Real Estate Investor · Rochester, NY · Member since 2014 · 18 posts · 4 votes
Hello All,
I've read that if you do your own property management, the number recommendation is to not reveal that you are the owner. (I'm planning to Owner Occupy a duplex as my first real estate investment purchase.) My question is, if the property is currently rented and you go and look at the property, how is it not obvious that you are the owner when you tour the place? Maybe it is uncommon, but the last place I looked at was a four unit and I met one of the tenants during the tour. Were I to move in, I'm pretty sure she was would know who I am! Any insight is appreciated, thanks!
All my tenants know I am the owner. I do everything in my name and honestly it has worked out great! I wouldn't worry about them not knowing. I have found that having a professional 14 page lease, treating it as a professional business has prevented any issues. Yes occasionally my "husband" makes calls but honestly we got rid of our LLC and do everything transparent.
All my tenants know I am the owner. I do everything in my name and honestly it has worked out great! I wouldn't worry about them not knowing. I have found that having a professional 14 page lease, treating it as a professional business has prevented any issues. Yes occasionally my "husband" makes calls but honestly we got rid of our LLC and do everything transparent.
I agree 100% with Elizabeth. In order to have long term tenants is based on a good Landlord/tenant relationship! This doesn't mean you become friends, family and loved ones. This just means that you have established a business relationship of comfort, stability and honesty. The tenant feels comfortable knowing who owns the property they live in, who is taking care of them, and they have that stability.
Do you like talking to a robot machine or someone who knows nothing about the product you are using when you have to call someone regarding your business dealings? How many times do we grind our teeth in frustration when we can't get answers, and we call and get a machine. Or...someone representing the product who really doesn't know squat about it?
I can't understand those who feel their tenants shouldn't know who they are! I'm proud to be a landlord! I want my tenants to know I'm their landlord! I like my tenants, bad or good (that comes with the territory), but to hide yourself from them, is fighting a hopeless battle, because at some time or another, they will eventually know who you are, via court, summons, whatever.
The ladies have nailed it! Be friendly, not friends, have a good contract and be business like.
Before selecting a business like real estate, or any business, check yourself out, what are your ethics, what do you believe business is? Do you think it's necessary to lie, deceive, mislead others by omissions or can business be done honestly, fairly and in good faith?
Then look to the legal requirements to conduct business, consider how things like fraud and torts come about, how liability can become an issue.
Not saying that keeping your ownership quiet is wrong, but is it always appropriate? Living with a tenant (or very close) is different than not.
Wait until there is a police call, for anything, like a car wreck in front that nails a mailbox or lamp post, whatever. Both you and the tenant are in the front yard telling your stories. The cop asks you who owns the place in front of the tenant.....and you say what?
Then the tenant looks at you and says, "why did you tell me you just managed this home, that you couldn't trust me to know you owned it?" and you say what?
The relationship you had has been bruised. That's good fuel for animosity! You have to live with them too.
If I were the OP, I'd let them know I owned it, let the rules be known and give them the numbers to call for various emergencies. I'd let them know I was looking forward to being a neighbor.
The reason new landlords try to hide out is simply to avoid matters, you do that by setting down the rules and forming understandings in the beginning, that's what they avoid is the initial position of dominance as the owner, taking control and leadership in the relationship in some respects. Not bossy, not demanding, but setting a firm business relationship first and be friendly about it. There avoiding part of an owner's responsibility.
under the advice of my attorneys and just about everyone I know...I do all my business in the name of an LLC. It's a little difficult to explain to my tenants that "no, I'M not the owner, but I own/manage the company that owns this property." I just tell them I own it but on rent day they have to write checks to the LLC that owns it.
I tell everyone that I'm the owner. The people in the neighborhood usually are happy to know that a good owner just purchased that run-down property. I also let everyone know I will buy any house on the street! I've had neighbors call me the second a sign hits the front yard when something comes up for sale.
After more than 25 years dealing with all sorts of good people, rotten scoundrels & once in a blue moon psychopaths, all you need is one psycho to end the need to be "the owner", and you will eventually get one.
Starting out as you are, I would create a legal entity, either a corp or even a simple registered fictitious name like, ABC REALTY & get a PO box for it. This way YOU are NOT the owner and anyone who needs to know you can tell them to send all writing to the office via the PO box, or to you because you are the onsite manager working for the company (in your case).
Everyone, even the worst of the worst come to a showing like they are angels, salt of the earth and a lot of times they are, other times they are wolves in sheep's clothing. Other times psychopaths get in as boyfriends or adult kids coming back home, etc. You can't always screen for crazy either, they do slip by...
