Privacy for Landlords and Investors: Finding the Right Balance

“When I was your age, we actually had this thing called privacy!” Is privacy dead? Long live privacy? I’ll let the politicians and data pirates debate that point, but here’s what I do know: landlords and real estate investors are juicy targets for lawsuits, so they should care more about privacy than most people. That doesn’t mean you have to go full-weirdo with a fenced-in compound and a small arsenal of semi-legal assault weapons. Or live off the grid, grow a gnarly beard, or become a paranoid schizophrenic. I hear people say all the time “If you don’t have anything to hide then you don’t have anything to worry about. I don’t know why people get so worked up about privacy.” I call shenanigans on that. Landlords are entitled to whatever level of privacy they wish for themselves. They’re private citizens, not public figures. They’re small business owners, not CEOs of publicly-traded corporations. They shouldn’t have to worry about angry clients showing up at their front door at night. Or having 24/7 access to call their home phone or personal cell phone. If you don’t care about your privacy or asset protection, that’s your right. Just as it’s the next person’s right to protect themselves against lawsuits and tenants banging on their front door at all hours. Before this article escalates to a full-on rant, here are a few ideas to consider, to protect your privacy and anonymity as a landlord… to the extent that you can.  

Use a P.O. Box for All Landlord Mail

You don’t want your tenants knowing your home address. Why? Because they might show up, wielding a chainsaw or interrupting your fancy dinner party halfway through the cheese course.

“Brian you keep going on about tenants showing up. What gives?”

It’s happened to me. I’ve had tenants show up at my front door at 9:00 at night, while I was halfway through a bottle of wine with a new girlfriend. She was extremely disturbed by two rough-looking men showing up and interrupting our evening alone together; it’s amazing she stuck around long enough for me to marry her. Post office boxes are cheap and worth the extra layer of distance. You can get one for $5-10/month, and use it to receive mail from all kinds of other people you’d rather avoid giving your home address to (e.g. online supplement sellers, Jehovah’s Witnesses, meathead gym membership salesmen). Mailbox services can sign for your packages or certified mail as well, making your life easier. Some private mail services will even scan your mail, so you can log in online and select which envelopes you want forwarded, which ones you want opened and scanned electronically to you, and which ones can be shredded. I use one of these myself!  

Phone Forwarding & Anonymization

Just as you don’t want to give out your personal address, you also don’t want to give out your personal phone number. Use Google Voice or another inexpensive service to give you a second number that you can just set to forward to your mobile phone. No muss, no fuss, just an anonymous phone number that can still reach you… when you want it to. You can turn call forwarding on and off at will, and the number won’t appear in any public records or directories.  

Social Media Settings

Ideally your social media accounts should be set so that only your friends and followers can see your information and posts. But it’s also critical that you not Friend your tenants on your personal social media accounts (if you have a business account, that’s different). Do you really want your tenants seeing photos of you and your family relaxing on the beach? People already think of landlords as living large like the 1%-ers. The last thing you want to do is encourage your tenants to think of you that way by letting them see pictures from your latest vacation (or that fancy dinner party with the cheese course). Your personal life is none of your tenants’ business. If you must interact with your renters on social media, do so only from your official business page. Ideally though, you don’t want your tenants to even know you’re the landlord.

Never Introduce Yourself as the Landlord

Manage your own properties? Great! We encourage it, especially for newer landlords. We even teach a course all about automating, delegating, and eliminating the work of property management, to double your returns as a landlord and cut your labor in half. And one lesson we stress: never introduce yourself as the landlord. You are “the manager.” The tenants don’t need to know who the landlord is. It’s not their concern. You’re their point of contact – that’s all they need to know. Granted, the name of the owner will be on the online public records. Which is a great reason to own your properties under an entity name.  

