Managing own rentals preferable to contracting out

Question: I found your column last week very interesting, but it didn’t go far enough.

You should also warn your readers about getting involved with inept property-management companies. My husband and I have owned rentals for nearly 30 years and mostly handled our own properties.

In 1995, we purchased a new condominium in Arlington and selected a real estate company in the area that had been around for many years. For the first few years, everything was great. Then somebody else took over managing the property and it went south.

After all was said and done, there was in excess of $22,000 worth of damage. Even though we pointed out that they were in clear violation of the management agreement, the real estate company has refused to reimburse any of the damages. A lawyer told us that it would cost more than the amount we were asking to take them to court.

Even professional property managers can cause tremendous damage.

Answer: I’m sorry to hear your story, but you bring up a very good point for anyone who is considering renting out property.

In my previous column, I wrote that first-time landlords should take the time to study books such as “Landlording” by Leigh Robinson (11th Edition) to learn how to manage a rental property. You want to learn from the mistakes of others so that you don’t repeat them.

New landlords should also join local landlord groups such as the Rental Housing Association of Puget Sound (www.rha-ps.com) and the Snohomish County Apartment Operators Association (www.scaoa.com ) to learn about the latest landlord-tenant laws and other legal issues involved with landlording.

Renting out a house or condo, even if you own just one, should be treated as a serious business. And in my opinion, it’s best to learn the business and run it yourself because nobody cares as much about your property as you do.

However, some people don’t have the time or inclination to become a part-time landlord so they turn the job over to a professional company.

I don’t mean to offend honest, hard-working property managers, but I think it’s important for property owners to understand that there is a limit to the amount of service they can expect to receive for a management fee.

Property-management companies typically charge a small percentage of the monthly rent for their fee. For example, if you have a condo that rents for $1,500 per month the fee might be 10 percent, or only $150 per month.

At that rate, the management company can’t afford to spend very many hours per month on your property or they would not make a profit.

Therefore, some (but not all) property managers will rent a property to the first semi-qualified applicant who comes along so they can move on their next rental.

As I pointed out in my column last week, tenant selection is the most important factor in determining your success as a landlord. I’ve sometimes taken as many as 10 rental applications for a single vacancy.

Most management companies can’t afford to spend that much time on a property, and you really can’t blame them when you look at the small fee they are receiving.

So again, I strongly encourage anyone who owns a house or condo that they want to rent out to learn the landlording business and do it themselves.

And if you have to hire a property-management company ask how many hours they are willing to work on your property and make sure they have a thorough tenant selection process rather than simply taking the first applicant who comes along with little or no background checks.

Steve Tytler is a licensed real estate broker. Email him at features@heraldnet.com.