To disclose or not to disclose??

25 Replies

Hi BIgger Pockets,

Just wanted to get a little insight as to wether to disclose or not to disclose, who owns our properties to the tenants that are calling us to Rent a property from us. We want to hear what the pros and cons are for both. My husband does not want to disclose we own them, and I do. Any thoughts?

Hi Jennifer,

I was in the "Don't Disclose" camp but wasn't comfortable lying to people, so if they ask I tell them we own the house.  This usually doesn't come up over the phone, but when they actually view the apartment, and only about 50% of the time.  I believe all my tenants are aware that we own their house though.  I am not sure how they would feel if I led them to believe I didn't own a property and they found out otherwise later- kind of destroys any trust they had for me.

I am in a unique situation now, I have people calling about apartments that are not currently leased (I have taken the ads down but still get calls) and am under contract on two more purchases.  I have at least 2 vacancies coming up and can't show the apartments yet since we don't own them.  So I am just telling people that I can put them on the wait list to be notified, I give them pricing and even addresses, but tell them we can't show yet and will be able to soon- once they are under contract.  If they drive by and see the For Sale signs they will think we are buying it or will be representing the buyer, I am ok with that.

Kelly

What reason do they have to ask?  What could you possibly gain from disclosing this information?

Pros-  Nothing comes to mind (you ARE managing the property FOR the owners right ;) ) Being the Property Manager often empowers you with good cop powers of mediation when problems arise. The tenant will tell the property manager things that they wouldn't necessarily tell the owner. Unless the property is owned by a LLC or Land Trust you will be identified as the owners through the tax assessor anyway if they really look into it.

Cons- You are negotiating from a position of weakness if you lack the firmness to say "no" and enforce the lease.  Heavy, heart string pulling sob stories will be laid on your emotions if they feel you have the power to dismiss their obligations (like paying rent).  

Was your husband stationed at Ft Carson circa 2000? 

Thanks@Don Griffith &@Kelly N.

You guys really helped support both our stances on this topic! Kelly your comment was very nice and well written. That is exactly how I felt. Don, your comment made us laugh. My husband almost said exactly what you said down to the last sentence. He is not in the military so he wasn't at Ft. Carson. I think we are going to combine both stances and also info that you guys have given us so that we are not jeopardizing our company and making ourselves prey to sue happy renters, but so that we are still being honest to renters that blatanatly the question. 

Wouldn't it be public knowledge with a little digging?

@Helen Ingham Sometimes when you put it into an LLC or trust it is more difficult to identify the property owner. My husbands main concern is putting our name out there for liability reasons.

Originally posted by @Helen Ingham :

Wouldn't it be public knowledge with a little digging?

At least where I live, it would be a 30 second search of the property's address to find my full name, the date I bought the house, and how much I bought it for. However, I did not buy it under an LLC.

If you had a tenant apply who provided you the pay stubs you required, and you later found out that the tenant was self-employed with irregular income, and the pay stubs were from his personally-owned LLC, would that bother you?

It shouldn't be a problem, right? Don says "(you ARE managing the property FOR the owners right ;) )" Well, your tenant applicant IS working FOR abc, LLC., right?

Or, if you think that sort of hair-splitting dishonesty IS a problem when the tenant does it, don't do the same thing yourself.

The "good cop/bad cop" thing is silliness.  Be a grown-up and own your decisions.

You are about to enter into an important, mutually-beneficial business relationship.  Don't start it off by lying.

@Richard C.

I think my husbands main concern is he is wondering why some potential tenants ask the question right off the bat. They will ask, " Do you own this property, or do you just manage it?" He really just wonders do they ask it to see if we are more or less leniant? Do they ask to try to figure out if we will do a background check, because they have something to hide? It seems as if that is a specific question with a specific agenda so we just ponder it. He also listened to a podcast and one of the speakers said you should never "own" the asset just "manage" the asset. Less liability. So he's stuck on that.

The "less liability" thing is nonsense. I don't know who said that in a podcast, but they are full of it.

Own it.  It's yours, you want to be big adult landlords.  Own it.  Don't worry about that good cop bad cop nonsense.  You're adults, you're mature, you're smart, and you're no pushovers.  When tenants make mistakes, you can tell them where they went wrong.  When applicants don't measure up, you can tell them "no, you can't rent the property."

It's not that hard.

And I'm not sure what liability has to do with anything.  If you present the image that you're property managers for an organization that owns dozens of properties, how does that make the "landlord" less of a target than you and hubby who own two or three properties?

Don't worry about it.  It's just one more of those "should we really do this?" thoughts that try to keep you from your goal.

Let's see ... Are the property records for the property in question visible online?  If so, it's not hard for somebody to look it up. So is this applicant trying to check the landlord's level of honesty, because they have already researched who the owner is?

@Randy E. & @Steve Babiak

No, they are not under an LLC or Trust yet, so they are able to look it up, and that is my husbands biggest concern. We own 17 properties / Doors and they are almost all paid off. So therefore we have a lot of equity. I think it will ease his mind to find a realty lawyer who can transfer them into an LLC or Trust.

But you guys are right the best way is to be honest and to let them know they are part of our portfolio. 

