I stumbled on a Facebook post this morning in one of the Philadelphia real estate investing groups. Someone was asking a simple question: are there any property management companies in Philadelphia they could use? And the responses are what got me concerned enough to record this.
A bunch of people jumped in the comments saying, “Hey, I’ll do it.” And my guess is most of them have absolutely no idea that what they’re offering to do is illegal.
Property Management Is a Licensed Activity in Pennsylvania
Here’s the thing a lot of folks don’t realize: property management isn’t just something a handy contractor or a friend with some rentals can legally do for you in exchange for a fee. In Pennsylvania, it’s a licensed activity. Same category as practicing law or practicing medicine.
Think about it this way. I’m not an attorney, so don’t take my word as legal advice, but I can give a friend legal advice all day long. What I cannot do is take money for it. The second compensation enters the picture, it becomes a licensed activity, and the repercussions for doing it without a license are considerable.
Same with medical advice. I can tell my buddy I’m having great luck with some vitamin. But the moment I say, “Give me $5 and I’ll tell you which vitamins to take,” I’ve crossed a line.
Property management works exactly the same way. You can help a friend manage their rental. You can give them advice. You just can’t take money for it unless you’re licensed to do so.
What Happens to the Rental Property Owner?
People naturally think, “Well, if it’s illegal, that’s the unlicensed manager’s problem, not mine.” That’s the wrong way to look at it.
There are actual governmental offices whose entire job is to track down unlicensed operators and shut them down. If the state steps in and takes disciplinary action against the unlicensed person managing your property, that doesn’t just disappear. As the rental property owner, you can end up held accountable too.
And honestly, that’s just the regulatory risk. The bigger day-to-day problem is what an unlicensed operator doesn’t have:
- They don’t have the experience handling Philadelphia’s specific landlord-tenant laws
- They don’t have the mechanisms, systems, and software in place
- They don’t have proper escrow accounts for security deposits
- They don’t carry the right insurance
- They simply can’t compete with what an established, licensed property management company provides
And Philadelphia has a lot of laws that have to be followed when dealing with tenants. Between the Rental Suitability Certificate, the Certificate of Rental Suitability, lead disclosures, the eviction diversion program, fair housing rules — you don’t want somebody learning on the job with your property. One mistake can cost you thousands.
How to Actually Vet a Property Management Company
So if you can’t just trust the random guy in the Facebook comments, how should you go about finding one?
1. Confirm They’re Licensed
This is the bare minimum. In Pennsylvania, a property manager needs to either be a licensed real estate broker or work under one. You can verify a license through the Pennsylvania Department of State website. If they can’t give you a straight answer about their license, that’s your answer.
2. Read Their Google Reviews — All of Them
This is the same vetting process I use at my own property management company when we’re approving contractors to send to our owners’ properties. I’ll actually sit down and read through all of a contractor’s Google reviews before we add them to our list. Do the same with any property manager you’re considering. Don’t just look at the star rating. Read what people are actually saying, both good and bad, and pay attention to how the company responds to criticism.
3. Ask About Their Systems
How do they handle maintenance requests? How do they screen tenants? How do they handle rent collection and late payments? A real property management company has answers for all of this because they do it every day.
The Bottom Line
I’m not bringing this up because I feel threatened by competition or because I want this particular person’s business — sounds like they’re in an area we probably don’t even serve. My concern is that rental property owners are out there making serious mistakes because somebody on Facebook said, “I’ll do it, just pay me.”
The person offering probably doesn’t know they’re breaking the law. And that’s even more disconcerting, because if they don’t know that, what other laws are they unaware of? Fair housing? Security deposit handling? Proper eviction procedure? You’re the one who pays the price when they get it wrong.
I’d be very hesitant, as a rental property owner myself, to ever pay someone to manage my property who isn’t licensed to do it.
This is Joe White, just a humble Philadelphia property management company owner doing my best to answer your rental property investing questions. Happy rental property investing.
