Over the past several years I have been very closely in tune with the Boston apartment rental market. In this time, I have had the pleasure of dealing with some spectacular rental agents, and also, some horrible rental agents. It is this dichotomy that has led me to analyze the situation and come to some very logical conclusions regarding rental agents.

For those of you who have not gone through the licensing process, I would like to comment that Massachusetts is one of the easiest states in which to get licensed as a real estate salesperson. To obtain your license, one must take 24 hours of pre-licensing education from an authorized real estate school, which can be done in a single weekend, and then pass a state licensing exam. The required hours of education is relatively low compared to most states, and during my education, little to no discussion of apartment rentals took place. Some states, such as Ohio, require over 100 hours of pre-licensing education, which is over 4 times the requirement in Massachusetts.

My guess is that when the requirements for licensing were first created, the one-month “broker fee” that is oftentimes common in Boston rental apartments was not standard, and most agents had the goal of becoming an agent to sell property, not rent it. Coupled with the lack of salesperson rental education, this creates a potentially growing issue as we see increases in the number of real estate brokerage offices in the Boston area that rely heavily, and almost exclusively, on business models centered on apartment rentals.

I’m not here to knock real estate brokerage offices that focus on rentals, it’s the type of office in which I started my career, and it can be very profitable considering the average rental fee per transaction is in the neighborhood of $2,000, however, I do think that the pre-licensing education and state requirements to become a real estate salesperson should be beefed up. In effect, agents are taught about legal issues and sales transactions in a 24 hour course, then go to work for a rental company and are forced to learn on the go; hence the large quantity of part-time agents who aren’t quite sure how to handle the rental process as a trained professional. This leads to big problems for all salespersons and their brokers in the city, as well as renters, as every agent is a reflection of the entire profession – in sales, one bad impression can ruin years of hard work.

My solution? I think that the education requirement for a Massachusetts real estate salesperson should be increased, and that the additional hours should focus solely on apartment rentals.

Boston is the home to 27 colleges and over 100,000 undergraduate students. With a high number of those students residing off campus, it comes as no surprise to see an entire apartment building filled with a majority of undergraduate students. From Dexter Park in Brookline, Audubon Park in Audubon Circle, to the Atrium in Packard’s Corner, Boston University students especially, make up a good percentage of the residing population. BU’s tuition is priced at such a high level that it is no surprise that students who can afford the tuition can also afford to live in a luxury apartment building. The same goes for many of the other schools in the city. Why is it then that some landlords and apartment buildings chose not to allow undergraduates even when they can afford it?

Why Would Landlords not allow Students?

Of course there’s the perception that undergraduates will wreck the place with their parties and hooliganism. Moreover, when presented with tenants of equal financial stability, a landlord would rather not have to put up with the headaches that might come along with their undergraduate tenant if they don’t have to. Buildings like the Trilogy, Boylston 1330, and Church Park (to name a few) are some examples of these landlords. Since age is a protected class and cannot be used as discrimination when choosing tenants, even a 50 year old undergraduate student (who writes that they are such on their application) would be turned down from these buildings according to their “no undergraduate” policy. Student status is not a protected class, therefore landlords are able to discriminate based on a wide variety of criteria relating to students. For instance, certain apartments are known to expand their no undergraduate policy to include law school students. To these landlords, there’s nothing worse than a know-it-all law school student threatening to sue you as a class exercise. Again, law school students are also not protected in MA, and therefore, can legally be discriminated against when choosing tenants. Beyond law school students and undergraduates, the other most commonly, but legally, discriminated against class is the pet owner (see Pet Friendly Boston Apartments).

Ironically, many of the apartment buildings that allow pets do not allow undergraduates. Interpret that as you will. Some students have been able to bend the rules and work their way around these policies by having a parent sign for an apartment, however, this is not advised as it could result in eviction. The best advice I have is do the research to find out which apartments will allow undergraduates to live there before viewing an apartment.

Historically, apartment rental turnover is at its peak throughout the summer up until the city’s busiest move in day—September 1st.   During the recent tough economic times and a flailing nationwide housing market, the seasonality and influx of college students created20 a relatively stable volume of apartment rentals; however, it did affect the price tags.

