Letting Tenants Sublet Boston Rentals: 5 Huge Pros and Cons
Thinking of letting tenants sublet Boston properties you own? Wait just a minute. This is a decision that will have huge implications for your rental business. Before moving forward, educate yourself on the pros and cons of subletting for landlords below.
Main Takeaways
- The pros of allowing subletting are tenants who can better afford your rent, consistent backup income, an outsourced tenant search process, the ability to raise the rent, and the ability to possibly share the subletting income.
- The cons of permitting it are a lack of control over your property, extra-complex evictions, property damage, legal issues, and possibly unstable income sources.
- If you plan on letting tenants sublet, you should draft an airtight subletting clause in your lease or rental agreement.
Table of Contents
- Pros of Allowing Subletting
- Cons of Permitting Subletting
- What to Do If You Want (Or Don’t Want) to Allow Subletting
- What Should Be Included in Your Rental’s Subletting Policy?
Pros of Allowing Subletting
As Boston property managers, we know that letting your tenants sublet Boston properties has its merits. Read below to find out what they are.
1.
Consistent Backup Income
If you let tenants sublet, you can secure consistent cash flow. The subletter can act as a built-in backup tenant if anything happens. For example, if your tenant has trouble paying their rent or leaves entirely, your subletter can hold the fort in the meantime. This can protect you from vacancies that threaten your profit margins.
2. Tenants Can Better Afford Your Rent
If your tenant sublets, it can give them a stabler cash flow. Because of this, they could have a more diversified income stream for paying the rent, utilities, and other needs. This way, if anything in their lives falls through, it won’t spell disaster.
3. Tenants Can Handle the Tenant Search Process
As you know, it can take hours and hours of interviews, screening, and other tedious processes to find new tenants. However, if you entrust those tasks to a reliable tenant, you can check that off your list. By extension, they are responsible for making sure the subletter has a positive time in their space.
What’s more, your tenant might care about maintaining your property more than if they were the only one renting it. After all, they have a financial stake in your unit now, too.
4. Ability to Raise the Rent
Since your tenant has an extra source of income, they may have more wiggle room to pay more rent. Furthermore, you have a legitimate reason to raise it. After all, your unit is holding more people than it used to.
5. Sharing Subletting Income
Or, you could arrange a profit-sharing agreement between you and your tenant. Needless to say, your tenant wouldn’t be able to make money from your unit if you didn’t provide it in the first place. As such, you have grounds to get a piece of the pie.
Cons of Permitting Subletting
Subletting’s positives can also double as their negatives. Carefully weigh whether they’re worth the trouble or not.
1. Landlords Have Less Control Over Their Properties
If your tenants select their tenants, that gives you less work. At the same time, it means you have less control over the quality of your subletters. Then, you may have to deal with terrible tenants.
Even if you think your tenants have good judgment, it’s still risky to simply take their word at face value. They likely don’t have the rigorous criteria a professional would. Since you don’t have a thorough idea about subletters’ backgrounds, you could run into lots of unwanted surprises.
Furthermore, it can make communications between the tenant party and you a bit more challenging to arrange.
2. Extra-Complex Evictions
When your tenant decides to sublet Boston renters, having a third party involved could make evictions a thousand times more complicated and costly.
If you want to remove them from the premises, the tangled-up legal arrangements (or lack thereof) could make legal proceedings stretch on longer.
Or, if you want to boot out your original problem tenant, you still might have to deal with their relatives, right there in their old unit.
3. Property Damage
Again, because tenants who sublet Boston residents may insufficiently screen tenants or poorly explain the lease agreement, this could lead to accidental property damage.
Also, since subletters lease under the tenant, not the property manager, it can affect their motivation to follow the rules. After all, renters may have a more laissez-faire attitude than someone truly invested in the property would.
Either way, if damage occurs, you will be footing the bill. To boot, you could have to make repairs or home improvements more often.
4. Legal Issues
If you don’t have a formal rental agreement with subletters, that lack of a contract opens you up to a lot of legal ambiguities. That’s not all, either. Even though the details are murky for all parties, you still will be liable if something goes awry for them on your property. For example, if they get injured or disturb your other tenants, you could be on the hook.
As a side note, whether or not you have a formal contract, once subletters pay rent to you, they automatically become your tenant. So, be careful.
5. Short-Term Subletters Provide Unstable Income
Trouble could arise if various people continually cycle in and out of your property, like in an Airbnb. Such volatile arrangements have two flaws.
They give your tenant unstable income, which can impact their ability to pay your rent. Even worse, if your tenant moves out and your short-term subletter stays, it could prevent you from bringing in long-term renters.
What to Do If You Want (Or Don’t Want) to Allow Subletting
If you don’t want to allow subletters, you should state so clearly in your lease. This will help protect you from liability if your tenant has unauthorized ones.
On the contrary, if you do want to accept tenants’ requests to sublet Boston properties, craft airtight clauses that require prior landlord permission. In addition, demand all sub-tenants follow the same screening processes as your original tenants did. Lastly, make all parties sign a newly written sublease agreement.
In this agreement, you should include a requirement for landlord consent, renter’s insurance, consistent communication, and payment system requirements.
What Should Be Included in Your Rental’s Subletting Policy?
When making a rental agreement subletting policy or clause, you should include some key points. Be sure to include some of the provisions below –
Prohibit Short-Terms: In recent years, sites like Airbnb and VRBO have gained steam. This can make it attractive for tenants to create short-term listings at your property. You should strictly forbid this in the lease, as tenancies with poor screening and limited income bursts can prevent a huge liability for landlords.
Landlord Consent Required: As a landlord, you should get the final say on any property occupant. As such, the policy should state that owner permission is necessary to sublet. Tenants should give you a request to do it in writing and include the reason for subletting, the sublet length, and information about the tenant.
Screening: Screening is paramount, whether the tenant intends to stay for one month or one year. Everyone should have the same screening criteria to comply with Fair Housing Laws (FHL). For example, if they have an emotional support animal, that is covered by FHL. In that vein, a proper screening should include a credit check, criminal background, income verification, rental history, and references.
Encourage Insurance: This speaks for itself—insurance will help your renter from the financial or legal trouble that could come their way.
Outline Payment Requirements: Make sure that the agreement clearly states how the new tenant must pay rent and who they’ll pay it to. Furthermore, if you state that all rent goes directly to the owner, that prevents the original tenant from charging an extra fee and taking the difference.
Handle Tenants Who Sublet Boston Properties with BMG Boston
The pros of letting a tenant sublet Boston properties include the ability to raise the rent, the ability to share the tenant’s subletting fee, and other factors. However, on the other hand, it could lead to property damage, extra-complex evictions, and other issues. Your decision to allow a subletter or not depends on whether the pluses are worth the risks.
Hiring a property management company can help you protect your rental at all times. For example, whether you want tenants to sublease your property, a property management team can help you ensure compliance. Similarly, property management can perform thorough tenant screening, to protect your property against a tenant with poor rental history. All this is why so many landlords choose property management groups like Bay Management Group. Call us today to secure your investment.