First Rental Property - Self Management company or NO?

Question

Just purchased a new home. Plan to rent out my current home.

Does it make sense to start a management company to oversee the transactions of the property, even if I am the one managing it?

If so, a few odd questions... (And of course I already know I should talk to a CPA and/or Attorney, but this site has plenty of them)

Do I need to insure this management company?(what are those estimated costs?) Seems like a large expense, when the management company may only clear $80-100 monthly in management fees.

Do I need to pay myself any salary as part of managing this company? (I don't anticipate the management company having much cash flow to afford salaries)

Any advice would be appreciated.

Thank you.

Mike

Eugene Kemp · Answer

Dont overcomplicate things. Just separate the funds and you're good.

Penny Clark · Answer

@Michael Grazul, If it is just for one SFR, all you need is a separate bank account from which all rental transactions go through as well as a spreadsheet system to track income and expenses and a way to make notations on communications with your tenants.

Corina Eufinger · Answer

Most states will require you to carry professional liability insurance when you start a company and register it.

What is your purpose with setting up the company? To give the illusion that you don't self-manage?  Tax wise you are better of taking an owner draw from your rental in most cases.