Collect the Rent Electronically

Sure, you could give them your P.O. box address to send rent checks to… and go physically pick them up… and then physically deposit them… and then wait for them to clear… But that all sounds like a lot of work. And a lot of delay. Alternatively, you could collect rent electronically, and require in your lease agreement that rent is paid that way. They never know your banking details, all they know is your email address. There are free options available, and the rent deposits straight into your bank account. You can even have the rent deducted directly from the tenant’s paycheck.  

Own Your Properties Under a Legal Entity

This is one of those old questions that people have argued about since time immemorial, like “Is Spam actual meat?” and “Why was Wham so popular in the ‘80s?” This is fodder for several nerdy legal debates, but the gist is that some landlords create limited liability companies (LLCs) to hold title to their rental properties, with the hope that if a rental-related lawsuit comes along, the worst that can happen is the plaintiff takes the property and not attack all of the landlord’s personal assets. The other benefit is some degree of landlord anonymity, as covered above. In your lease agreement, you can list the LLC as the landlord, and yourself as the “manager.” Granted, in most states, the principal’s name is still a matter of public record along with the LLC. So, when an ambulance-chasing attorney looks up the LLC, they see your name right there, and just list you as a defendant in the lawsuit along with the LLC itself. With that said, it takes an extra step to look up. And LLCs are ideal for folding into investment property trusts. LLCs by themselves are not enough to protect you, which is why it’s important to sit down with an attorney to discuss how best to protect your assets. Which is why we’re partnered with one of the country’s leading authorities on asset protection for landlords, and investment property trusts.

Investment Property Trusts

The structure goes like this: you assign ownership of your largest assets to a trust, which has someone else as the beneficiary (usually your spouse or adult child). If a tenant or someone else sues you, they can’t take your assets, because they’re not “yours” per se, but rather belong to the trust. You don’t technically own them… but you still control them, and the money still comes to you. Trusts can get a little complex – that’s why we’re partnered with asset protection attorney Sayge Grubbs for our Snap Landlord students. He sits down one-on-one with all of our students for a free strategy session to discuss their assets, and how best to protect them. Honestly the one-on-one strategy session with Sayge Grubbs, Esq. is worth the price of our Snap Landlord course alone.  

Separate Bank Accounts

Ever hear the term “commingling of funds”? If you mix business with pleasure in your finances, you’re asking for trouble. On many, many different levels. First of all, your accounting will be a nightmare. It will take you six and a half times as long to do your taxes, and you’ll probably miss some potential deductions. (Or worse, you’ll take deductions you shouldn’t, and then you’ll have the joy of explaining yourself to several IRS agents as they audit the heck out of your sloppy books.) But if you commingle your funds, you lose any protection your LLC may have given you. You have to operate your LLC like a business, if you want the legal protections afforded to a business. Sure, the slimy personal injury lawyer who tries to sue you for your tenant’s “slip ‘n fall” will list you personally in the lawsuit. But if you demonstrate to the judge that your LLC has completely separate finances, it helps prove that the LLC really is its own entity, so the judge will (hopefully) allow you to remove your personal name as a defendant in the suit. Thus, only your LLC’s assets are at risk in the suit. And then there’s the minor detail that if you have your tenants write checks to you personally for the rent, it’s hard to maintain your anonymity, now isn’t it?  

The Benefits of Hiring a Property Manager

Property managers have pros and cons, like everything else in life. But one oft-overlooked benefit is that they provide another layer of distance between the landlord and tenant, and assume some legal liability for the way the property is managed. Property managers typically charge 8-10% of collected rents, and of course they do a lot of other work for you as well, from tenant screening to signing lease agreements to collecting rent and handling evictions. If hiring a property manager makes sense within your investing model and property finances, then go for it, but don’t hire them solely for privacy reasons. More privacy is better for landlords, but there are of course practical limits. If you can avoid giving tenants your name, real address and real phone number, you’re in good shape. Use aliases, nicknames, employees and agents when practical, but don’t get too “cute,” or you’ll spin yourself into a web you can’t easily escape (or remember, for that matter).♦   How do you protect your privacy? Had any bad encounters with renters or attorneys, that made you wish your privacy was better held?

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