Property Management without Licenses

16 Replies

Hi Everyone,

I have a different question about this. I know you see the subject and it's been beaten to death.

My question is this. I am close to starting my own firm with license and was wondering how to do a full service management. I came across Master Lease Agreement, but not sure if the owners are willing to do that so I want to have alternative options.

If my company is added to the owner's LLC as a manager, would that be okay or I still need to be licensed?

If that doesn't work, how about adding my company to their LLC as a member with 0% or 1% ownership? (not sure if they are willing to do this as well)

I am just trying to structure everything before I launch my firm.

Any advice would be great! 

Thank you.

I don't understand the question. Are you asking about licensing requirements for property management firms? That depends on the state, but almost all states require property managers to have a real estate license. I think Idaho is one of the few exceptions.

Here in Texas the one exception for having a license is if you are working directly for the owner as an employee. So an on-site manager of an apartment building who is a direct employee of the owner of that building would not need a license. But doing property management for any third parties would require a license.

i meant without a license.

My question is if my company is listed as a Manager in my client's LLC, would I still need a license for doing a full-service management for the properties?

Your going to need to be licensed to do property management for properties that you have no ownership stake in.

I do not think convincing owners to give you 1% ownership stake in their properties is a plausible strategy. I imagine you will be told to take a hike quite often.

that's why i stressed on listing a manager

the only way around this that I found in California was to have a poa. The Cavour is you cannot receive payment for acting your manager duties! Personally I have looked long and hard last year and couldn't find a way around it! Good luck!!

Ultimately, probably the best thing to do is to just go ahead and get licensed so you're completely legit.  But here's another recent thread on the topic where some other ideas/options get tossed around: Managing without a license

If you are talking about working in NY city I would imagine the licensing is strict. What is it about property management that attracts you? There are some things a PM does that you can do and there are some things you can't do. You can also do a lot of things if you are an employee of the owner.

You need to check with the local RE agency that regulates PM and see what you can do. I'll bet the items that are excluded from what you can do w/o a license is collect money, hold money, write leases, advertise and show properties and...

The idea of creating an LLC to get around licensing is really silly. That will not absolve you of liability if you do something stupid because you don't know what you are doing. You don't know what you don't know. Get a license unless you are only interested in the maintenance aspect of PM.

@Simon W.  

  states love to take down those that think they can circumvent the laws by doing exactly what your talking about. 

You could get away with it.. but if you ever had a complaint your going down end of story. Unless the state in questions does not require PM to be licensed.

And one of the reasons is PM's as they grow have access to LARGE amounts of cash in their trust accounts.

Just think about a Pm with 1,000 doors at 800 a door and a 90% collection rate. how much cash comes into his account ???  I know we don't like math but  that's $720,000 bucks a PM who is even bigger has a lot of responsibility.. Far more than most RE agents or brokers. they are up there with Title companies.

Or like here in Oregon we as brokers NEVER have trust accounts all deposits go to Title company

"I am close to starting my own firm with license and was wondering how to do a full service management."

Easy answer. Finish the licensing and be legitimate in your practice. Sounds to me like trying to negotiate a "creative" solution will take longer than just finishing your licensing. 

@Mike Nuss  

  Mike this is huge in the mid west ,, north east rust belt and the deep south.

and as Portland investors were only 10% or less of our sfr's are rentals... And our multi by and large is managed by a very few local multi management companies.. o

Out in these areas as much as 50% of all SFR's are rentals.. and there are literally 100's and probably thousands of little mom and pops that take on management without licenses.

@Jay Hinrichs  is there anything you don't know about real estate on this continent? Seriously, your perspective and insight is quite amazing. Let me know when I can buy you a coffee and glean some of that info. 

@Mike Nuss  

  well when your a national lender you get an education and learn a little

thanks for the input. i figured it out.

@Simon W.  

Over the last few the real estate industry has suffered from various issues. In some states, they've identified property management as an area that needs to be managed by a licensed individuals. The good thing about is that you have a person that understands the laws. If I was you I would go through the process of receiving a license or pay a profession it cost normal 8 % to 10 % of the monthly leasing.

@Randy Johnston  

@Mike Nuss  

Ok guys enough already... Yall know ever bit as much as I do about RE... I might have a little more knowledge on the out of state stuff because I have done a ton of it.  LOL

happy to meet anytime... I think I live only 1 to 2 miles from Mikes office just waiting for him to invite me over.

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