realtor friends some interesting happenings here in Massachusetts governor Mora Healey is starting to talk about uh essentially attacking broker fees and how they're paid with respect to rentals she's making an argument that tenants should never have to pay the fee and she also is making a secondary argument about if you didn't hire the broker you shouldn't have to pay the fee well I have a lot to say about that but before we totally get into what I have to say about that in addition to my talking about it on the news yesterday I wanted to bring to you the king of rental from Massachusetts my friend Demetri is here hello Sir Anthony thanks for having me well I'm happy to have you you have been I mean just kicking ass in rentals and all things rentals for years so why don't you introduce yourself don't be humbled talk about your different companies or or I'll do it um thank you uh my name is Demetrius alogo I'm the CEO of Boston pads and uh it's a technology platform that's hyperfocused on uh apartment leasing and multif family sales that in specific we we've aggregated over 18,35 landlords uh which comprises over 24,500 apartment listings uh 27,000 Keys we have over a million pictures 79,000 galleries 30,000 smoke this is all in Massachusetts this is all in Greater Boston yeah Greater Boston and we spread out we have 442 luxury buildings across the Greater Boston area and Beyond we constantly pick up luxury buildings all right and that's Boston pads all the tech but you also own some rental companies we do that are beat with realtors that are or agents that are beating the street every day and assisting tenants and landlords with getting their units rented correct um so we have six Uh current offices right now uh the the brands are Boardwalk properties nextg realy Jakob realy Douglas Paul real estate and US woo and so the technology Powers down to these and it's fully integrated from click to close all the way from your Google click search engine all the way down through the through the infrastructure so we have all these real time you know reporting tools where agents can make accurate decisions all right so how many rentals you guys do last year I mean good year is bad years we're going to do 6 to 10,000 uh rental 6 to 10,000 so folks I'm not exaggerating when I say he's the king of rentals from Massachusetts and he and I full disclosure have been texting and in touch about some of the things that have been happening in the real estate space and it's funny in the summer we were talking about how the Department of Justice was all over you know the sales side of the business which I was very much on top of and you know some people say I'm an expert with that uh and and but on the rental side I defer to you and and you know I talked about this in the news yesterday I talked about how and I want the realtor audience to know this I am not some proponent of tenants absolutely having to pay but my argument is when they step in and say tenants can't pay or they make a secondary statement of if you didn't hire the broker you shouldn't have to pay well I think they're forgetting that things are done differently the further you go out in Massachusetts and and why don't you elaborate on that and explain your thoughts well you've absolutely been probably the the best proponent uh by far on the sales side in advocating for uh you know and I say that sincerely I don't think anyone's put in more of an you know advocacy uh for real estate agents than you and I think you've been spot on I think in terms of apartment leasing I think that perhaps our legislature just doesn't understand the leasing process clearly because he's so nice about it well I mean what's the difference between rentals and sales it's huge right right okay first of all the days on market right secondly the interaction and the speed the average days on market for an apartment listing in Boston's 15 days you don't necessarily see that in sales right it's a hell of a lot quicker right and so in the last four or five years yeah for for sure yeah I mean definitely since you know and we can we can track data all the way back to the pandemic but in terms of like speed it's three things that separate apartment leasing from sales right it's the size of the commission the speed and how a landlord interacts with the uh tenants to create a lease and so so the paperwork's different and it's more individualized than it is in say sales right because you've got your lease you've got your lead you've got your addendum you've got your escrow you've got your water and sewer you have all and then like a len have specific addendums we have over 500 different addendums for landlords each one of them having their own unique right so you don't see that on the sales side so I think there's a a loss there in the understanding of the actual apartment leasing process and the value that uh a professional apartment leasing agents provide okay that that that's you're right there is a loss of value on that and I mean you know I was talking to my dad about this last week and my dad was reminding me that every industry gets you know oh the restaurant's too expensive the lumber is too expensive I mean consumers us included have a tendency to criticize Industries and criticize costs but what I take issue with is government stepping in and saying it can't be done this way or it can't be done that way so let me ask you some questions the first thing that she's proposing is tenants should not have to pay the fee at all so I want to ask you what percentage of the rentals in Greater Boston is the tenant paying the fee so it depends on the time of year for sure and we know that there's a a busy like the city of Boston runs on a September 1st to August 31st leasing cycle every year that's the the yes yes okay yeah it's it's it's a bulk it's that's the bulk word especially with the schools the universities dominate inside the city and sure and that sets The Edge and that has all the ancillary people that are involved with that leasing process or move in process un professors Etc at you