MLS (Multiple Listing Service) data will have you believe that the average monthly rental price from 6/1/2009 to 9/1/2009 was $2,293, which is the same as the amount paid during the same period in 2008. What is neglected to be told in this data, besides the fact that it covers such a small percentage of the overall rental market, is that in many cases, landlords have been picking up some, or all, of the tab for brokerage fees.  Broker fees generally cost the landlord or tenant (or a combination of both) one month’s rent paid upfront at the time of lease signing.  In 2008, and even more so in 2007, I saw more tenants picking up the bill over landlords–however having seen it first hand–this year’s rental season was dominated by negotiation and landlords paying or splitting broker fees.  With broker fees typically amounting to as much as one month’s rent, the indirect result would raise average 2008 rents to roughly $2,500, making 2009 numbers look far less stable.  However, a difference of roughly $200 per month is unfortunately not the only issue that landlords have negotiated on.

Over recent months, landlords have taken fewer security deposits and/or last month’s rent, as well as offered more concessions, and they still saw their properties sit on the rental market for roughly 12 days longer than last year.  The first point is an obvious one. With unemployment so high and our national savings rate increasing, it’s no wonder that renters are no longer willing to shell out four months of rent upfront. Secondly, concessions have come in a variety of forms, but most recently in the form of free rent for up to two months.  Luxury apartment buildings like the Watermark in Kendall Square and the Atrium by BU are currently using this technique to fill their vacancies in hopes that they will avoid leaving units vacant during the winter when rental turnover really dies down.  Some other forms have included waived amenities fees, including certain utilities, and discounted parking.

With all of these concessions and lowered upfront costs, you’d be surprised that apartments are lingering on the market, however, given that asking rents have hardly changed year over year, it’s clear that there are more behind the scenes negotiations rather than overtly advertised deals. That, and of course, people want to save more money and spend less on housing and retail–and just about anything else–and are willing to settle for that smaller apartment or less expensive pair of shoes in the name of saving. I see this savings trend as a positive for long-term growth, and believe that while it’s the landlords who suffer now (to the renter’s benefit), they will see plenty of upside in rents within upcoming years once we’ve all stockpiled enough of our money. Until then, happy renting!

“Regarding the payment, you will be instructed to deposit the amount to a Move.com Agent from [the] United Kingdom. They will hold and insure your money until you check the apartment and decide if you want take it or not. That is how their buyer protection policy works.”

An apartment rental scam is infiltrating Boston, and has largely focused on apartments in the Financial District, namely Broad Street, according to several potential victims who have provided details of their ordeals.

The scam ensues by luring potential renters to respond to a Craigslist advertisement for a high-end Financial District condo that is being offered for rent at a very (unreasonably) attractive price.  The landlord claims that they are in a foreign country, and that in order to preview the unit, the keys will be sent to the prospective renter after a deposit is made – the landlord claims that the “only problem is that I`m the only person who has the keys and I have nobody in [the] United States that could show you the condo. In order to check [it out]”.  To get the keys, the renter must provide a deposit to the landlord, which is facilitated by a website (move.com),  and once the website is holding the funds it is claimed that the keys will be sent.  The landlord claims that “If you do not want to rent the apartment the funds will be returned to you”.  Luckily, we are not aware of any renters who went so far as to send a deposit.

In the most recent account, a potential renter was responding to an advertisement for a unit at the Folio (a full-service luxury condo development) located at 80 Broad Street in the heart of Boston’s Financial District.  A two-bedroom two-bathroom condo was being advertised for rent for $800 per month.  There were several context clues in the advertisement and email exchange that followed between the renter and landlord that pointed to the fact that this was a scam.  For instance, Folio opened to residents in 2006, however, the landlord states in email communication that they have lived in the unit for 5 years.  The pictures of the unit, while they represent a higher-end condominium, do not accurately reflect the Folio’s interiors.  Lastly, no unit number was provided in either the advertisement or any follow on communications, and monthly rent at $800 is unheard of in the downtown Boston market.

There are legitimate rental units available in the Financial District currently, but nonetheless, renters should proceed with caution should they experience anything similar to the apartment rental scam experienced recently by several Bostonians.