Strategy for ...Real Estate Agent + Investor/Landlord

2 Replies

I am a licensed RE Agent + Investor with few rental properties. I set up S corp for my RE Agent practice and therefore when I rent my own property, I write a commission check to my brokerage firm and he writes a check on my S Corp’s name (mostly I rent it by myself to Sec 8 and without coop broker on the other side). I think, this is helping me save same tax amount since it becomes my individual expense and my Corp’s income.

I am also considering to use my S Corp for property management/operating company. Would this be a good idea? Would this help me from liability perspective? Would this help me from tax perspective?

Would appreciate inputs from experienced RE Agents/Brokers, CPAs and investors.

My 2 cents.

Your PM company should be completely independent from any other RE activity. So regardless of the entity type, keep it separate from you, your investment business, and your brokerage business. It gets a little tricky with things like your automobile, which you may use in all business activities (rental, brokerage, PM) and personal use... so check with your accountant. If your business use is a large percentage, have the PM company (or brokerage, or rental business) buy a company vehicle. But I'd first check with your accountant to make sure you know how to allocate correctly.

@Chris Martin : Thanks Chris,
I think I got it but bit lost too.... here is the deal
I have my S Corp for my brokerage business (affiliated with a brokerage house e.g. ReMax). As of now I only do brokerage activities including buying/selling and renting out my own properties.  
I am considering to set up an LLC to hold my rental/Fix & Flip properties and have these properties managed by my S Corp which does brokerage activities. In such case, I was assuming (still need to talk to my Managing Broker) that the contract will be between my LLC (holding company) and my Brokerage House (me as an 'assigned agent'). My Brokerage House will then write me a check just like they do for co-op commission. does this make sense or I am thinking in wrong direction? ????
If I understood you correctly, you advised to have a separate LLC for PM business i.e. I will have three companies. Two LLCs and one S Corp;  LLC-1 that owns the properties (holding company),  LLC-2 that does the  PM job and the my S Corp. which does brokerage activities.   Is this correct?  If yes, what our Licensing requirements?  My S Corp, as a Licensed Agent,  is affiliated with a Brokerage House and as a Licensed Agent I can also do PM. However, if I set up a separate LLC, I am not sure about the implications from Licensing and affiliation perspective. 
would appreciate if you can help me understand this better.....


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