Property Management legal question

[Robin Behrstock]

I own a duplex in Milwaukee Wisconsin and Renters Warehouse is the property manager. I noticed they use the same company (Brew City Property Services) for all repairs and from my own property management experience, the charges seem high and BCPS appears to be an unnecessary middle man who is hiring cleaners, electricians etc, when Renters Warehouse could be doing that. I searched the wisconsin business records and saw the same person owns Brew City Property Services and Renters Warehouse, a man named THOMAS M. DIDIER. Is what they are doing here legal? 

[Will Fraser]

Nice catch, @Robin Behrstock!  There are two different nuances to this question:  legal and ethical.  I can't speak to legal with any clarity, but real estate laws in Wisconsin MAY require a disclosure of interest in any referred company (or they may not).  

Legality aside, the ethics of this are not hard to find holes in.  If BCPS was a GC or any other sort of contracting company that the PM used to contract out cleaning, repairs, and makeready services then that is what it is . . . a middle fee for something that could be done by the PM (but that would require their system or service to facilitate that particular function of being a GC).   However, when you change the equation to the PM owns the GC company then things get dicy really quickly and it becomes clear that the PM is violating the core ethos of investing . . . align interests to make investing most efficient.

This isn't unusual to see in the industry, but it is one of the things that should tip people off to steer clear of a company that doesn't disclose conflicts of interest working against their clients when they are readily evident to anyone working there.