Rental Registry, Rental Inspections and other govt costs...

[Sam Wilson]

Are there any landlords who currently have rentals in cities with rental registration and/or rental inspections?  If so we'd love to hear how those have impacted you and/or your tenants.  Memphis is currently trying to push these. @Douglas Skipworth already posted this info regarding the proposed regs:   https://www.biggerpockets.com/forums/517/topics/712622-the-price-of-landlording-in-memphis-going-up-rental-registry?highlight_post=4202298&page=1#p4202298

I'd assume that rents would rise, evictions would rise (because landlords would be punished by code complaints that are caused by tenants - which the vast majority of those in Memphis are), and there would be higher vacancy rates/times because of increased rent/deposits.

We had a meeting with government officials last week and they couldn't tell us any of this info and pretty much just said that this was the new "best practice" and "other cities were doing it".  From what I read, about 10% of Detroit landlords have registered; but haven't read any other statistics on this.

Thanks!

[Mark Ainley]

@Douglas Skipworth Thanks for the mention.  @Sam Wilson So I am not sure if this is better or worse but Chicago proper doesn't have the rental license requirement which is nice but they do have their own set of landlord/tenant rules call the Chicago Residential Landlord-Tenant Ordinance (CRLTO) that causes a whole different set of challenges if you don't know you way around or thru it all.  

Now Chicago has 150 or so suburbs in the 6 county area around Chicago. That is where it gets tricky.  Every suburb is different with different rules and requirements.  One town fines heavy for things and the other gives out warnings and is flexible.  Not all of them have rental license requirements but I would say 50% of them do.  Now within the 50% of ones that do the degree is so different.  Most villages go after life safety issues. Things us landlords should have already like smoke detectors, safe egress, & no gas leaks.  They do look out for occupancy issues(too many people in one unit) and some city code violations but for most part those suburbs are landlord friendly if you have a good property and a tenant that is not an issue.  The city gets there $75-$300 annual fee depending on the city and they typically leave you alone.  

Now other suburbs are getting crazy to the point where it feels they are being very blunt on how they don't want rental properties thru the rules/laws they make. We took over management of a property in a south suburb last month and when they did they inspection they actually told us we had to sand down the wood floors because they are not in top condition which I think is too far(floors were not that bad otherwise we would have done it in the turnover scope).  Another suburb passed a law that you can no longer put grass cutting on the tenant and you as the landlord or PM must hire a local professional professional landscaper to handle the lawns.  

As an investor it does add some costs and it does require you to either do more as a self manager or ensure you have a property manager that is one top of it.  I know around here if you fall out of compliance the fines are fast and heavy and I see PMs lose owners all the time because it is just all too much for them to stay on top of. 

Overall, like anything there has to be a balance of the regulation and like in the examples above when a suburb goes too far the suburbs will end up cutting their nose to spit their face.