Having strong systems in place to handle tenant emergencies and maintenance requests is crucial to keep tenants satisfied. 

7 Tips for Being a Successful Landlord

1. Screen Tenants Diligently 

In order to become a successful landlord and property manager, properly screening tenants is a necessity. Landlords need to thoroughly run background and credit checks to ensure potential tenants are financially reliable and satisfactory citizens. In addition to criminal background checks, successful landlords take the time to look up tenant applicants in the county clerk of courts database for civil lawsuits. 

2. Enforce Your Lease Contracts

In addition to creating a strong and thoughtfully crafted lease, successful landlords diligently enforce their leases and protect their assets. Leases are designed to protect properties from physical damage, and landlords from legal liabilities. Landlords should be diligent about setting standards and expectations, and fines for any tenant who decides to break the lease. Landlords need to accept full responsibility for firmly and professionally enforcing lease agreements. Ensure that leases are air tight, and set out the terms and conditions of your tenants in great detail. 

3. Encourage Good Behavior

Successful landlords are both creative and and inventive towards building a successful real estate business. Many landlords specifically build their lease with incentives for good behavior and harsh penalties for bad behavior. Some landlords will give a $100 discount for early rent payments, which brings spectacular results. Also many landlords will charge a 20% service charge on cleaning and damage costs taken from the security deposit. Furthermore, make it very clear that overdue rental payments will incur late fees. The extra income will help compensate for the burden of not receiving the rent on time. 

4.  Document Details

When it comes to building a successful rental property business, it is imperative to always record any agreements, important conversations, and contracts. Verbal agreements hold no weight, and all contracts must be professionally enforced and signed. In order to protect your interests and the interests of you tenants, always record agreements, contracts, and important discussions in writing.

5. Keep Tenants Satisfied

Keeping tenants satisfied and happy with their living experience should be the top priority for all landlords and property managers. Furthermore, keeping tenants happy highly increases the chances of  raising tenant retention rates. Retaining tenants is beneficial for landlords, because it removes the time and effort involved in finding and screening new tenants every year. Successful landlords always treat their tenants with respect, respond to issues promptly, and listen carefully to complaints and constructive criticism. Seek to understand their position and and keep in mind how they may perceive your actions.

6. Properly Clean and Secure Your Residence

As a landlord, it is imperative to always keep the grounds of your property clean and free of debris. In addition to assisting landlords with property liability, the residences will always look professional and immaculate. Tenants are more likely to renew their lease when they are comfortable and happy with their living environment. Furthermore, it is important to always provide extra security measures, to ensure tenants feel safe and secure. Providing extra security measures can even lower insurance premiums in certain situations.

7. Fix Repairs Promptly

One of the most powerful ways to ensure tenants renew their lease, is to always provide them with a comfortable and exceptional living experience. Answer repair calls promptly, and repair issues as quickly as possible. When it comes to furnaces and other necessary appliances and fixtures, repairs cannot be substanially delayed.

What To Understand About Real Estate Appraisals

When purchasing or selling a property, real estate appraisals are often necessary, especially if the buyer is using a mortgage loan to purchase the property. The appraisal value of a property often influences the buyer to purchase the property or move on. If the buyer is seeking a mortgage loan to purchase the property, an appraisal is often ordered by the lender. The lender will want to obtain an appraisal to determine the true value of the property, independent of it's listed or negotiated price, to measure against what the buyer has agreed to pay. Appraisers will use their knowledge and experience to deliver an accurate home appraisal report.

As a buyer or seller, it is essential to understand the appraisal process. Continue reading our blog to discover the 7 most commonly asked questions about appraisals, and the truth behind the appraisal process.

1. Are Appraisals Really Necessary? 

Appraisals are highly suggested for all property transactions, however appraisals are only necessary when the buyer is seeking to obtain a mortgage. Since sellers want to obtain as much money as possible for their property, and buyers only want to spend what is deserved and necessary, professional appraisals make senses for both parties involved. 

Lenders always order appraisals to protect themselves. If the buyer defaults on the loan for any reason, the lender wants to know that they can sell the property to obtain the money back. Lenders never want to receive low appraisals before handing out home mortgages.

2. Who Hires the Appraiser? 

The appraiser is hired through the lender giving the mortgage, through a third-party company. Appraisers and lenders are forbidden from being in direct communication. The appraiser is a licensed professional that successfully completes licensing coursework and internship hours. The appraiser is also required to be an objective third party with no connections to anyone involved in the transaction. 

3. What Does a Real Estate Appraisal Report Contain? 

The real estate appraisal will contain specific details concerning the subject property. Included in the report, will be comparisons between similar properties that have recently sold or are for sale. The appraiser will also provide a detailed evaluation summarizing how the real estate market is performing in that specific area. Any issues or potential issues the appraiser is concerned over will be highlighted in the appraisal report. There will also be flagged descriptions of any important issues such as water penetration through the roof, or cracked walls. The appraisal will also include an estimate of the average sales price for other comparable homes.

4. Are There Multiple Types of Appraisals?

The most common and frequently used type of appraisal is a full appraisal, which includes the appraiser carefully inspecting both the inside and outside of the property. Exterior-only appraisals are sometimes performed, and are referred to as "drive-by appraisal". Drive-by appraisals are not as compressive as a full appraisal, and are often used by lenders who do not possess much doubt concerning the property being appraised.

5. What Does the Appraisal Process Really Involve? 

The appraiser will go throughout the house and inspect its state of repair, square footage, and features. The appraiser will mainly be looking for features which help determine the property market value. The appraiser will go through each room, taking careful notes of all details, big and small, which are required to accurately compare and contract nearby homes that have sold in the area. Once all details of the house are carefully inspected and recorded, the appraisor will look over the sales of recent homes in the area, and summarize a comparison before delivering the final appraisal report.

6. What is the Difference Between an Appraisal and a Home Inspection? 

Although often confused with each other, home appraisals and home inspections are two very different operations. An appraisal simply focuses on generating an accurate market value of the home, while a home inspection focuses on identifying problems associated with the home. While appraisals look for obvious defects, home inspections go much deeper and intrusive. Home inspections aim to discover faults with the property that are not discoverable by simply looking at the property.

7. Is the Appraisal Information Available to the Public?

No, home appraisal reports are not available to the public. The appraisal report belongs exclusively to the party who ordered it, not necessarily the party who paid for it. If the lender orders the appraisals, the lender have full access to the appraisal, and is responsible for sharing that information with the appropriate parties. Usually, the buyer is responsible for paying for the appraisal. The lender or mortgage holder is required to give the buyer a copy of the appraisal report by law.