Rent By The Room Property Management

[Essien Benjamin]

Hey BP!

I was finally able to secure my first house hack in Everett, WA a little over a year ago. Unfortunately, due to the pandemic, I had to find a job out of state. I own a 3 bed/2 bath condo and I am renting out the other two bedrooms right now. I would like to rent out my room once I am ready to move out in a couple of months. However, I would also like to get property management in place to help me with this since I'll be too far away to manage it myself. Does anyone know any property management companies willing to take on room rentals instead of whole units? I could rent out the condo as a single unit, but my cash flow would decrease significantly. 

Any advice would be appreciated! Thanks!

[Sherief Elbassuoni]

@Essien Benjamin, 

In the greater Seattle area, many PMs charge the first month as placement fees, then they charge 10% for 1-2 doors. You can negotiate the 10% down if you have multiple doors with the same PM. When you divide the first month placement fee/12 month (8.3%) and add the standard (10%) management fees, the new management fees is actually (18.3%) not (10%).

For year two, if the tenants are renewing the contract, PMs around here typically ask for half a month rent (4.16%). If they are getting new tenants in year 2, they will charge a full month rent again (8.3%), so for year 2, your actual management fees ranging between (14.16% and 18.3%) depending on if tenants will renew or not.

This is why I self manage my properties within reach. 14-18% of management fees can easily reduce the +ve cash flow I have.

For your case, many PMs don't like to manage by room properties, and even if they do that, sometimes they ask for a higher percentage.

So you need to plug all of these management fees into your calculations to see if it makes sense to keep renting by room, or rent it as a whole unit.