There’s a certain pride of ownership; however, when a new prospective tenant asks that question – “Are You The Owner?” – I always have to catch myself, before saying “Yes, I am!” – Instead, the best answer is “No, I’m the Property Manager.” - Or even better, “No, I work for the Property Management Company”. That answer will position you with the greatest freedom and leverage to handle matters going forward.
Welcome to Episode #27 - Are You The Owner? No, I’m The Property Manager.
Now I always answered this question incorrectly in the past. Hell, I was proud to be the owner (as long as I've wanted to be a Landlord), so when asked, I’d quickly say – Yes! However, I came to realize a few critical problems with that answer.
First, there are many prospective tenants who are actively seeking an independent Landlord who owns and manages their own properties. Ideally, they’d like for this to be your only property, and even better if they are your first ever tenant. They want an inexperienced Landlord who does not know how to properly screen tenants. They want someone who will fail to run a credit check – revealing their sub-500 credit score and credit report with a ton of collections, liens and judgements. They want you to fail to run a background check – showing their long and recent criminal history and prior evictions. They might be on the sex offenders registry. Or they’re likely going through an eviction right now! They don’t want someone who will check their references, contact prior landlords, verify their employment and income, and on.
Experienced Landlords are far more likely to do all these things – and more! So, it's often the case that when you're showing a home yourself, a less than ideal prospective tenant may ask if you’re the owner just to see if you might be a good target for exploitation of your inexperience. You’re a fly headed right towards the spider’s web. The next question is going to be – “Do you have any other homes for rent?” – not because they are not interested in the home you are showing them now, but again, to see how experienced you are - so their hoping the answer will be no.
I can certainly recall some prospective tenants who asked me those questions… “Are you the owner? Do you have any other homes for rent?” – Who were initially very interested in renting the home when I answered – “YES” to the first question; but who quickly lost interest upon hearing my answer also of “YES” to the second question and then being subjected to my application process, which makes it clear that I’m anything but inexperienced. Upon seeing that I would not be an easy mark and all their baggage and skeletons would be revealed, serving only to cost them time and an application fee – they went elsewhere searching for someone else to take advantage of (maybe You!) – because it won’t be me, if I can help it.
But not everyone asking that question is out to get you. It can be a totally innocent question – but still one you should treat with all seriousness and avoid the urge to claim the Landlord title as you do your Captain Morgan stance. Despite the name of this Podcast being [… and Landlord!] – it's rare that you hear anything good said about Landlords. It’s a largely thankless job and title that comes with hundreds of years of stigma and current news stories seemingly daily that cast the entire profession in a negative light - so don't claim it where you don't have to.
When asked, I'm the Property Manager (not the Landlord and certainly not the owner). Question... "Are You The Owner?" - Answer... "No, I’m The Property Manager". But even thought I know this is the best answer to that question, it's still hard for me, as I'm very proud to be the owner. Hell, not to pat myself on the back, but I own well over a dozen properties when most people don't even own one! That's an accomplishment and something to be proud of. My mother-in-law almost tiers up with pride when she talks about her daughter's husband. She's proud of me and the things I've accomplished, as is my own mother, father, brother, sisters and lots of other family members and friends. So whenever I'm asked that question, it's hard not to let that wave of pride from multiple sources flow right into a big "YES! I am the owner"... Striking my Captain Morgan stance. But, it's said "Pride goeth before the fall" - so I keep it in check, and just say no.
To do otherwise will likely just cause problems later, that could have been avoided as the Property Manager versus being known to be the Landlord or Owner. And It may also prevent you from falling victim to a Professional Tenant looking for an inexperienced owner to exploit.
Now, is it a lie to say that you're not the owner (instead the Property Manager) when you really are the owner? Well first, how I answer what I consider to be a "none of your damn business" question anyway - is up to me; however, I do feel the need to be honest in everything I say. Always tell the truth and you never have to remember what you said to anyone. For me, honesty is high on the list of things I value in others and especially in myself.
Of my Rental Properties, I currently own 3 in my personal name, along with my wife. They were the first 3 I bought, before I started using Hard Money Lenders and Commercial Loans on more distressed properties that needed a lot of rehab to be rental ready - and Traditional Lenders typically won't fund them, or its hard to get a 203K Rehab Loan from one.
