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Being a landlord can be hard. Rentals in Detroit should be registered with the city and brought up to code, which can be expensive and slow. Homes need regular maintenance, snow needs to be shoveled, grass mowed.
Maintaining quality rental property in a city that doesn’t demand high rental prices means profit margins aren’t big.
But the biggest challenges come from dealing with people, not owning property. Plenty of households can end up in a situation where they’re late on rent or have trouble paying one month. Tenants have the right to push for repairs, and many do.
How landlords respond to these challenges shows their values. Should they fix up the home or let it fall into further disrepair? Should they offer some leniency for a tenant late on rent or move to evict?
Increasingly, landlords are outsourcing these decisions to property management companies. These companies will perform all the responsibilities of being a landlord for many properties, intended to maximize efficiency and profit. They’ll also answer the thorny moral questions with minimal involvement from the owner.
This efficiency comes at a cost. Renters can be treated like commodities, traded to benefit investors, treated harshly and threatened with eviction at the first infraction. I’ve witnessed this behavior in Detroit again and again while reporting.
Data from researchers analyzing activity at eviction court in Detroit has lent credence to this trend. It also might go into overdrive with the introduction of new technologies that streamline all aspects of property management.
‘A niche business opportunity’
The shift to a formalized, transactional rental market ramped up after the 2008 housing crisis allowed investors to scoop up thousands of distressed and foreclosed homes in Detroit for cheap. Many of these investors do not live locally, and own far more properties than they can handle without intermediaries.
Property management companies take care of all the essential functions of a landlord: They advertise rental listings, set up lease signings, collect rent, accept work orders and arrange for units to be repaired.
They also evict lots of people. According to data gathered by the Eviction Machine, an advocacy and research project that studies evictions in Detroit, four of the top five evictors in Detroit since the start of the pandemic are property management companies.
“It’s very clear from the data that the actors utilizing the court are larger management companies who work for many different owners and are more professionalized,” said Alexa Eisenberg, a postdoctoral research fellow at the University of Michigan and co-creator of the Eviction Machine.
Eisenberg speculates that the motives are largely profit-driven: Property management companies are hired to get the largest return for their clients. But Eisenberg also thinks the lack of a personal relationship between landlord and tenant contributes to their high eviction numbers. If a landlord knows their renter on a personal level, they may forgive the renter for being late on the rent, for example.
“It makes sense that investors would want to distance themselves from the process itself as well as the harm that they’re doing,” she said. “And that creates a niche business opportunity for management companies to come in and streamline and automate and turn the eviction process into something that is fast and relatively simple and creates returns for the property owners.”
Do you have an experience with a property management company or landlord tech that you’d like to share? Email aaron@outliermedia.org. Text DETROIT to 67485 to get help with other housing issues from Outlier reporters.
Landlord tech comes to Detroit
The depersonalized system of property management could go into overdrive with the introduction of “landlord tech” to the Detroit market.
Property management companies now largely accept work orders, payments, lease signings and other communications exclusively through websites or apps. Prospective tenants are screened via online forms and algorithms.
These technologies are convenient for both landlords and tenants. But they also create even more barriers between them.
“We’re seeing a lot of these tech products being sold to complement or at times even replace the function of property management,” said Erin McElroy, an assistant professor at the University of Texas at Austin and co-founder of the Anti-Eviction Mapping Project, a group documenting the effects of eviction in U.S. cities. “But they do other things that property management companies never did.”
McElroy has studied the effects of landlord tech on renters and found it’s been used in numerous discriminatory ways, particularly against Black and low-income residents. Most alarmingly, new surveillance technology that’s been widely implemented by landlords in New York City — where the stakes in real estate are astronomical — has been used for evictions. Cameras and facial recognition software are used to look for illegal activity, unauthorized subletting and other lease violations that can justify an eviction in rent-controlled apartments so the owners can raise the rent.
Rental surveillance tools don’t appear to be in widespread use in Detroit, but it becomes more likely as property values rise and renting becomes more profitable for landlords.
Detroit’s largest evictor (and largest management company)
The top evictor in Detroit is also the management company in charge of the most properties in the city: Mutual Property Management, based in Farmington. It’s filed 766 evictions since March 2020 — more than double the next highest evictor.
“Our ambition is to be the Quicken Loans of Detroit property management.”
– Mousa Ahmad, operations manager at Mutual Property Management
Mousa Ahmad, operations manager at Mutual Property Management, says the company’s high rate of evictions is largely a result of its size: It manages 3,100 units. He touted the company’s 94% collection rate as evidence that his company is not evicting on a widespread basis.
Ahmad said his company is sympathetic to tenants’ individual circumstances and says that all evictions are handled on a discretionary basis.
“If we have somebody who’s been in the house for three years and they fall behind, we’re not going to be trigger-happy and file an eviction,” Ahmad said. “But if we have somebody who is consistently not paying their rent and not taking our calls and not answering our door notices, then we’re going to represent the owner and try to turn the property over.”
Mutual Property Management does use many of the latest technologies for typical landlord tasks, including online screenings, app-based communications and online portals to fulfill work orders and pay rent. But Ahmad also said every tenant is provided a property manager who they can text or schedule a Zoom call through the online portal.
“We offer our occupants various ways of communicating with their assigned property manager,” he said.
Ahmad said his company hopes to be the first name someone thinks about when it comes to Detroit property management.
“Our ambition is to be the Quicken Loans of Detroit property management,” Ahmad said.
While this may interest some landlords, most renters in Detroit may think differently.