When you own a rental property in the Detroit metro area, it's critical to understand landlord and property management laws in Michigan. Whether you know the rules or not, you're responsible for everything required of a landlord and rental property manager.
Remember that laws can change: whether you're just getting started as a landlord or you consider yourself a veteran, know where to find current laws to stay up to date.
As property managers in Michigan, we hear frequent questions about specific elements of landlord-relevant laws. Here's a quick overview of a few critical things to know about property management in the Detroit metro area.
Do I Need a Real Estate Broker's License?
Since property management is a real estate activity under current Michigan real estate licensing laws, you need need a real estate broker's license to manage rental property.
Under the Michigan Public Act, if you are a landlord who directly manages your rental property, you must have a real estate broker's license.
What Are the Requirements for Real Estate Broker's License?
To apply for and pass the requirements for a real estate license in Michigan, you must meet the following criteria:
- Required experience: Brokers must have a minimum of three years of full-time experience in real estate.
- Required education: You must complete 90 clock hours of approved broker-level training.
- Required exam: To receive your license, you must pass the broker licensing examination.
- Reliability and trustworthiness: Real estate brokers must show evidence of good moral character. This is a critical trait when handling personal property and sensitive information for homeowners or tenants.
Is the License Really Worth It?
If you only have one rental property, the process of getting your real estate broker's license can seem overwhelming: it's a lot of work to become legally licensed to manage only one property.
However, if you own multiple properties in the Detroit metro, you might find it is worthwhile to go through the process of getting your broker's license. This allows you to fully and legally manage multiple properties. Managing multiple properties comes with its own set of hassles: it's time-consuming, and it can get expensive to be a hands-on property manager for more than one rental property.
Don't let the requirements for your real estate broker's license discourage you from owning rental property in Michigan: whether you're in the state of Michigan or out of state, investment properties are a wonderful way to earn passive income. There is an exception—and a better solution—to the license requirement.
Navigating the Licensing Laws in Michigan
While it's essential to follow the laws to keep yourself out of trouble (and to provide a legal living situation for your tenants), there is an exception to the requirement for landlords to have a broker's license.
You can own and provide professional management for your rental properties in Michigan—without a broker's license—and stay within the law.
Depending on the services you offer for your properties as the landlord, you can potentially avoid the requirement to become a licensed real estate broker. Regarding the brokerage license requirement, Michigan defines property management as:
the leasing or renting, or the offering to lease or rent, of real property of others for a fee, commission, compensation, or other valuable consideration pursuant to a property management employment contract.
If the services you "personally" provide for your properties and to your tenants do not include leasing or renting services, you are not required to get your broker's license.
If you are not providing the leasing services for your rental property, someone else must bear the mantle. One simple way to avoid the time investment in acquiring your real estate broker's license (while following the law) is to hire a property manager for your rental property.
Property management companies provide leasing, maintenance, and rent collection services for rental property; because they provide these services, property managers must have a license as a real estate broker.
Your property manager handles the direct management of your rental property for you: with a property manager in place, you don't need a broker's license. With that in mind, when choosing a property management company, be sure they have a license within Michigan laws.
Property Managers Help You Follow the Law
There are a lot of laws to be aware of when it comes to landlord requirements in Michigan. Before you get overwhelmed at the idea of learning them all and staying up to date with any changes, let a property management company help!
You don't have to worry about licenses when you work with JMZ Management. We are fully licensed, and we work hard to stay current with all laws regarding the management of your Michigan property. You own the home—relax, and let us make managing your investment our business! Not sure where to get started? Reach out to us for a FREE rental analysis of your investment property, and see what you've been missing!