How do I rent our place?
February 15, 2022 2:18 PM Subscribe
We might need to rent our condo. How do I even start doing that?
We're in our new place, and prepping our old place for sale. The market for condos here (Portland, OR) is, to be charitable, not great right now. Most people are looking for detached homes and our unit has a couple challenges that will make it an even trickier sale, namely, no outdoor space and no view. The building is built into the side of a hill, and our unit faces the hill, essentially, and is on the first floor, so the view is of a little garden with a retaining wall behind it, and street level is two floors up.
So basically, we're preparing ourselves for the reality that the place may not sell, or if it doesattract an offer, it will be a lower offer than we're comfortable taking. So, rental becomes an option, until the market picks back up.
We do not want to be active landlords; we'd be fine with turning tenant finding and all ongoing admin of the place over to a management company, for which we will happily pay a fee. So here's my questions:
- How do we even start that process? Do we just cold-call management companies?
- What sort of fee is typical for these companies to charge?
- What kind of lead time do we need to give them between us signing an agreement with them and them screening/moving in a tenant?
- What are the pitfalls/risks of working with a management company?
Any and all advice will be welcome, as we've never really thought about any of this stuff before today. Thank you.
We're in our new place, and prepping our old place for sale. The market for condos here (Portland, OR) is, to be charitable, not great right now. Most people are looking for detached homes and our unit has a couple challenges that will make it an even trickier sale, namely, no outdoor space and no view. The building is built into the side of a hill, and our unit faces the hill, essentially, and is on the first floor, so the view is of a little garden with a retaining wall behind it, and street level is two floors up.
So basically, we're preparing ourselves for the reality that the place may not sell, or if it doesattract an offer, it will be a lower offer than we're comfortable taking. So, rental becomes an option, until the market picks back up.
We do not want to be active landlords; we'd be fine with turning tenant finding and all ongoing admin of the place over to a management company, for which we will happily pay a fee. So here's my questions:
- How do we even start that process? Do we just cold-call management companies?
- What sort of fee is typical for these companies to charge?
- What kind of lead time do we need to give them between us signing an agreement with them and them screening/moving in a tenant?
- What are the pitfalls/risks of working with a management company?
Any and all advice will be welcome, as we've never really thought about any of this stuff before today. Thank you.
Step one: determine what rules your condo association may have. You agreed to them when you bought the place, so they are binding on you and you should not do anything at all until you know what they say.
posted by aramaic at 3:09 PM on February 15, 2022 [1 favorite]
posted by aramaic at 3:09 PM on February 15, 2022 [1 favorite]
Response by poster: mareli - that's exactly what we are doing. I'm just getting my ducks in a row now, in case that time period goes by and a sale doesn't happen - there's a lot going on in our lives right now and the more we understand in advance the less we'll have to learn later, and we don't have the financial runway to be able to scramble and figure it out last minute so I'm trying to find out as much as I can now.
aramaic - did that too. No rental cap in our building, slight adjustment to our insurance policy, other than that we can do what we want, rental-wise.
posted by pdb at 3:14 PM on February 15, 2022
aramaic - did that too. No rental cap in our building, slight adjustment to our insurance policy, other than that we can do what we want, rental-wise.
posted by pdb at 3:14 PM on February 15, 2022
In that case what I've done in the past is find out if any other units in the building are rented (the HOA may not want to tell you; some do, some don't, IME, but you can search real estate listings and the like) and try to find out if they're using a property manager and if so, which one. Then contact that same company (if they know the building, and the HOA/Board knows them it makes everything easier).
