When rent controls were imposed in 1976, the prevailing wisdom among apartment owners in Montgomery County was that the rental housing market had been destroyed. Some got out of the business altogether. Others opted for what they saw as the only profitable alternative - the conversion to condominiums.

And then there was the case of David H. Hillman.

This 37-year-old developer not only bucked the trend of his colleagues, he used it to great personal advantage. Over the last three years, Hillman went from a financial position where "all I could afford to buy was lunch" to his current status as the "apartment king" of Silver Spring - owner and manager of apartment buildings worth an estimated $43 million.

Hillman says he owes it all to rent controls.

"Rent controls," explained Hillman, "eroded the values to the point where we can buy things in Montgomery County."

Indeed, with his partner, Melvin Lenkin, Hillman has put together a portfolio of about 2,000 apartment units during a period when those around him were either allowing one-time luxury apartments to slide into slums or selling them off as condominiums or cooperatives.

Tenants and county housing officials who had grown cynical about landlords' promises were generally impressed by Hillman's work. He restored the lobby of the massive Twin Towers in Silver Spring with a paint job and new chandelier. He ran armies of mice out of Summit Hills. He filled his apartments to 98 percent of capacity and kept them running smoothly.

"Everything he touches, he straightens out," said Gene Sieminski, director of the Montgomery County housing office, which is grateful to Hillman for saving Summit Hills.

"I think the man has good ideas and believes in a pretty complex," said Madeline Vines, president of the tenants' association at Summit Hills.

Operating as Central Management Co., the Hillman partnership owns properties in Montgomery, Prince George's and Anne Arundel counties in Maryland, Fairfax and Prince William counties in Virginia, and the District.

"It takes some money, and it takes some guts," said housing director Sieminski, when asked about Hillman's Montgomery County operations. "He has the guts to do what has to be done."

It also took the government regulations that brought panic to other landlords and depressed apartment building prices.

"Most of the stuff we've bought was in some kind of financial trouble," Hillman said. "We hardly ever buy anything under normal circumstances. Anybody can do that."

In three years, Central Management has committed slightly over $30 million to acquire six major Silver Spring complexes worth $43.5 million on the county's books, which generally underestimate property values.

Others in the real estate business, however, remain skeptical.

"I don't see how he could change things. What's happening to rental housing is happening to everyone," said John O'Neill of the Apartment and Office Building Owners Association. "He hasn't got any magic."

O'Neill conceded Hillman may be "either a maverick or a genius that has some super knowledge that the rest of the industry doesn't know about." But the owners' representative predicted Hillman would succumb to the same financial pressures that drove other apartment owners to condominiums or cooperatives.

Hillman replied, "I don't know how to do condominium conversions, and I don't want to know how. Just being in the rental business is hard enough."

Nor does Hillman share his collegaues' current enthusiasm for condominiums.

"I think in another year the market in middle-income condominiums would have been reached," he said. "But a lot of people like renting."

Condominium conversions were halted at least temporarily last month when the Montgomery County Council, concerned about the depletion of rental housing, clamped a four-month moratorium on further conversions.

Hillman's operations were not affected.

Three years ago, he and his coinvestors bought the Hampshire West Apartments, the Chateau and Silver Spring Towers. In 1977, they added the Twin Towers and in 1978 the Claridge House Apartments, which Hillman described as having "a panoramic view of the dump."

Their latest and largest acquisition, the deteriorating Summit Hills complex, provides an example of a Central Management deal.

The comples with 2,600 tenants had gone into receivership, and count officials were fearful that a huge chunk fo their already limited supply of moderately priced rental housing was about to disappear.

Hillman's group moved in, promised to restore the property's nine buildings and continue to operate it for low- and moderate-income tenants for at least six years.

Built in the late 1950s and early 1960s for about $13 million as luxury high rises, the Summit Hills' cachet had long since faded, replaced by unwelcome notoriety. Hillman's group bought the complex, on a 30-acre site at 16th Street and East-West Highway three blocks from Metro, for $8 million - less than half its market value, according to tax assessments. They also got three-year financing at 6 percent interest.

The partnership plans to invest up to $3.5 million to rehabilitate the run-down complex, including installation of new boilers, playground equipment and $75,000 that was spent right away to reopen the swimming pool in time for use this summer.

"They appear to be genuinely trying to upgrade the complex," said N. I. Grayson, a former apartment tenant who operates his dentist's office at Summit Hills.

Tenant association head Vines, who likes Hillman's plans, remains somewhat pessimistic. "He says he's not going to do anything for six years, but I wonder what will happen then," she said. "My gut feeling is that in six years, none of us - the moderate-income people - will be here."

Vines added she would like Central to move more rapidly to fix up the inside of the apartment buildings. Hillman said the company is doing outside work while the weather permits and is replacing the boilers and trash compactors.

Vines noted improvements in security and said that the mice, which she used to kill at the rate of 10 to 12 a day, have disappeared.

"Even with the money we're spending on rehab, we're in there at very low cost," said Hillman.

At the Twin Towers apartments on Georgia Avenue, a "luxury" apartment and hotel complex with a gleaming new lobby lighted by chandeliers, tenants said Central made substantial improvements after it acquired the building.

"They changed the furniture; they put new lighting in and wallpaper, and pub new carpets in," said Charles E. Lloyd. There are still problems caused by children and noisy tenants, but "I'm not blaming management," Lloyd said.

Hillman said his secret is simple: he buys cheap.

Because mortgage payments account for 40 to 50 percent of an apartment building's costs, he said, "if your mortgage payment is less, you can make a profit."

Housing director Sieminski and observers in the real estate business credit Hillman with an eye for bargains but say he also is a skilled entrepreneur and efficient manager who isn't afraid to invest in improvements.

Although he was at first reluctant to be interviewed, preferring to keep a low profile, the developer eventually relented and explained how he got into the business.

He grew up in the District and Silver Spring, attended Bethesda-Chevy Chase High School and studied accounting at Strayer Business College.

As a fledgling certified public accountant, "I had a lot of clients looking for tax shelters in the 1960s - clients who were builders," Hillman said. "I notices they were doing a lot better than I was."

One of those clients gave Hillman a chance to try his hand at making a profit on a money-losing project.

"It took a long time, but I found that I liked that better than doing debits and credits," Hillman said.

In 1967, Hillman formed the Central Management partnership with Lenkin, who comes from a family of builders and had access to financing.

Today, Hillman sits in a tastefully furnished office in Bethesda, his walls decorated with a map of Central's holdings and blow-ups of deeds to Park Place and Boardwalk, the prime properties in the game of Monopoly.

When rent control was enacted, Sieminski said, Hillman "figured out that while everybody was getting out, he wanted to get in."

Hillman agrees that in the short run rent controls have been good to him and his coinvestors, and he told the County Council that last spring.

"From that point of view, I told them I hoped they would never take them off," Hillman said in the interview. "But rent controls are stupid. All they are is a gift to high-income people."

The developer claimed that residents of luxury apartment buildings are among the most fervent lobbyists for controls and that the county could save money by paying direct subsidies to low- and moderate-income families who need help to meet rising rents.

"In the long run, rent controls will probably hurt us," Hillman said, "because we're going to want to make more money, or want to sell or just want to operate in a free market.

"But I can't knock them right now. They got us in here." CAPTION: Picture, Central Management bought Summit Hills for less than half its market value. By James M. Thresher - The Washington Post