Real Estate Agent · Saint Clair, MI · Member since 2017 · 39 posts · 28 votes
Hello!
I know traditional property managers in Michigan need a broker's license (or to be an agent under someone w/ their broker's license) to manage other people properties. But does this also apply to managing STR's?
What if I wanted to rent a 3/1 apartment (NOT owned by me) in my smaller city and make it a STR, would this break the 'PM' rules?
And/Or would I have to claim this activity on tax Schedule C (versus E)? Just trying to set this up the right way...
***Here is what one site described Michigan PM as:
Property management is:
1) the leasing or renting, or the offering to lease or rent, of real property of others for a fee, commission, compensation, or other valuable consideration pursuant to a property management employment contract.
2) However, if the activities provided do not include leasing or renting services, a license is not required.
IF specifically, I don't offer a renting 'service,' I just rent the apartment myself, then sublease the whole STR on my own. Is that even a true PM service?
With my recollection some of these investors have real estate licenses and some dont.
Example: They rent property in Ann Arbor or Royal Oak on yearly lease; then do STR for daily or weekly for VRBO's etc.
Again, there may be association restrictions (if this is a condo or subdivision) and city requirements to be resolved. Handling property insurance is another item to done correctly.
I know traditional property managers in Michigan need a broker's license (or to be an agent under someone w/ their broker's license) to manage other people properties. But does this also apply to managing STR's?
What if I wanted to rent a 3/1 apartment (NOT owned by me) in my smaller city and make it a STR, would this break the 'PM' rules?
And/Or would I have to claim this activity on tax Schedule C (versus E)? Just trying to set this up the right way...
***Here is what one site described Michigan PM as:
Property management is:
1) the leasing or renting, or the offering to lease or rent, of real property of others for a fee, commission, compensation, or other valuable consideration pursuant to a property management employment contract.
2) However, if the activities provided do not include leasing or renting services, a license is not required.
IF specifically, I don't offer a renting 'service,' I just rent the apartment myself, then sublease the whole STR on my own. Is that even a true PM service?
Thanks for your guidance!
95%+ of leases (any lease drafted by a competent attorney) will have a prohibition on subleasing without written approval. In the event you rent a place out without written approval from your landlord (which you'd have to ask for repeatedly) you'd be in breach of your lease. If the landlord decides to step in, then you'd likely be breaking your STR contract and your original lease.
Pretty much asking for legal problems if you do this without having the landlord fully on board with your business plan.