know staff and so we're never going to get away from the September 1st to September 1 cycle essentially it's never going to happen so that's always going to be in place and then so leasing kind of follows and optimizes across each University across each micro market across each neighborhood and you really have to understand the nuances of that uh so ultimately what happens is you'll see different neighborhoods light up at different times and it's done because that's the way the university operates and so and then you have pricing that's kind of automatically built in uh because of the fact that the universities keep increasing their tuition and room and board so there's a lot going on there behind the scenes that a lot of people don't look at that so so you're saying that the school units they obviously backlash and have an impact on all the other units as well 100% so if the universities are raising room and board by 3 to 5% every year guess what happens I mean the apartment Le the apartments surrounding it look much more affordable right so they slowly draft up so it's not it doesn't take a genius for any landlord to go look and see oh they just raised the the room and board to $3,000 at say Boston University the landlord's like I can provide a affordable solution for $2,000 so they and and the spreads constantly change and so I think that's something that you know like in other words I haven't seen dorm price control come out right right so we heard about rent control but we see dorm price price control do we see University price control so what part of the year I think I know the answer but I want you to say it what part of the year is there the most Demand on units generally speaking well it's it's uh I would say starting from January 15th to September 1st is the you know people start correct yeah and the sales cycle is pretty close to that and the rentals have an effect on that because what we run into is landlords not wanting to allow uh leases to expire between September and March so everyone's leases are expiring between really April to August so buyers come out in droves late January February March and sellers always I'll never understand why they wait but they always so many of them wait till spring and what to get the most money they list when they list in February late January March but so you're saying the rental cycle January to September but when is the most Demand on rentals which months I mean it February March April it it just it's it's literally lights out right now all the way to September if I had to busy yeah I mean I I would say if I had to pick one month that was the busiest of them all it would be July but you have to remember April's lights out May's lights out June shoulders to July it's busy but July becomes lights out well July also because there's freakouts of I need to find a unit yeah and and and so I think well there's different markets that open up and stuff that's been left behind so the whole city opens up and so um but most of the University stuff close to universities uh the students are renting earlier because they don't want to be fly fing out to go see their parents are leaving for the summer then have to fly back and get an apartment to come back so there's a cost associated with that but what percentage I want to go back to the question what percentage of the time is tenants paying the fee in Greater Boston is it 80% is it 90 is it yeah so uh the highest we've ever seen like during the pandemic was 80% of the landlords paying the fee right of landlords paying oh yeah during the pandemic so because we had a because you had a ton of inventory no one moving here correct see and that's the part I want everyone to hear and I talked about this on the news yesterday and I said it to the governor and I said it to the mayor if you want to solve this housing crisis if you want to bring rents down if you want to stop tenants having to pay you need more Supply yeah it it's it's absolutely a supply problem I don't think they get that though well I I think they do I think it's just H how do we figure it out and work with them to try to get the best Solutions and I think they have to listen to Business Leaders yeah and so but I haven't heard from them have you no I haven't me the guy who's rented the most departments in the history of New England since the pilgrims arriving in Plymouth that that would be me and I've never gotten a call from them never gotten a call and I am the owner of theose to being third largest Brokerage in New England as far astal sales transactions a year I haven't heard from and I know the governor she's actually very nice and she does a great job on many things but on this she's got it wrong she's got it wrong and it's very frustrating so okay so so tenants wait during the pandemic landlords were paying 80% of the time but that hasn't been the case in the last couple years tenants are paying actually so what happened was and this is we'll go into it real quick so when everybody left the greatest migration out of had history like so landlords were renovating like crazy like they never had before they were updating everything the first time they had vacancy right so your normal leasing cycle 2019 lowest unemployment rate great economy um you know we still saw at the peak would come up for availability about 6% right and we know that 6% and above creates a a a you know if we get to so we have two different things the real-time availability rate and the real-time vacancy rate if you have a vacancy rate at 6% you're going to have almost all the landlords paying the fee anyway so this is really all it this is a right now you're telling me all it takes is 6% vacancy that's all it takes and then it flips and landlords are paying more often that's it I would have guessed a way higher number no no and and your availability rate also has that impact look when when people left uh during the pandemic and we went North at 10% here's what happened landlords fixed all the properties they lowered rent they paid fees everybody ran back I've it it looks like