Managing Investment Property - Better to have the expense or not?

[Kate Barry]

Hi All

I am a Realtor as well as investor, and we have a property management company as well.  I am looking to invest with partner on some potential deals that will require a PM, and I'm wondering what the pros and cons are in terms of the financial strategy to charging management fees when partners are involved.  I'm considering just taking more equity of the property in exchange for managing it, but I wanted to ask the community here what else there is to consider when doing this.  The plan is to refinance in 5-7 years, so my thought is that its better to show more cash flow without having the 10% management fee on the top to be able to do this. 

[Kate Barry]

Quote from @Jon Kelly:

Hi @Kate Barry you kind of answered your own question. You're investing in deals "that will require a PM." 

Another thing to consider is your personal taxes. There may be (and by "may be" I mean should be) tax advantages to charge a PM fee.

Thanks Jon!  Thanks for the clarity on how a bank will view the deal.  It's an interesting property - its a commercial building that includes a 3 unit Multi, 50+ storage units, and a deli/market.  Yes I was kind of hoping to get some feedback on the tax advantage part of this strategy...