Missing Info for Property Managers and Investors

[Joe Maris]

BP has a hole (missing info) for property management. I've seen several posts asking for a sample Property Management Agreement. Before you recommend calling a RE attorney or warning that laws vary from state-to-state, keep in mind that BP has sample lease agreements customized for every state. The same could be done for PM Agreements. Of course, the sample agreement could come with the obligatory warning about contacting your local RE attorney and checking the agreement with state and local laws. The point is, a sample PM Agreement is info that BP needs to offer to PRO members. 

[Kevin Sobilo]

Quote from @Joe Maris:

Thank you. You have been very helpful, and I appreciate it. Here's the short version of a long story. I purchased a property in my personal name. Construction loan to do the rehab, etc. Formed an LLC while doing the rehab. Following rehab, refinanced with a conventional loan that does not allow the property to be owned by an LLC. So I will keep the property in my personal name for now (will refi again later). Obviously, we do not get the legal protection of owning the property in an LLC. CPA is recommending that we have a property management agreement in place so that the LLC can be paid by the property owners. I guess in that sense the LLC is the property management company, so the property owner (me) will be paying the property management company (the LLC, but still me) for business accounting and taxes. Does that make sense?

Most people just transfer the property into the LLC after getting the loan without telling the lender. Technically they can call the loan due but I have never really heard of that happening as long as its being paid. Alternatively many people choose to skip the LLC and just get a healthy umbrella liability policy, this makes sense in states where having an LLC is more expensive. The cost to have an LLC varies quite a bit from state to state.

Unless you are having the LLC taxed as an S-corp or something I don't see why your CPA would recommend this. Just seems more complicated to me.