Landlords and tenants each have rights and options but not necessarily in extreme opposition. There are ways to handle the stresses of either side. This column will look at issues from the owner/landlord's perspective. A future column will look from the tenant's perspective.
As an owner, the first question is: "Do I manage the property myself or hire a professional management company?" Here are some advantages and disadvantages.
Management companies better understand the entire process -- from marketing through leasing to occupancy. A professional manager should know the best marketing venues for your property, be skilled in all aspects of renting the property, and follow through to the final day of occupancy. Two important advantages are:
1) Professional screening of a tenant. This should include credit and criminal background checks (red flags include utility collection notices and arrests), employment verification and prior rental verification. Management companies are also familiar with Federal Fair Housing requirements.
2) Knowing and adhering to the correct sequence of the many legal time frames necessary to evict a dream tenant who turns into a nightmare. "Problem" tenants may know how to use the legal system to their advantage against an inexperienced owner.
Below are additional stress relievers that a management company can provide for you:
• Advertise and show the property to prospective tenants;
• Confirm transfer of utilities into tenant's name;
• Provide a quality lease agreement and secure proper signatures;
• Collect and account for rents and deposits;
• Buffer you from tenant questions and repair issues, especially the late-night emergency calls;
• Coordinate the initial and final walk-through regarding property condition, prepare the security deposit statement, and refund any amount due to the tenant within the prescribed time limit;
• Have a team of qualified maintenance people to handle repair issues and coordinate as needed;
• Maintain property in good repair and order to prevent the slow degradation due to poor maintenance;
• Provide a range of rental rates to expect based on in-depth market knowledge of comparable properties and amenities;
• Provide a monthly statement of all income and expenses plus a recap at the end of the year for taxes.
Insurance companies also see the value of a property manager. If you are an out-of-state owner, your insurance company may require a local property manager in order to keep your policy in effect.
Of course, professional property management comes with a cost. You can expect to pay 5 percent to 10 percent of the monthly rental income for a management fee. Additional fees may include up to the first month's rent for the placement of a new tenant. Repairs and other expenses, such as advertising costs, are still paid by the owner. Management companies will typically require some form of reserve account for such expenditures.
Regardless of whether you do it yourself or hire a professional, download the Alaska Landlord Tenant Act at www.commerce.state.ak.us/occ/landlord.htm to familiarize yourself with the rights and obligations of both sides of the rental issue.
The 71-page booklet provides easy-to-follow information on what to do before, during and after you enter into a lease. There are also examples of forms needed to satisfy the various time-sensitive notice postings.
Do-it-yourself property management is not for the inexperienced. Even though we are in the real estate business, we use a professional company to handle our rental properties. For us, the management fee has given us a peace of mind and security we wouldn't have had otherwise. We have used a management company for more than 10 years, and we have never had a bad tenant. We believe that's more than just luck.
Clair and Barbara Ramsey are local associate brokers specializing in residential real estate. Their column appears every month in the Anchorage Daily News. Their e-mail address is email@example.com.