a triple black diamond ski s all the way down as we filled the apartments back in subsequent to that and I knew it was going to be the lowest we'd ever see because people got a great deal after the pandemic they got to live in a better that that first year they got to get a better apartment that they ever had in a better neighborhood they ever thought they could get into or a better street because the units were better and they were coming back in and they were taking advantage of that so subsequent to that 3 years later we average after that under 1% vacancy rate for threee straight we're just starting to see 1% now in the real-time vacancy rate and because of that tenants are paying more often that's right because landlords have more power and that's exactly what I explained on Fox 25 yesterday because if they if they want to solve it they have to make it easier to build and you know I've been a licensed builder in Massachusetts since I was 22 so 21 years every two years I have to go for continuing ed I got to sit in two days of classes for six hours every two years when I go it's harder to build they got this energy efficient Rule and they added that now the window I mean the windows today that you have to use right the worst Windows you could buy 25 years ago would have been the best Windows you could possibly buy and they're still not good enough they still want better ones better ones so the state keeps making it more expensive to build the municipalities look at city of Boston especially since mayor woo and I don't care if she sees this because all the developers are saying it they just don't want to say it to her she's made it harder to build they' make it more complicated permits do you see permits in 35 permits got approved in November of 2024 in the entire city of Boston 700,000 people one of the biggest cities in the nation 35 permits approved for new construction what you know I work with all the biggest landlords in our database right and I've got a a stack this high of permit deals that landlords bring to me and say please sell this for me because the risk is too high and so normally landlords are going to permit or developers are going to permit that so they can go get a profit right but when you add too much affordability in there to your point when you add too too it's like you're trying to build now a Mercedes or a Ferrari but ask it be built at like a you know Hyundai price if you will right I always say you can't get a Cadillac for the price of a Cameron it's it's that simple so in many respects it's good right we're trying to build the best housing stock possible but the pricing of it and then adding in the affordability requirements I mean there are countless um developers that will say to you I don't care if you can build 3,000 units when you have a 20% impossible the math doesn't work it's completely insane that these people think that developers make that much money that they can take 20% of their units and be forced to sell them less than market value and and they they actually think they're still going to make a profit yeah and that's why the developers say I'm out I'm not doing it you know I I I I served as a volunteer for the city of Boston plan Dudley plan Roxbury plan Nubian committee and a lot of those areas they've really come up I mean it's it's it's not like there's been no Improvement and and I tell you there's there's a great group of people there I think some when you're on these boards and you're working with these people it's great right and then you realize that some of them don't have a strong fundamental understanding of cost structure right and so you once you understand cost you can see why development gets slowed down there's a huge cost component that causes a pause that takes issue with development itself and here we are with unaffordable I think you know what I've suggested is is and you know a lot of people are not going to like this when I say it but I think we need a 2 or threeyear moratorium on any affordability requirements whatsoever on any developments just so we can stimulate growth if affordability if affordability was working it would have already been working right so here right so we know the definition of insanity we don't need to go into that but they'll keep doing it though okay and then we'll keep having un look at my where I live Watertown right up the street you know I've been there forever in Watertown mandatory two-year demolition delay on any property so it doesn't matter if you buy a property that is literally falling to the ground with seagulls living in the attic and raccoons 2-year mandatory not just if it's historic two-year mandatory you know what that's done in Watertown developers said I'm out yep and now we don't have more units and now in Watertown tenants are paying the fee most of the time and so they don't recognize the impact that they're having the other issue secondar and I could and I could speak to that uh I bought an old house falling apart like literally birds in it like rats open windows and I go to build that property and they slapped historical on it and I said who's historical here they're like well we really maybe to the raccoons you know Paul R's Mouse may be defecated in there for all I know you know but but here's what we know it wasn't and they tied it up for several months and developers have carrying costs and I think the state and the city no the state the city they have no compassion for it municipal have no compassion for the money they have no compassion whatever water insurance I I think risk I think that the state has to get serious whether or not they want to treat developers kindly and see that a profit if they make a profit is an actual good thing and so I think that there in lies the rub I was on a committee one time and and a and a woman said to me kindly she goes um the city is concerned with unjust enr M on some of these and I said you you mean a profit right mean Capital so I'm going to put 2 million in the ground and I'm going to risk my life savings to go build a a small multif