Any new property I buy has my business name on the deeds & leases, I'm just one of the few local people working for the company (when I am a one man band) and I show up in an 17 year old van with the company name on the doors, anything I sign has my first name and the first 3 letters of my last name & I have a seal with the company name to make it look official to seal anything I sign for the company. I've been to LL/TT court and by that time they are out and it doesn't matter if they find out I hold more cards than I let on. Even my old props, "my management company" handles all, leases are in the company name, they are subleasing to the tenants.
I've run into inquisitive tenants who wondered who actually owns the homes, I tell them it's corporate investor owned & gave them my story of woe, like they all have theirs, how it's just a part time job for me & money is tight yadda yadda... That makes the issue go away.
In the past I've had to call the cops after being threatened over the phone and even in person, by that point it's too late to count on the sanity in a riled up TT. When you have a wife, kids at home & your own safety to think about, believe me you wont want the honor of being the owner anymore.
I don't think it is much of an issue when you are small and have a four-plex or two. There does come a point when you start to grow that you will either need a property management company or staff that includes a property manager.
My property managers need to make real decisions and have them stand. Sometimes they need to evict for reasons not related to rent. Sometimes they need to deal with residents that are unrealistic about expectations.
The moment that people realize that I am the owner, I am swamped with requests and grievances. This undermines the ability of the manager to run the property.
Everyone thinks I am the maintenance supervisor. So nobody thinks that it is odd if I am in the office with the manager during tough situations or standing with the manager when knocking of a door to talk about issues.
Not every owner will be good at property management and making tough decisions. Some want to stay out of the limelight.
@George C. makes some great points about some of the crazies out there. They are there. Some people don't like to be told what to do or be evicted. People tend to take less action against you personally if they feel that there are powers that are not in your control.
My tenants all know I own the properties, they all know where I live (put rent under my front mat).
I tell every tenant that the property has a mortgage on it, and I have to live by certain rules set by the bank,,many times its easier to say the bank or insurance company won't allow "x" that they want to do (put an above ground pool in the backyard say" I've never had anyone question that
If you have assets, it only makes sense that you want to keep them and protect them. I know a guy who spent 25 years amassing his portfolio. One major lawsuit wiped him out, caused him multiple heart attacks and generally left him wondering what hit him.
Just like Steve, I represent myself the same way. At times, I have been "disregarded" because I wasn't known as the owner, it didn't bother me one bit....
Most of the tenants recognize me as a representative on the behalf of the owner. The Property Management company handles the rent and maintenance (sometimes I bring a guy of my own to save time & money) but they know I am in touch with whats going on.
I am able to try and relate to tenants without being known as the owner. Sometimes I have to make decisions that I couldn't do being known as the owner. It seems easier for them to talk to me, I can't explain it but its just better for larger properties.
Also when I show up, if I'm known as the owner, I hear all the complaints etc...I can always result to, "I'll convey the message to the owner and/or property manager"..... Makes my life much easier when I show up.
Smaller rentals, I think you can be known as the owner but for larger multi-families, not disclosing you are the owner is best for everyone.
@Mark Ostertag The thing that stands out to me is that you are looking at it from your perspective. Maybe a tenant wouldn't want to live next door to their landlord, and they should have the right to know that would be the case in order to make an informed decision.
I've always found that honesty really is the best policy.
If you are managing and living next store, I think it is clear that revealing you are owner is the best policy.
It does get a little more complicated when you are dealing with multiple properties, especially if someone else is managing. If you have an LLC, it might be possible to conceal your ownership. Otherwise it is pretty easy to look up property ownership in tax records.
I let them know up front. Why lie? Unless your goal is to encourage the tenant to do the same. I've found they are happy to be dealing with owner instead of a PM company that doesn't really care...
I'm really just trying to be conservative and safe seeing as how my family and I will be living next door. I realize that my screening process likely isn't going to be impenetrable (try as I might) and I don't want anyone to lash out at my family if there is some disagreement that I cannot resolve. Hope for the best, prepare for the worst...
I'll have to ponder this one further, lots to consider. Thanks again!
If a property is put into a trust, is it readily apparent who the beneficiary is? If you told tenants you are a part owner, and also a manage the property, would this take some of the heat off of making all decisions on the spot?
My thought process is that you can still say "I have to talk to the other owners," while maintaining an upfront relationship with the tenants. Just trying to gauge whether or not this would be a good idea. It seems like trying to remain anonymous as the owner while living there would be difficult to pull off over a long time, especially in the case where you meet current tenants while looking at properties.
Something else I have been unclear about is who do your tenants address the rent check to when you are trying to remain anonymous as the owner? Do you need to create an LLC or entity in order to open the bank account under a separate name or is it just in your own name and you maintain you are just the PM?
If you are representing yourself as only the PM you would need some other entity with a bank account. I think the details of the entity may vary from state to state. You could either have this entity as the owner or property management company.
Writing a check to the PM personally could raise red flags or at least suspicion from your tenants. I think it would be really hard to get your security deposit, 1st months rent paid this way.