Question about Managing Properties in Different States...?

Question

Hello Everyone,

I have a quick question about how to set up a company structure when dealing with managing properties in multiple states.

I have a property management company established in Maine (where 90% of my rental portfolio will be managed). But I do have the opportunity to manage other properties located in Massachusetts and in New York.

Do I need to establish a separate entity (LLC) in each state that I conduct property management services?

Or can I have the management under the umbrella of where my company was established in Maine?

Not sure if anyone has managed properties in multiple states and the type of business structure.

Thank you so much,

Mike Marquis

Michael Marquis · Answer

Thank you so much, Brandon. Yeah, you pretty much answered my question. I know certain states require a Property Management license/RE Broker license to operate a PM company. Fortunately, Massachusetts and Maine do not have this restriction, especially if you plan to provide management services only.

And absolutely yes, if you know of a CPA/Accountant who specializes in real estate, I would love to connect with them.

Thanks again for taking the time to answer my question and point me in the right direction.

Mike

Michael Marquis · Answer

@Dustin Lauer Thank you for the good info, Dustin. I just checked out establishing a foreign entity in each stay - it seems like that's the best play. All the best, Mike.

Brandon Hall · Answer

Yes you nailed it. Maine is pretty lenient with some licenses, but not with others. For example, contractors do not need a license, but plumbers do.

I recommend connecting with Justin Freeman, he is extremely knowledgeable and always makes time to chat. He also knows and invests in Maine which I think is important. I will attach a link to his website for his accounting firm. https://www.freemanassociatescpa.com/our-team/justin-freeman...

If you need any help with anything else let me know, I am a licensed agent, and an investor in the Southern and Central Maine markets!

Brandon Hall · Answer

Not sure of the answer to this exact question, but I am sure your accountant would be able to answer this question for you.

However, it is my understanding that you can have an entity in whatever state you wish, and can conduct business in any other state. For example, the first LLC I established was in New Jersey, but I only own property in Maine. It was explained to me like this. Fedex has their corporation centralized in Tennessee, however, they still ship packages in Maine.

I hope this is helpful, I can provide a Maine accountant I use if you need some insights.

Michael Smythe · Answer

Also check out licensing requirements in each state.

Dustin Lauer · Answer

@Michael Marquis

Larger blanket loans will require a special purpose, Delaware entity for multi-state financing in the same loan.   Single asset loans these days are great though so not really necessary.  Tons of benefits to single asset v portfolio.

If investing multi state with one entity, you may register it as a foreign entity in each state.

I have this setup for lending in multiple states (and other financial reasons).

*Not legal or tax advice but finance multi state all the time.

Best of luck!

Michael Marquis · Answer

Perfect, I'll contact Justin tomorrow and set up a meeting. I will certainly keep in touch as I transition to South Portland by mid/late December. My wife and I are certainly looking to grow our portfolio and are mostly looking in the Westbrook/South Portland, area.

Once again, thank you for the guidance!

All the best,

Mike Marquis

Question about Managing Properties in Different States...?

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