family building would you work for 2 and a half years or 3 years for free and if you ask that person theyd say absolutely not I said well that's really what you're you're asking of developers right to put up their they don't see it that way though they don't and there in lies the rub do you think there's hope cuz I I don't at least here I don't I do notice when you go Worcester County West they are the municipalities are easier to work with I I just the whole vibe of dealing with them like when we were flipping houses one after the other outside the 495 belt it was pretty easy to get permits y but you still have to follow the state rules which every year get harder correct but do you have hope because I don't I I think speaking to landlords they they obviously think it's a lot easier to do development outside of the city there's no question about that the further you go the better you're treated the question is why don't we flip that and make all the landlords and Boston developers treated really really well treated with respect have have a have a uh a a a spot at the table to discuss these things I think if if you're in an echo chamber it's not going to work that's what they are and and and you have to bring in Business Leaders and say these are some comments and solutions we work on that we win and I think we start bringing Supply on I think we're ready for it am I right uh to say and you might not want to answer this but I'll ask anyway to say that development has slowed down dramatically since mayor Woo's gotten in yeah there's no question about it okay because that's how I see and I know listen in her defense slightly interest rates have gone up inflation has screwed up you know the cost of building but if you compare it to other major cities Boston is fairing much worse as far as construction now since she's gotten in it's really just the whole vibe she's giving off with developers well I I and I think that's where you talk to Business Leaders and you say look okay cost of borrowing went up debt went up materials went up labor went up everything went up okay we're and we're up affordable units where the landlord's going to lose money that makes no sense so you so a a leader says you know what let's cut back on this go back to any Community like that says well we need more affordable units you say it's build as much as possible correct that's how you get affordability right there folks thank you I've said it many times all right let's let's turn the page for a second here because you and I could go on and on and complain about the municipalities and the state all day all right Instagram for those of you that haven't seen it go on to mass governor and go back to last week and you will see a post that really got my attention you didn't hire the broker you shouldn't pay the fee let let's end renter paid broker fees so you know first of all I don't think they realize as you said these two comments contradict one another so if we break them apart and we say you didn't hire the broker you shouldn't pay the fee what about outside of greater Boston or heck even inside sometimes when a when a because we have it happen all the time you know our relocation team we get incoming uh folks that are looking for rentals and by the way I'm going to introduce you to our relo VP after this we get people oh hi there's a doctor moving in there's an accountant that works a children's hospital whatever they need they want to rent a place for a year so one of our agents takes them around for the weekend shows them the property sometimes more so when it's outside of Boston when they find a property they like they write a rental proposal they propose it to either the landlord's broker or directly with the landlord depending on the property and they often put in they request that the landlord pay our company's fee when representing the tenant now if they get their wish with this silly post that wouldn't be allowed so now they'd be hurting the tenant and tenant Representatives ability to get the landlord to pay what is your thoughts on that my thoughts are sound bites are good back in the 90s but we've got to get in in awesome podcast like this where we can actually matriculate and talk about the bigger issue there's a whole host of things you negotiate beyond the fee right parking you utilities what's included length of lease and so all those things factor in and you know landlords are willing to negotiate on on those things and first of all I think the bigger broad question is is the system broken and the answer is no you know we've done 1. 5 million showings of apartments on a disclosed dual agency uh you know uh notification form we've never had anybody have an issue with that everybody knows that you're working towards progress of finding an apartment they know some properties are going to be full fee half fee they come to your website it says it in advance it openly States what the what the fee structure is and landlords will also say I'm negotiable so I think that you know trying to force something uh sounds good but I think it what it'll actually do is probably slow down the entire process my biggest concern right now and there are many of this is that most landlords okay let's say they decide to go do it themselves okay try to rent it themselves most of them do not know how to do the leasing paperwork properly so many of them I talk to on a daily basis have illegal things in their addendum but they don't know it they just made it up they're good people they put in there and I go you can't put in late fees day one 10% correct they're like why can't I I go look if you so here's what I who there's going to be winners and losers with this if it passes lawyers are going to win lawyers are going to win because just like ambulance Chasers you're going to have lawyers that reach out to all these tenants and we've seen these tenant chasing lawyers now that try to find to try to make money is that going to make money for the landlord no it's going to cost the money land so landlords are going to lose lawyers are going to