Financial Advisor · Hillsborough, NJ · Member since 2015 · 21 posts · 5 votes
I live in New Jersey and am currently in the process of starting a property management company. However, I came to find that in NJ you need a real estate broker's license to do property management. Does this mean that if I get my real estate sales license UNDER a brokerage that I can start this company? Or does it mean that I personally need a brokers licenes? Please help if you have any info!
Requirement for property managers in NJ. YES. Key components of property management (renting, leasing and collecting rent) are considered real estate activities under existing New Jersey real estate licensing laws. If a property manager is going to rent, list, collect rents, procure prospects or negotiate, assist, or offer to perform any of those acts, he or she will need a broker's license. A salesperson working under a broker may engage in such activities.
I wish I could help but am not familiar with NJ laws! In Florida, even if you get a sales associate license, you would be required to hang your license under a broker. It is fairly common in Florida for licensees to hire a broker of record and start their own company.
I am pretty sure you don't need a Brokers license to start a property management company. At the very least maybe a Realtor's license is required but even that I fin a bit surprising as selling RE is different from managing it.
@Chris Masons unfortunately for you I am from Florida as well. In Florida a company may manage property that it owns without a license. However, to manage property for others the company must be a licensed brokerage company. Meaning the company must have a broker of record who has a brokerage license with the company registered as a real estate brokerage. Each state has different legal statues. NJ could be very similar. NJ statutes should be available online.
Requirement for property managers in NJ. YES. Key components of property management (renting, leasing and collecting rent) are considered real estate activities under existing New Jersey real estate licensing laws. If a property manager is going to rent, list, collect rents, procure prospects or negotiate, assist, or offer to perform any of those acts, he or she will need a broker's license. A salesperson working under a broker may engage in such activities.
A broker of record is a broker that a licensee or non-licensee hires to operate as a RE brokerage in the state. Laws vary and I am referring to Florida. A sales associate that does not have a brokers license cannot operate on their own and must hang their license with a broker. If they want to start a PM company or RE brokerage company their hire a broker of record and pay that person compensation every year. That broker or record is responsible for all the actions of the company. Keep in mind a non licensee that hires a broker of record in Florida cannot perform duties that require a license. You CAN own the company, but you cannot sell, lease, auction, etc RE for a fee (unless it is your property).
Brokers or sales person/realtor? The answers aren't clear and are conflicting. thanks!!
A Brokerage is a real estate company licensed to provide real estate services to the general public. A Brokerage must have a broker of record to operate.
A Broker is a licensed person who has a higher level license which allows them to operate a Brokerage as the broker of record.
A Salesperson is a licensed person who may provided real estate services to the general public under the name and control of a Brokerage.
A Realtor is an individual who is a member of the National Association of Realtors. Salespersons, Brokers, Appraisers, Real Estate Assistants, Brokerages, Home Inspectors can become members of NAR. Membership is optional.
The short answer is no you do not need a "brokers" license. But if you manage property for anyone but yourself then you will at least need a "sales person license." Which is one step below a Brokers license. The original OP said they wanted to run a property management company---I am a Broker in Texas so this is our states situation----your sponsoring broker "can" allow you to "run" a property management company within the confines of the Brokerage office but all money received from the property owners for your service "think of your fee as a commission" goes first to your sponsoring broker and then to you based on whatever agreement you and the sponsoring broker have. I am a Broker within my brokerage firm. I am not the sponsoring broker so all monies are paid to my sponsoring broker first and then to me based on the agreement we have. You cannot have more than one sponsoring broker even if you had an office full of Brokers...
One other thing your sponsoring broker would have to agree to is to have a bank account totally separate from the regular bank account for the brokerage firm. You do not want to co-mingle any money received via property management with any other money. Period.
@Cheryl Schuck I am in Florida so can't answer regarding NJ as each state has its' own real estate laws. @Paulette Smithwrick is in NJ and provided an NJ specific answer saying that a license is required to offer 3rd party property management services.
The original poster asked about starting a property management company which has additional requirements as one needs to have a broker's license or someone to act as the principal broker for the company.
@John Kent and @John Thedford, thank you both for your post. I work as a construction coordinator for a General Contractor who is in the process of setting up a property management company. I am not certain that he knows its required in FL to have a broker of record to manage properties other than his home. Seeing how I occasionally assist them as he and his partners get their business of the ground, it would probably be wise for me to pass along this information. Thanks for passing along some useful information.
The New Jersey Real Estate License Act, which also is known as the Real Estate Brokers and Salesmen's Act, makes clear that only a person licensed by the New Jersey Real Estate Commission (the "Commission") may engage in the activities of a real estate broker, broker-salesperson, salesperson or referral agent:
No person shall engage either directly or indirectly in the business of a real estate broker, broker-salesperson, salesperson or referral agent, temporarily or otherwise, and no person shall advertise himself as being authorized to act as a real estate broker, broker-salesperson, salesperson or referral agent or to engage in any of the activities described in R.S. 45:15-3, without being licensed so to do as hereinafter provided.
"The licensing act is a regulatory measure and represents the strong public policy of "New Jersey". As such, it makes it clear that its application is broad, providing that "[a]ny single act transaction or sale shall constitute engaging in business within the meaning of this article.
So yes you need to be a real estate broker to manage property in New Jersey. If you are a salesperson and you collect a check it must go to your broker and he must pay you according to your independent salesperson contract. A salesperson is an extension of the broker so a salesperson could conduct management activities in the name of the brokerage but could not do it exclusive of the Broker.
You can start off as an unlicensed assistant for a property management firm to get your foot in the door. Then, go ahead and get your real estate license so that you can get more involved within the company and industry. Once your licensed, you can then start working on your brokers license. In Georgia, you need to be an actively licensed sales person for 3 years to become eligible to be a broker but that doesn't mean you can't take all the necessary courses and exams prior to the 3 years.