The tenants in these 3 rentals have been there for years. My first tenant from 2015 is still with me, and she's been great. My second tenants are also still with me, and they've been great. The third property has had one tenant turn-over, but they were also great, as has been the tenants who replaced them. I've had great success with my tenant selection, only having problems with 2 of my former Section 8 tenants, and as I've said before about them - those two tenants are to be thanked, because they made me a much better Landlord (I mean Property Manager), and most of my policies, procedures and lease provisions came as result of what I experienced with those two.
So those who have been with me for awhile, or even more recently before I established this habit of identifying myself as the Property Manager - they know that I'm the owner. And if my name is on title for the property, it's easy enough to learn - so I'd not likely say otherwise in those cases, to avoid the appearance of lying. Thankfully, it hasn't come up for those, as like I said, the tenants have been there for years.
But for my other properties that are not owned in my name directly, but instead owned by my entity - technically, I'm not the owner. Blue Chariot Properties, LLC is the owner. Or in the case of some, one of several other entities (that I'll not name here for asset protection reasons) is the owner, and those sub-entities are then owned themselves by Blue Chariot Properties, LLC. I'm just a member of the owning entity, and my ownership percentage of that entity (while likely 100%) is my business - between me, my CPA and the IRS.
A famous quote on that... “The secret to success is to own nothing, but control everything.” - Nelson Rockefeller
So for best asset protection and to give myself the greatest benefits as a Landlord, I seek to control the properties and be known as the Property Manager - while NOT being the owner. Because I'm NOT the owner - I'm the Property Manager. Blue Chariot Properties, LLC is the owner. And Blue Chariot Properties, LLC has hired Blue Chariot Management, LLC - who then employs me as the Property Manager. I even get a paycheck.
And hey - if you are local to the Raleigh / Durham (Triangle) area of North Carolina, you can also have me as the Property Manager for your Rental Properties - by hiring Blue Chariot Management. The website is BlueChariot.Management.
And especially, now that I'm managing properties under Blue Chariot Management on behalf of other Landlords - prospective Tenants have no idea which are mine directly and which I'm managing on behalf of someone else anyway. Because I treat them all exactly the same.
More than anything else, claiming Property Manager status, instead of being the owner, gives you the greatest Freedom of Speech. It changes you from being perceived as the mean / greedy Landlord who keeps charging late fees; and who charges for fixing all the things the tenant keeps breaking - to the Property Manager who must just follow the rules of the lease between Owner and Tenant (as an impartial third party); also along with following the contract between the Owner and Property Manager. Your hands are tied, and you're just doing your job.
You're not in a position to make exceptions or to let things slide. And it's not you being mean or greedy, but your legal responsibility to follow the lease and contract.
What if you knew that it was the law that every time the police radar showed a speed more than 5 miles over the limit, the police officer was required to pull you over and issue a ticket every time. In that case, the moment you saw the lights, you'd already know the outcome. You wouldn't be happy, but you're less likely to be mad at the officer who was just doing his or her job and had no leeway in the matter.
But in reality, when you get a ticket now, you are pissed and you are mad at one person - the officer. Because you know they didn't have to give you a ticket. Hell, they didn't even have to pull you over in the first place! They had the authority and option of letting it go or just giving you a warning. But they were mean and greedy. You go off thinking, they probably get a cut of each ticket they write or get a Dunkin' Donuts gift certificate when they hit their quota.
When you are known to be the person in authority and the handling of a matter is at your sole discretion - it will always cause anger and resentment if you handle the matter otherwise than someone affected by your handling would have preferred. So don't claim the authority. Place the authority elsewhere... "No, I'm not the Owner. I'm the Property Manager."
Now, with his said and fully understood by all involved (even referenced in the lease), you don't have to and should not make comments like "Let me check with the owner" - when at some level, you are the owner. That gets into being needlessly deceptive. Once you've established your roll as the Property Manager, act in that role, and speak with the full authority of that role against the lease. It's not Tenant to Property Manager to Owner. It's Tenant to Property Manager to Lease.
In other words, its not let me check with the owner on that matter to see what the owner says... It's what does the lease say.
Once you've established yourself as the Property Manager, your role is to enforce the lease in legal manner on behalf of the owner. So your communication with the Tenant should not reference the owner, it should reference the lease. The owner and the tenant have nothing to do with each other, beyond their mutual responsibilities towards the lease. So don't speak on behalf of the owner (using false statements to sound as if you are checking with someone else / some third party), speak directly on behalf of the lease.
