The drop in home prices left many that might have been ready to sell holding onto their properties. Property owners, waiting for the market to turn, have opened up their homes or condos to renters, and are learning about property management for the first time.
This week on Home Matters, hosts Pete and Rob speak to Dorothy Ennes, the Director of Property Management for Coldwell Banker Bain, about things people new to property management should be aware of.
Ennes says there’s a lot to consider when transitioning a home from one the owner lives in to a rental.
“We talk to owners about whether or not they are emotionally and financially prepared to do this. When you list a property for rent, it becomes a business and you have to be able to step back and not say, ‘This is my house. This is where my kids grew up. I don’t want anybody in my house marking the walls or scratching the hardwood floors.’ You can’t do that.”
Property owners need to be prepared for maintenance costs, and be able to respond to tenants’ needs in a timely manner she says.
“There are going to be maintenance issues that are going to come up. I’ve had owners who said, ‘Nothing ever broke in the last year and now the dishwasher broke, and then the fridge broke, and then the furnace went out.’ Life happens,” says Ennes.
“The tenant isn’t going to be willing to say – the furnace goes out on Friday afternoon – well let’s wait until Monday to fix it.’ By law, we have 24 hours to respond to no heat. Those are expenses that the owner is going to have and the owner needs to be prepared for that.”
Legal issues can also be complicated for a new landlord. Property owners need to be aware of discrimination laws in tenant screening, and once they’ve found a tenant, they need to make sure all legal forms are filled out properly.
“I can’t begin to tell you how many times we’ve had an owner who comes to us and says ‘I have a tenant, they’ve destroyed my house. They’re not paying the rent. I need your help.’ And I’ve said, ‘OK, where’s the lease?’ ‘Where’s the move-in inspection,'” only to be met with blank stares, says Ennes. “If you don’t have a written move-in inspection by state law, you can’t even collect a deposit, much less charge the tenant for damages. So the tenant can trash your house and you have no recourse.”
Some homes are built in with things that can prove dangerous legally for property owners. Ennes says waterfront properties or homes with pools pose more complicated situations.
“Number one on my hot button is hot tubs. I’m aware of three million dollar lawsuits regarding hot tubs on the Eastside. It doesn’t necessarily mean the tenant is going to win, but you can spend thousands of dollars defending yourself.”
She says yard play equipment, water features, and even gardening equipment could leave room for a lawsuit.
“You leave the lawnmower and the kid decides to mow the grass and cuts his toe off, who’s responsible?”
If property owners are considering hiring a property manager, Ennes says the fees vary. Her office charges a commission of the full amount of the first month’s rent, for marketing and management to place the tenant, and 10 percent of rental fees each month after the first to continue managing the property. As with anything, she says when comparing property managers people should look closely at what kind of services they’re getting for the cost.
This week’s Home Matters is sponsored by Property Management 101.