...but then again, I'm the sort of person who's perfectly willing to spend money in order to avoid hassle (I view it as "buying time" so to speak), so the percentage cut taken by a management company is money well-spent in my view.
posted by aramaic at 3:54 PM on February 15, 2022 [1 favorite]
...but then again, I'm the sort of person who's perfectly willing to spend money in order to avoid hassle (I view it as "buying time" so to speak), so the percentage cut taken by a management company is money well-spent in my view.
posted by aramaic at 3:54 PM on February 15, 2022 [1 favorite]
We just got set up with a property management company and, yeah, started with Yelp and called up a few companies that had decent web presences (seems like a low bar, but not really). We stuck to companies that stayed local to our area and had good reviews from both tenants and owners. Two came over for assessments of our place. The company we went with came back to us with data about themselves (how long units take to rent, how long on the market, how long their tenants stay, etc.) and what they expected for ours, along with rents for comparable properties in the area. They had a few plans, but the one we went with was for 18 months and they take about 8%. No charge to us until the place is rented.
We signed a contract with them right before xmas – not exactly the time of year lots of folks are moving. I needed a week to get the rest of the place emptied, then they did a detailed assessment and got back to us with items and photos of things that were recommended to fix. It took about 2 weeks to get everything fixed, cleaned, locks changed, and photos taken (this was for a house). They recommend painting, but we had already gotten that done so I think typically there would be a few days to add in for that. It was painless as they had contacts for everything. They spent about a week showing it and then had a signed lease. So, it took us a month start-to-finish, but it was a house over the holidays with a bunch of stuff that needed to be moved out at the start so ymmv.
So far no issues, but we're just a month in. Anything the tenants ask the management company is also cc'ed to us, but they take care of everything. Overall, happy to have used a company for the whole process.
posted by homesickness at 4:04 PM on February 15, 2022 [5 favorites]
We signed a contract with them right before xmas – not exactly the time of year lots of folks are moving. I needed a week to get the rest of the place emptied, then they did a detailed assessment and got back to us with items and photos of things that were recommended to fix. It took about 2 weeks to get everything fixed, cleaned, locks changed, and photos taken (this was for a house). They recommend painting, but we had already gotten that done so I think typically there would be a few days to add in for that. It was painless as they had contacts for everything. They spent about a week showing it and then had a signed lease. So, it took us a month start-to-finish, but it was a house over the holidays with a bunch of stuff that needed to be moved out at the start so ymmv.
So far no issues, but we're just a month in. Anything the tenants ask the management company is also cc'ed to us, but they take care of everything. Overall, happy to have used a company for the whole process.
posted by homesickness at 4:04 PM on February 15, 2022 [5 favorites]
What sort of fee is typical for these companies to charge?
They typically charge a percentage of the rent plus certain fees, such as a leasing fee or a service fee. The service fee is likely to be a flat fee plus an hourly rate, or just an hourly rate, and can depend on type of service.
What are the pitfalls/risks of working with a management company?
Well, the most obvious one is that they cost money. If you're looking to make money - or even just break even - on a rental property, this is something that you have to consider. Definitely run the numbers.
Another issue is that they can be incentivized to screw people over on maintenance. I've seen this go two ways, personally. If they're not making money on service calls, then they want to skimp on maintenance; hiring people to do calls cuts into their profits. If they're making money on calls, though, then they want to drag out repairs so that they can charge more.
It can be difficult to tell which management companies are better than others. Some problems only become apparent over time, and some are only apparent if you have some experience. This is where recommendations can be very helpful. Online reviews can be unreliable because (a) people hate them like they hate cable companies, and (b) a lot of good reviews are fake.
In any case, It's always a good idea to keep in mind that their interests don't always align with yours. One way their business interests do align with most landlords, though, is that they want to rent a place as soon as possible for as much as possible. (The second part might not align with your ethics, though.)
You might need to do some repairs, or you might not, but once the place is rentable they can advertise it almost immediately. I would probably budget a month for this, to be on the safe side, but it could likely take less. It could also take more if the company you choose sucks or if you need something done requiring a qualified tradesperson (there's a labor shortage).