win who else stands to benefit right we have to look at who the win I don't even know if the lawyers will win I mean I do you think so I do I think yeah I think that so cuz tenants because you're saying they'll does have lawyers represent them more so yeah because they'll have bad paperwork right so yeah but bad paperwork happens every time Brokers aren't involved it happens I mean I have family members that they've rented their units for years and now that I got in the business they turn them over to us I look at existing leases they got the security deposit Totally Miss I'm like where's the security depos oh I put in my bank account whoa or lead paint lead paint they all fumble and I'm like what in the hell so you know it's not done correctly and then if the onus was to try to put it onto the landlord it sounds like what they're trying to do or i' I'd love to have a meeting and understand what they're trying to accomplish there if that's the goal then I can say with absolute certainty there'll be more lawsuits and more landlords that make mistakes on paperwork inadvertently they're good people a lot of them are immigrants that came and they bought a piece of real estate they're living the American dream I I I constant sometimes I have to get translators to help landlords put information on their properly because they don't met know better they just made up their own stuff well and what you were saying earlier before we went on camera and I want you to elaborate on that as your last thought the the smaller landlords are going to have a harder time with this absolutely they're going to be dis proportionately impacted and explain that well I mean look in in in Massachusetts Small landlords provide about 65% of the housing in Massachusetts right and so 65% of the housing for tenants in Massachusetts I believe that I believe that okay right and so do so if a landlord rents let's say it owns a Triple Decker and the Tenant stays for 5 years they don't know what legal updates happened in the last 5 years and a lot of them are still on paper from Old Paper leases and so they're not keep keeping up with stuff so they're going to be disproportionately impacted not only in the legislative side but also understanding what they need to do and so now you're asking them to pay the fee most of those smaller landlords don't keep up as to date on pricing trust me I know then luxury buildings these big buildings are constantly looking at rental optimiz they have rental optimization software right and so they're doing that on a daily basis do you think that small mom and pop landlords using that software no they're not right no of course not now let me ask you a question do you agree with what I said on Fox yesterday literally live on camera you didn't see it yet it hasn't been released yet but it' be released today I said mark my words here on the live news they pass this rents will go up the next day yeah I mean because the landlords are going to say at least the the corporate ones that are in the know they're going to all raise their rents and then and then the longer term tenants they're going to get hard hit harder and end up spending more am I right about that uh yeah I no question in fact I've got if I have time to read off a few data points want we can talk about that you know I mean we you know we sent out a survey to 18,000 landord you do agree with me the go oh yeah there's there well the facts are the facts like uh do you believe smaller landlords will be disproportionately affected by this change 93. 2% said yes okay would this change who who got asked that question the landlords we sent it out to all landlords yep and so so large and small okay um would this change make it more challenging for you to maintain or improve your rental properties 87.
6 said yes yeah do you currently rent your properties through an exclusive agent we should talk about that 68. 9% said no right so if you think about the implications of that they're putting it out there because landlords know best on an open market because landlords want their properties rented as quickly as possible yes and that's it it's speed they have they want three things they want speed least amount of disruption to the tenant right they want the highest qualified tenant and they want the most showings as quickly as possible they want it over so the tenant isn't disrupted landlords know best the facts are there they're not these are incontrovertible okay do you use if if you use an exclusive agent do you pay the fee 56. 2% do not use an exclusive agent 33.
7 say no 10. 1 say yes do you pay the fee 33. 7 say no that of to paying the fee correct right and so 10.
1% say yes right so if real estate agents left the industry due to less OPP unities do you think it would negatively impact your real estate business 73. 6% of landlords said yes well it would hurt the tenants too my own sisters at at Boston University and when we sent her when she had to find a unit I sent her to a friend that I grew up with the Colonial Real Estate I don't know if you know them over in Brookline and he helped her find a unit and guess what I paid the fee okay I paid the guys got to get paid and and I knew me finding her a unit it wouldn't Jive and he found it he you know and he nailed it all so that's that's super interesting to me there there's two things that I want to regroup on um you had made a comment oh I know what it was you said during Co M when that hit all of a sudden the landlords were paying the fees everywhere yeah think about that folks So within a matter of a couple of months when there was suddenly more supply all of a sudden bang landlords are paying yeah it's even better than that explain landlords were dropping security deposits landlords were saying you can build secure deposit over 6 months landlords were dropping last month's rent landlords were throwing in free parking there was so many incentives there all because of incre Supply that's it now what percentage of the units were vacant then well the highest I think we ever saw for availability was 15.