And if you think that's awkward, remember that you shouldn't be speaking on any matters of the lease in person or by phone anyway. EVERYTHING should be done in writing. We use an email bases ticketing system for all communication.
And if a tenant requests something outside of the bounds of the lease, like new carpet in only their second year - that would logically require owner approval. You don't say "I'll have to check with the owner to approve that request". Instead, you say (in email) something like "the rent for each property under management is based upon a specific annual budget for maintenance, repairs and upgrades - so if we exceed that budget during the lease term, it will result in a rent increase upon lease renewal. Having to replace the carpet early could also incur an immediate charge to you per the lease if it has failed to reach its typical useful life due to actions, neglect or abuse on your part." - and for me, all of this would be spelled out in the lease.
My lease even says how long things like carpet and paint should last - so it's not a matter to be determined by the owner... It's all in the lease. And I fully establish myself as the Property Manager in the lease. Blue Chariot Properties, LLC (or related sub-entity on title) is indicated in the lease to be the Owner; while Blue Chariot Management, LLC is indicated to the the Property Management Firm; and good ole Jonathan Taylor Smith is just the Property Manager or Agent of Blue Chariot.
And even in the case of properties I manage for others, it's the same setup, with them or their entity referenced as owner. And even when I do have to check with that owner on how to handle something, my response back to the tenant on that matter references the lease - not the owner.
So don't be like I was in the beginning - so proud of myself that I couldn't wait to claim owner status. Even if the question "Are you the owner?" isn't a setup for the spider's web of a Professional Tenant, failing to answer "NO, I'm the Property Manager." - will still put you in the position of being the mean / greedy Landlord. Step out of that darkness into the light of being the Property Manager. Your tenant relations will be sooo much better in the process.
And instead of falsely saying "Let me check with the owner". You can say "I have to follow the lease". Because, you know... Failing to follow the lease and thereby treating one tenant differently than another can be called a "Fair Housing Violation" - and that can land you in both court and jail. It's sooo much easier being the Property Manager who's just following the lease; than the perceived mean / greedy owner.
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“The secret to success is to own nothing, but control everything.” - Nelson Rockefeller
So last week in Episode #26, I spoke on the need of Landlords to treat this profession seriously and run their Rental Properties like a business. Well, this week I speak on why you should avoid the title of "Landlord" and being known as the property (business) owner entirely - own nothing, but control everything.
But for me, its a matter of pride that I own over a dozen Rental Properties - so my default answer to the question of "Are you the owner" has always been to quickly and proudly say "YES!" - and claim full Landlord status. Why shouldn't I?
Well there are reasons you shouldn't. A better answer to that question may be "No, I'm the Property Manager". And so in this episode of the [... and Landlord!] Podcast, I go into details as to why being known to be the owner, is not likely to your benefit. Its better to be known as the Property Manager than Landlord or owner.
Because the owner is a mean and greedy SOB in the eyes of many; whereas the Property Manager is just a hard working employee (just like the Tenant) - who must unfortunately adhere to the lease in all dealings.
The Property Manager would love to waive the late fee for the Tenant, but they must adhere to the lease and treat all Tenants the same. As Property Manager, you'd love to let the Tenant out of their lease early, but you must adhere to the full term of the lease. You have no problem with allowing the Tenant's boy/girl friend move in, but as the Property Manager, you must adhere to the lease's stated authorized occupants.
When you're the owner, you're the bad guy. But when you're the Property Manager, the lease becomes the bad guy. This may sound like semantics, but it gives you tremendous freedom from negative perceptions from Tenants when you can point to the lease (that they agreed to and signed), and explain that you must adhere to the lease in everything - no exceptions. And when you are not seen as the owner (who is thought to be able to make exceptions at will) - life as the Property Manager becomes smooth in comparison.
So in this episode of the... and Landlord Podcast, I talk about my initial desire to claim full Landlord status, proudly being known to be the owner. But how I've since come to realize that this is not necessarily in my best interest. And so upon coming to this realization, when now asked by a prospective Tenant, "Are you the owner?" - my response is now always, "No, I'm the Property Manager." - listen to this episode to learn why you might want to make that your answer to this question as well.