  It should not matter to the person renting who owns the property. That is an off-putting question for someone to ask. The terms of the lease, rent, and condition of the place they want to move into is what concerns them.

  how many properties you have, or if you own it, is your business not theirs. That question would make me  worried about going ahead with a lease.

  What real reason for that question is there? Why would they care what kind of a person the owner is? There is more then enough laws protecting renters, for them to not to worry about such details. there is an uncomfortable angle with that question.

Whenever I am asked that question, the inevitable shoe to drop involves some sort of credit issue, usually pretty egregious.

I think prospective tenants with bad credit think that dealing with the owner will make it easier for them to get the place. They don't understand that the owner sets the screening criteria, and as the manager of the property, I am bound by that.

@Fred Heller

Yeah that's what we thought as well that they were probably hiding something. What process do you take for accepting out of state tenants? 

We have a PM company for our units, but my husband does all the maintenance/repairs.  The main reason we don't disclose to our tenants is that they are much more relaxed around the handyman, so he gets a really good idea about how well they are taking care of our place.  He also finds out how happy they are in the place, without it being a bitc# session to the owner.

Originally posted by @Jennifer Griffin :

@Randy E. & @Steve Babiak

No, they are not under an LLC or Trust yet, so they are able to look it up, and that is my husbands biggest concern. We own 17 properties / Doors and they are almost all paid off. So therefore we have a lot of equity. I think it will ease his mind to find a realty lawyer who can transfer them into an LLC or Trust.

But you guys are right the best way is to be honest and to let them know they are part of our portfolio. 

 Jennifer - I have some experience with this. My opinion is that many potential tenants want to know if you own the property because they know that they have something in their history that my preclude them from being able to rent through a PM company with more stringent rules.

I has it happened to me over and over again. They think that if they meet with the owner, and make a good impression, you will be willing to overlook whatever the issue is. I have had everything from REALLY bad credit to no citizenship/documentation to sex offender......

It really isn't any of their concern in my opinion. Your husband is on the right track IMO.

Account Closed

You guys are exactly right. All of the applicants and potential renters that have asked us who owns it, have not panned out. After we tell them what criteria we look at, the truth comes pouring out. I just encountered this exact situation this evening. A gentleman called me and the very first question he asked me was if we were private owners. I told him we owned it. He says oh ok great so it's just you two that own it. He asked how to apply and I told him we check criminal background and prior rental history. About 10 minutes later he texted me saying he was a registered sex offender. 

Jennifer depending on the prospective tenant it really should not matter. We do not disclose to tenants we are the owners, but in the state of Florida you can go online and find that information very easily. As its mentioned before, its mainly tenants who feel if its not a big PM company then they have an in with the owner. My husband also does most of our repairs so he gets to be comfortable with tenants and speak with them while I am the business person who don't want to know the details just that you pay my rent and keep may homes per the terms of the lease. We don't like for tenants to know we are the owners of our homes as we also live in the community where our homes are located. 

Originally posted by @Jennifer Griffin :

Account Closed

You guys are exactly right. All of the applicants and potential renters that have asked us who owns it, have not panned out. After we tell them what criteria we look at, the truth comes pouring out. I just encountered this exact situation this evening. A gentleman called me and the very first question he asked me was if we were private owners. I told him we owned it. He says oh ok great so it's just you two that own it. He asked how to apply and I told him we check criminal background and prior rental history. About 10 minutes later he texted me saying he was a registered sex offender. 

Eww!  There is just something creepy about getting info like that via text.  I would probably have to wash my hands and sanitize the phone.

As a potential renter and after dealing with a few management companies who 

(a) won't answer the phone

(b) if they do answer, the actual agent does not get back with me

(c) can be really rude

(d) or better yet, just drop the ball when I ask to set up a meeting so I can give them the deposit and application. 

Are you really working for the owner of the house or your bottom line? Are you managing too many rentals that you can't take care of all of them properly? The phone driving you crazy because you don't want to hire somebody to answer it? 

There are good reasons for asking if you own the house.  And really, don't lie. If you want a long term mutually respectful relationship with a tenant, lying about whether you own the house or not isn't going to help.

I know there are good companies out there,  I was able to speak to an agent yesterday who did take time for my questions and was very pleasant. But seriously folks, we don't all have time to sift through good and bad companies. It might just be easier to deal with the owner who really cares about his or her property. 

@Lori Sturgeon

Yeah you have some valid points. In our case, we are always talking to our potential tenants, and always answer their calls. My husband owns all of the properties and they are all in his name entirely.  I just manage them. So I am not lying, I do not own them. The guy I spoke about previously who told me he was a registered sex offender ended up calling me at 1:00 o'clock in the morning asking for Tabitha. Kinda strange considering his background. So in many instances they actually do inquire about ownership to see how much leeway they might get with a troubled past, a poor rental history, or any other issue. 

That is why it makes sense to do background checks, et al, I guess the crazies come with the profession. You are getting a lot of good advice here. I would just add going LLC, getting a separate phone for your business that you only answer during business hours, and a 24 hour emergency number just for your tenants.

Free eBook from BiggerPockets!

Ultimate Beginner's Guide Book Cover

Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!

  • Actionable advice for getting started,
  • Discover the 10 Most Lucrative Real Estate Niches,
  • Learn how to get started with or without money,
  • Explore Real-Life Strategies for Building Wealth,
  • And a LOT more.

Lock We hate spam just as much as you