Is It a Lie to Tell the Tenant I’m Not the Owner?

Is It a Lie to Tell the Tenant I’m Not the Owner?

4 min read
Brandon Turner

Brandon Turner is an active real estate investor, entrepreneur, writer, and podcaster. He is a nationally recognized leader in the real estate education space and has taught millions of people how to find, finance, and manage real estate investments.

Experience
Brandon began buying rental properties and flipping houses at the age of 21. He started with a single family home, where he rented out the bedrooms, but quickly moved on to a duplex, where he lived in half and rented out the other half.

From there, Brandon began buying both single family and multifamily rental properties, as well as fix and flipping single family homes in Washington state. Later, he expanded to larger apartments and mobile home parks across the country.

Today, Brandon is the managing member at Open Door Capital, where he raises money to purchase and turn around large mobile home parks and apartment complexes. He owns nearly 300 units across four states.

In addition to real estate investing experience, Brandon is also a best-selling author, having published four full-length non-fiction books, two e-books, and two personal development daily success journals. He has sold more than 400,000 books worldwide. His top-selling title, The Book on Rental Property Investing, is consistently ranked in the top 50 of all business books in the world on Amazon.com, having also garnered nearly 700 five-star reviews on the Amazon platform.

In addition to books, Brandon also publishes regular audio and video content that reaches millions each year. His videos on YouTube have been watched cumulatively more than 10,000,000 times, and the podcast he hosts weekly, the BiggerPockets Podcast, is the top-ranked real estate podcast in the world, with more than 75,000,000 downloads over 350 unique episodes. The show also has over 10,000 five-star reviews in iTunes and is consistently in the top 10 of all business podcasts on iTunes.

A life-long adventurer, Brandon (along with Heather and daughter Rosie and son Wilder) spends his time surfing, snorkeling, hiking, and swimming in the ocean near his home in Maui, Hawaii.

Press
Brandon’s writing has been featured on Forbes.com, Entrepreneur.com, FoxNews.com, Money Magazine, and numerous other publications across the web and in print media.

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I want to stir up come controversy—and get your opinion on this matter.

You see, I’ve stated numerous times on both the BiggerPockets Blog and in the Forums that my favorite tip for being a good landlord is not admitting I’m the owner—instead just being “the property manager.” In fact, on my list of the best advice for easy landlording, that’s my number one piece of advice. I’ve even mentioned it in the podcasts a few times.

I didn’t invent this idea. I believe I first heard about it from Mike Butler in his awesome landlording book Landlording on AutoPilot (which if you are a landlord and have not yet read, go to Amazon right now and get a copy. You’ll thank me and Mike later.)

Ever since talking about this on the site, I’ve had several people ask me if this wasn’t a little too deceptive, especially since anyone can look it up in the county records and find out who owns a property. What if I got caught? Isn’t it morally wrong to do this?

Related: Should You Tell the Tenants That You Are the Owner? [Counterpoint]

So, I wanted to look a little deeper at the issue and get your opinion. I invite you to read through my reasoning below—and then leave me a comment at the end and let me know if you agree or disagree.

Also, be sure to check out the other side of the debate by reading Kevin Perk’s great counterpoint article “Do You Own the Place? Why You SHOULD Tell Your Tenants About Your Ownership.”

“I’m Not the Owner…”

For those not familiar with this way of operating, I’ve stated previously,

“Finally, my number one tip for being a successful landlord: don’t be the owner. This is especially true for those of you who, like me, are peacemakers and non-confrontational. As a landlord—you are going to face a lot of tough decisions and awkward conversations. When you are the owner—the blame is on you and as a result you will often make decisions based on convenience rather than common sense. (After all—you better not be the owner. The owner should be a business entity that you set up with your attorney.)

Instead, from this moment on, you are no longer the owner. You are simply the property manager.

Tenant: “I can’t move my 200-pound dog into this studio apartment!?”

Me: “No, I’m sorry—the owner doesn’t allow dogs here.”

Additionally, you can tell the tenant, “I need to talk to the owner about this,” to buy yourself time to think about odd requests. Instead of the tenant being upset with you—they are now upset with the mysterious “owner.” Feel free to play this up all you want:

Me: “Sorry, I tried talking the owner into it but he is a stickler for the rules.”

Tenant: “Ugh, I hate that guy.”

Me: “Yeah, me too…”

It’s much easier to make decisions when I am just a third party in the relationship, rather than the “big bad owner.” I’ve found this works really well with my personality and helped me to avoid a lot of nasty conversations that I’d rather not engage in.

Related: Low-Stress Landlording—Yes, It’s Possible!

woman in maroon shirt and yellow sweater talking on a cell phone while going over notes on a notepad

Is This Lying?

As a deeply moral guy, I don’t believe lying is ever okay. Not in business, not in life, not ever. So, before I decided to switch to this strategy, I really had to ask myself: “Is this lying?”

In the end, I’ve decided it wasn’t—and here is why.

I hold my real estate properties with LLCs, not personally. In other words—I don’t own the properties. I have a management role in an LLC, which owns the property.

Yes, the distinction is subtle. But in my opinion, it’s separate enough to not bother my conscience.

Not stating the whole truth? Yes. Lying? I don’t believe so.

Some people might believe I’m being too deceptive here, and I understand the concern. I mean, I very clearly am making a point to not let the tenant know I own the property. However, in my opinion, I don’t believe it’s any of my tenants’ business to know what business I own. I don’t let them know about the companies I have stock in, the political party I donate to, or the church I tithe to. Why should I tell them I own a company that has real estate holdings?

If a tenant directly asked me, “Do you have any ownership interest in this property?” or “Are you involved with the LLC that owns the company?”, I would not lie. I’d tell them yes. However, I’m not asked this—ever—and don’t believe I ever will be.

Furthermore, I feel even more justified in my decision because I know that in every sense, I am separate from my business. I know if I wanted to go pick up the rent from one of those LLCs and just stick the money in my pocket and buy a new TV, I would be breaking the law (or at least the tax code). That money does not directly belong to me; it belongs to the company, which then pays me.

If someone were to sue my company for wrongdoing, they aren’t going to sue me personally (hopefully), because the company is a separate entity that I paid good money to a lawyer to create.

Conclusion

So, I want to know your opinion. Is it wrong? Is it lying?

I’m totally opening up this conversation for debate, because I want to know what others think. In the end, I think a lot of it comes down to my personal conscience—and as of this point in time, I don’t feel wrong doing it.

Would you?

What do you tell your tenants? Why?

Leave your feedback in the comment section below.