Investing in Real Estate | The Cities
In the last post, I talked about the negatives of buying investment properties through a “celebrity” spokesperson.
At the end of the post, I mentioned city certifications and rental licenses. That can be the bane of many a real estate investor and an expense that many people are not made aware of.
How crazy can some of the cities be?
An example can be found right here in our new main office city of Pontiac, Michigan. The city charges landlords $300.00 to register their single-family or duplex rental properties. They then charge a $100.00 inspection fee every 3 years or at a change of tenant. (Which means if your tenant only stays a year, you have to pay that fee again before the next tenant.)
If they do their inspection and have to come back because things needed to be repaired, they charge an additional $75.00 each time.
If you change property management companies (probably because they weren’t doing a good job), the city will charge you $150.00! They then charge you $25.00 to verify your tenant.
The city of Warren, Michigan makes it next to impossible to get your license. Their list of requirements for landlords will definitely make your home the best one on the street. The city will deem your roof needs to be replaced, or your driveway needs to be ripped out and a new one installed. All while the house next door falls down around the owner.
Heck, never mind the fact that if your Warren rental becomes vacant, they will tag the door if they notice it is vacant and make you get a new certificate of occupancy, as well as a new rental registration. Those two licenses don’t necessarily ask for the same requirements.
The strangest part of the cities rental property policies is that they punish someone for renting a house in more than one way. You will end up paying more in property taxes than an owner-occupied property and they gouge you for fees for the pleasure.
Does that mean you shouldn’t buy a rental property?
Not at all. What it means is that you need to go into it with eyes wide open and with the information necessary to make the best decision.
Next time we will talk a bit about leasing...