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Rental property management: Do it yourself or send in the experts?

Local agents discuss responsibilities, pitfalls
By: Gloria Young,
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Property management company services (types of services vary by company)
• Home inspection to gauge price on rental market
• Advertising for and screening prospective tenants
• Preparing lease
• Photo walk-through of the home
• Checklist for tenants (includes obtaining renter’s insurance and putting utilities in their name as applicable)
• Checklist for homeowners (includes obtaining landlord insurance)
• Collecting rent and maintaining financial records including the 1099 tax form for homeowners
• Tracking and scheduling yearly maintenance (gutter cleaning, sweeping the chimney, heating and cooling service and other tasks)
• Monitoring and keeping up to date on laws and regulations that impact home rentals
• Annual visit to the home

While many do-it-yourselfers choose to manage their own rental properties, the process is not for everyone.

“If you are unsure of yourself, if legal matters scare you or intimidate you or if your life is just too busy, you really want a property manager,” said Ed Koons, owner of Courthouse Property Management in Auburn.

Koons, who is also a lawyer, says the key to avoiding problems and potential escalating issues is finding the right tenant.

“All of the rules and regulations never come into play unless you have a tenant who is a trouble-maker or unsatisfied with life in general,” Koons said. “(The screening process gives you the opportunity to verify you have) someone who can pay the rent, has good credit history and doesn’t have a history of prior eviction. We also check for bankruptcy. It doesn’t automatically eliminate someone but it is something we factor in. We get credit reports for all prospective tenants, verify employment and sometimes we’ll check references.”

Local management companies offer a menu of services and the flexibility for homeowners to choose the ones that apply to their situation.

“We can advertise, screen for tenants, get the credit check and then write the lease,” Koons said. “We’ll do that and then turn it over to the property owner. Or we can do full service — not only finding tenants, but collecting rent and making sure it is paid in a timely manner. At the end of the year we send the 1099 so the homeowner has a good tax document to work with. We arrange for repairs if the owner requires it — we have a number of reliable vendors.”   

For Jessica Lunsford, owner of Affordable Property Management in the Lake of the Pines area, the job is a lot of work, but she thrives on it.

 “I like real estate in all its forms,” she said. “When I’m on vacation I’m scanning the homes. I enjoy the property management aspect of it because you’re building relationships with people rather than it ending after escrow.”

A typical week for Lunsford includes inspecting homes to determine rental price, interviewing and screening tenants, running background and credit checks on them, preparing leases, handling maintenance, supervising financial and bookkeeping chores and keeping up to date on laws and compliance issues that impact rental homes.

In fact, compliance issues are a very important part of the business.

“We’re taking classes and keeping up with those things,” said Allison Lemley, officer manager at Sutherland Property Management in Auburn. “When requirements for the language that must be in leases change, we’re getting notices for that. Laws are ever changing so private owners who don’t use management companies probably don’t hear about those changes unless they are diligent about taking classes offered by rental housing associations.”

Recently the most notable change in the law was the requirement for carbon monoxide detectors.

“It’s been advertised on the radio a lot, but if not for that, how many people would know?”  Lemley asked.

Screening and selecting tenants can also present challenges.

“Lots of owners don’t understand that some of the ways they’d make a decision about new tenants might not meet requirements to avoid discrimination,” Lemley said. “You can’t tell someone they can’t smoke. But you can tell them they can’t smoke in the unit. You can’t tell someone they can’t have a service dog. Service dogs don’t (fall into the same category) as pets.”

And, once a tenant is selected, it’s important to have a clear understanding about maintenance responsibilities.

“There are still a lot of tenants who think they know what the owners are obligated to provide or check versus what the tenant must do,” Lemley explained. “(For example) tenants should be changing heating/air-conditioning filters. That’s part of cleaning. But some tenants think that’s the owner’s job.”

Under state law, when tenants vacate the residence, homeowners have 21 calendar days to submit a written statement regarding their deposit.

“If the landlord is acting in bad faith, there’s a double damage provision,” Koons said. “But even if the landlord misses that deadline, the landlord is not penalized if he is acting in good faith.”

Preparing a home for the rental market is a matter of common sense.

“We want the house to look good,” Lunsford said. “Each home is different. It rents depending on condition. But it is up to owners what they want to fix and don’t want to fix. I’ve been very fortunate with great tenants. I have a couple who take better care of the home than the owners did. If owners want the property to look a certain way, they should take care of it. But on the whole, it is not as common for tenants to take as good care of the home.”

Exterior maintenance presents more decisions. Some homeowners opt to pay a lawn care contractor. Others do the work themselves. Some leave it up to the tenants.

“I like for our gardeners to go out because it is someone there once or twice a week,” Lunsford said.  

Another helpful thing for homeowners to have is backbone, according to Koons.

“If there are tenants in financial trouble, if they’re dealing with an individual, that individual is going to be paid last,” Koons said. “A property management company is like the bank — ‘here’s how it is, you are going to pay the rent or we’ll have to ask you to leave.’”

Both Lunsford and Lemley suggest a yearly inspection of each rental property.

“We like to do the annual inspections, but that remains the owner’s choice,” Lemley said.

At Affordable Property Management, Lunsford charges a flat fee for her services — $500 to screen and find tenants and $95 a month to manage the property.

At Sutherland Property Management, the cost to screen and find a tenant, write up the lease and collect rent and security deposit is one-half of a month’s rent with a minimum of $375 and maximum of $1,000, according to the website. The monthly management fee is 6 percent of the rent.
Courthouse Property Management charges half of the first month’s rent for advertising, screening and writing a lease. The monthly management fee is 6 percent of monthly rent charge.