You also want to look into the legal requirements for landlords in your jurisdiction and the timeline for those. These very by jurisdiction. It looks like Portland might require you to get a business license.
posted by Kutsuwamushi at 4:47 PM on February 15, 2022 [1 favorite]
They typically charge a percentage of the rent plus certain fees, such as a leasing fee or a service fee. The service fee is likely to be a flat fee plus an hourly rate, or just an hourly rate, and can depend on type of service.
What are the pitfalls/risks of working with a management company?
Well, the most obvious one is that they cost money. If you're looking to make money - or even just break even - on a rental property, this is something that you have to consider. Definitely run the numbers.
Another issue is that they can be incentivized to screw people over on maintenance. I've seen this go two ways, personally. If they're not making money on service calls, then they want to skimp on maintenance; hiring people to do calls cuts into their profits. If they're making money on calls, though, then they want to drag out repairs so that they can charge more.
It can be difficult to tell which management companies are better than others. Some problems only become apparent over time, and some are only apparent if you have some experience. This is where recommendations can be very helpful. Online reviews can be unreliable because (a) people hate them like they hate cable companies, and (b) a lot of good reviews are fake.
In any case, It's always a good idea to keep in mind that their interests don't always align with yours. One way their business interests do align with most landlords, though, is that they want to rent a place as soon as possible for as much as possible. (The second part might not align with your ethics, though.)
You might need to do some repairs, or you might not, but once the place is rentable they can advertise it almost immediately. I would probably budget a month for this, to be on the safe side, but it could likely take less. It could also take more if the company you choose sucks or if you need something done requiring a qualified tradesperson (there's a labor shortage).
You also want to look into the legal requirements for landlords in your jurisdiction and the timeline for those. These very by jurisdiction. It looks like Portland might require you to get a business license.
posted by Kutsuwamushi at 4:47 PM on February 15, 2022 [1 favorite]
I recently engaged a management company to rent and maintain a condo in San Francisco. You want someone who will come to the place and advise you on how to make the place attractive to renters. After you do whatever painting and repairing, they should take pictures and list the place. Our management company put it on craigslist, zillow, and some other online sites, as well as on their own website. Before setting a rate, look closely at other apartments for rent in nearby neighborhoods. I suggest that you not price it at the top of the range unless there's something truly special about it. Ask the company to let you know whenever they do a showing; if time goes by and nobody's looking at it, lower the price. Our place sat unrented for 3 months because we were asking too much for it.
They charged a percentage of the rental rate for their tenant-finding services, and then $200 per month for management, plus whatever expenses are incurred when repairs and maintenance work needs to be done. Be sure to talk to them about what you consider reasonable maintenance and repairs. For example, do you consider changing lightbulbs to be the tenant's responsibility? What if the toilet is clogged because they flushed things you clearly asked them to flush? Also, consider having the management company take care of things that could end up costing you money if the tenant doesn't do them...like changing furnace filters, cleaning stove-hood filters, and replacing smoke-detector batteries. Also, you might want to require that the tenant have renter's insurance.
Provide appliance operating instructions and simply state whatever caveats and request in writing, preferably a hard copy. Make sure they have a copy of tenant association rules, if any.
posted by wryly at 12:48 PM on February 16, 2022
They charged a percentage of the rental rate for their tenant-finding services, and then $200 per month for management, plus whatever expenses are incurred when repairs and maintenance work needs to be done. Be sure to talk to them about what you consider reasonable maintenance and repairs. For example, do you consider changing lightbulbs to be the tenant's responsibility? What if the toilet is clogged because they flushed things you clearly asked them to flush? Also, consider having the management company take care of things that could end up costing you money if the tenant doesn't do them...like changing furnace filters, cleaning stove-hood filters, and replacing smoke-detector batteries. Also, you might want to require that the tenant have renter's insurance.
Provide appliance operating instructions and simply state whatever caveats and request in writing, preferably a hard copy. Make sure they have a copy of tenant association rules, if any.
posted by wryly at 12:48 PM on February 16, 2022
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posted by mareli at 3:06 PM on February 15, 2022