3 years happens pretty quickly and the knowledge and expertise you will gain from others will pay off quickly when the time is right to open your own firm.
I live in New Jersey and am currently in the process of starting a property management company. However, I came to find that in NJ you need a real estate broker's license to do property management. Does this mean that if I get my real estate sales license UNDER a brokerage that I can start this company? Or does it mean that I personally need a brokers licenes? Please help if you have any info!
It means you won't hold the management company as an agent, your broker will and you can manage as an agent under them. Yes, get a broker's license to own your own company.
Now, some agents may have a company under a broker, you'll need to speak to your broker.
You don't need a license managing properties you own or have an ownership interest in like a TIC. You do managing for other owners, you can be employed as a manager on site by an owner, but that can't be your management company.
These are pretty basic and common license requirements nationally, check out what is required as a company license and who may hold interests in a real estate company.
@Chris Masons Thanks for the input! I was surprised to that you need a RE license to do property management but I guess the leasing aspect of it is the reason.
@Paulette Smithwrick Thank you, I took a lot at that website and it has great material
I have looked into starting my own property management company as well. You can do it as a licensed salesperson, under your company's brokerage, but the payments have to be through your brokerage and they are going to take a cut.
If you want to start your own property management company, you need a broker's license in NJ.
In order to get a broker's license you have to complete the required class room hours (150 hours) pass the licensing test, AND have 3 years of full time real estate experience (unless you are a military veteran).
Another option would be to get your salesperson license, start your company, and hire a broker to work for you and handle the managerial aspects of the firm.
Hi , I am currently studying to get my Real Estate License in Florida and the reason I want to get my license is to start a short term rental housing LLC company.
I read every single blog and read every single line in the book to get detail info but there is no clear answer to this.
We all know to you have to have a Broker license to start your Property Management Company.Anything involves " Commissions" you have to be licensed BUT if it doesn't involve commissions you don't need a license. So if you rent an Apartment for $1500 a month and charge property management fee of $150 a month instead of %10 , you don't need to be licensed!
"Leasing and collecting rents are included as real estate brokerage services under the state's brokerage licensing requirements. HOWEVER, if a person is acting as an agent for an owner or a broker while managing or leasing property for the owner or broker, that person is exempt from the requirements. "
I know many companies especially in Los Angeles,CA that offers Housing service and they do not hold any license. If you manage OWNERs property directly with an agreement and the fee than you don't need to be licensed BUT if you planning to manage Condo complex etc. of course you need to have Broker License.
I am still making research about this subject because I want to start my housing company and I want to be sure How to legally start , open a XYZ Housing company office with no broker license and advertise and rent Bedrooms and complete apartment.
I have to find a way to start this business with out a Broker License and I think there are ways to do that.
What I find so far is , if you rent and manage Family Owned Building or Owner apartment directly than you don't need any license at all but I would recommend you to get Real Estate license so if you have investors looking for an investment property than you can make your commission.
Please let me know if I am wrong about above information , this is what I found so far and would like to know more from an experienced people.
In most states, it does require a real estate broker license and special insurance (a few K per year for property management). In California they prefer you have special training and credential on top. Most have a Mba degree or connection with RE attorney to handle eviction.
NO LICENSED NEEDED for vacation rentals. The state defines VR. As long as you fall within that parameter NO LICENSE NEEDED. You do NOT need to own the properties yourself. This is the only case where a non licensee can represent others without a license in rentals with the exception of salaried employees. VR are different than seasonal rentals which may be for 2,3, months, etc.
Thank you so much for this info , I had no knowledge about this. If I rent apartments behalf of owners by month to month basis than I don't need to be licensed,right? Can I charge the owners by percentage or should I charge by Flat negotiated $ amount. My plan is to do monthly rental for owners and manage all their properties by renting monthly. I will rent the owners houses or apartments by room so if its 3 Bed house , I will have 3 of monthly tenants in each room.
So in this case , Can I open a office ,advertise their listing locally ,online and find monthly tenants? They will need to sign lease for a month and I will have to collect deposit as well for these transactions. Would that be ok ?
I truly appreciate it for you respond, the info you provided is super valuable and not easy to find. Thank you so much
Thank you so much for this info , I had no knowledge about this. If I rent apartments behalf of owners by month to month basis than I don't need to be licensed,right? Can I charge the owners by percentage or should I charge by Flat negotiated $ amount. My plan is to do monthly rental for owners and manage all their properties by renting monthly. I will rent the owners houses or apartments by room so if its 3 Bed house , I will have 3 of monthly tenants in each room.
So in this case , Can I open a office ,advertise their listing locally ,online and find monthly tenants? They will need to sign lease for a month and I will have to collect deposit as well for these transactions. Would that be ok ?
I truly appreciate it for you respond, the info you provided is super valuable and not easy to find. Thank you so much
Best Regards
No, that is a BROKERAGE act. VR is weekly, etc for a very SHORT period of time. Fall outside of the state definition and you will be BROKERING WITHOUT a license. Look at VRBO, etc. Those are typically a weekly rental. Those are exempt. Renting month by month is NOT VR. Get your license. ALL problems solved. You can then hire a BOR and open your own PM company if desired.
Thank you so much for the info @John Thedford , I appreciate it for the respond. I think I may need to hire a Broker for my business model but I have to make another research about how to hire a broker as well. With your experience do you think, Do I have to give him a % cut on every single transaction or I can offer him a flat fee for each transaction?
I am sorry to keep you busy about this issue. I am studying to get my RE License but for me to become a broker will take several years so I am planning to start this business by January , I am currently finding investment properties and furnishing them.