Is it OK to Visit My Rental Properties if I Have a Property Manager? I’m Sort of Curious To See Them…

 

Answer: Yes!  We live in the United State of America.  If you’re the owner, you are always welcome to visit your properties.  This right is usually written into the lease as well. 

 

This is a very short answer (and makes for a very short blog)…

 

For a longer discussion… the question could be whether it is advantageous for owners to visit their properties if they have a property management company managing them already.

 

Let’s look at 3 scenarios of an owner rental home visit.  Keep in mind (especially after COVID), at least one of the tenants will probably be home at some point during the home inspection:

 

Scenario #1 (Happy Time):

Owner knocks on the door.  Tenant enthusiastically answers and there is a warm greeting.  They tour the home together. 

Owner: “My, you keep my home up beautifully!  How did you get the cracks so clean between the countertop and backsplash? 

Tenant: “Oh, it was a trick my mother taught me- gently scrub a paste of baking soda mixed with lemon juice in with a toothbrush.”

Owner: “Splendid!  And thank you for always paying early!”

Tenant: “You’re welcome!  Have you met my 4-year old daughter, Ivory?  Honey, come say ‘hi’ to our landlord!” 

Owner: “She’s so cute!”

Tenant: “Thank you!  Can I get your number if I have an emergency and can’t get in touch with the management company?  They’re sort of slow sometimes.” 

Owner: “Sure!”

 

Upside: Owner has firsthand knowledge of the property and a budding friendship?

Downside: It might be necessary to evict the tenant and her young daughter.  A personal connection makes this tougher.  The tenant now has an influential third-party to go to when the property manager’s answers are not to the tenant’s liking (the old “Go to Mom when Dad says ‘no’” trick).

 

Scenario #2 (Unhappy Time):

Owner knocks on the door- no one answers.  Owner keys into the property.  Family is eating dinner.  Tenant has been late on the rent.  The home is really messy and not maintained.  Owner speaks to the tenant.  Tenant had a tough day at work and complains about repair issues with the house.  An unhappy conversation ensues.  No one is happy when the owner leaves.

 

Upside: Owner has firsthand knowledge of the property

Downside: The relationship with the tenant is potentially complicated.  There are negative feelings on both sides that may lead to sub-optimal choices that erode the relationship further.

 

Scenario #3: (Normal Time):

Owner knocks on the door- no one answers.  Owner keys in and no one is home.  Owner walks through, inspects all the rooms, and takes a few notes.  Owner is preparing to leave and the tenant arrives home with her daughter from basketball practice.  Owner and tenant cordially greet each other and then each continue along with what they were doing.  Owner leaves. 

 

Upside: Owner has firsthand knowledge of the property

Downside: None

 

As a property manager, our goal is to maximize our owner client’s investment; a large part of that is creating a drama-less relationship where rent is paid, the home is maintained, and needed repairs are done.  We want to create an environment where tenants want to extend their leases and have no landlord-related reasons on why they wouldn’t.  They are free to enjoy their rental home and live their lives.  If at some point we need to file for eviction, the decision is based more on a business case as opposed to any emotion either way.

 

It's a boringly successful relationship for all parties.  Ran correctly, it’s a beautifully benign operation.

 

And it is entirely possible that an owner visit would not affect the tenant relationship at all!

 

But… going back to whether owner property visits are actually advantageous, we still don’t recommend them as the safest move seems to let things be.  It doesn’t seem wise to add any potential disruption of this boring relationship when there is no tangible upside. 

 

Owners are always welcome to visit their rental properties for any reason, including curiosity!  There just seems little to be gained and much to be potentially lost.  Why take an unnecessary risk? 

 

Happy Landlording!

McAlister’s Deli “Service Fee” Strategy: Applicable to Rental Homes?

 

The (FTC) complaint alleges that (a large property management company) advertised monthly rental rates that failed to include mandatory junk fees that could total more than $1,700 yearly… These undisclosed fees ranged from “services” such as “smart home” technology and “utility management,” to air filter delivery and internet packages. Renters could not opt out of paying these fees.

(www.FTC.gov)

 

Some friends and I meet for a Bible study on Monday nights at the local McAlister’s Deli.  After buying my sandwich one night, I started to peruse my receipt after paying.  I was trying to figure out why my regular sandwich cost so much and looked at the bottom of the receipt.  I saw the tax amount (can’t dodge that!), but above it was an itemized “Service Fee”.  And here I thought I had just picked the sandwich up at the counter…

 

I clicked on an icon next to the aforementioned “Service Fee” and it offered a fuller explanation.  “This fee is used to help pay for the restaurant’s app and website.”  Surely, companies can’t charge for that as a mandatory fee.

 

Wait- or can they?

 

I always thought companies were only allowed to upcharge under the condition that they added more value.  If McAlister’s allowed me to add another slice of cheese to my sandwich, I’m fine with them charging me more.  If I wanted a bigger drink than what is in their value meal, I’d expect to pay more.  But ordering on their app or website?  Isn’t maintaining the on-line ordering portals the cost of doing business in today’s environment?  And isn’t it cheaper and easier for them if I use them?

 

The line on chargeable value has gotten blurred in rental real estate as well.  As property management companies have piqued Wall Street’s interest of late, maximizing revenue is being stressed and companies are getting really “creative”.  Now I’m all for “revenue enhancement” as making more money is generally good.  However, fees should be generated by providing tenants voluntary options that could make their lives easier or give them greater flexibility; mandatory fees for unwanted or unwarranted services could easily cross a line (see the FTC blurb above detailing the “value-added services” that incurred a $48M fine).

 

We are starting to have tenants ask us things like, “Is the rent really $1,800/month or are there hidden fees that are not mentioned?”.  Being that these questions are being asked at all means this practice is becoming prevalent; legislation and more enforcement is probably on the horizon.

 

Landlords and property managers all aim to maximize revenue for their real estate investments and rightly so.  However, we need to be cautious and make sure a fair value proposition is made.   If any fees are questionable and wouldn’t withstand scrutiny, they should be scrapped.  Landlords should be on notice and make sure general business practices on add-on fees stay on the right side of the law.  “Service Fees” for common technology usage may only work in the food industry.

 

Happy Landlording!