Limitations of consulting SFR owners.

3 Replies

I would like to start a consulting business where I would advise first time owners of SFR to enable them to manage their property independently. I would offer suggestions on how maximize rent. This would include suggesting updates to the home, marketing (eg how to take pictures, listing on Zillow etc.). I would provide example forms and explain them, show them how to project expense, etc.

My question is what are the limitations of doing this without a real estate license? I understand I cannot show the home, and execute the lease, but is there anything else I should be aware of?

Main thing is to be careful (in most states, some states there's no limitation) on crossing the line and becoming the property manager. Usually that means you are making decisions on tenants, acting as the owner's agent and charging tenants late fees, damages, etc, setting lease terms, etc. If you steer clear of those activities you're going to be fine for the most part - but you should still check out the laws in your state. Especially since you are in California. 

From a compliance perspective, I don't think you'll have a problem if you're only providing a professional consulting service and providing information.  Generally speaking, licensing comes into play when you are representing another person in a transaction, or are making a commission from a transaction - as long as you're not representing or making commissions you might be okay. However, from a practical perspective, it doesn't make a lot of sense to pay for professional Real Estate consulting services from somebody who is not a licensed or trained professional.  Having a license comes with several advantages, and if you're serious about your business plan then take the time to get a license.  It's relatively simple and would give you substantially more credibility.

There's nothing wrong with being a consultant, but I've seen countless unlicensed Real Estate "consultants" engage in actions that require a license - not intentionally or maliciously, moreso by ignorance.  If you don't have the training to know what actions require a license,  there's a decent chance you are going to violate some licensing laws while you're just trying to be helpful.