Worth getting a PA real estate license just to collect management fees

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Worth getting a PA real estate license just to collect management fees

Leah Stutz
Member since 2026 · 6 posts · 2 votes

Hi all! I own a few properties in PA and self-manage. Down the line I may bring in outside investors and want to collect a management fee. One question I keep coming back to is whether or not get a real estate license.

From what I've read:

- PA's owner exemption lets up to 5 partners/officers of an entity manage that entity's own property without a license. Has anyone relied on this with a multi-member LLC that includes outside investors?

- A separate management LLC charging a fee probably needs to be a licensed brokerage, and a broker's license takes 3+ years as a salesperson

For those who've been here:

1. How did you structure management compensation on partnership deals?

2. If you started your own PM company, did you get your broker's license or partner with an existing broker?

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Clever Mukori
Member since 2026 · 43 posts · 18 votes
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I can't speak to how PA applies the owner exemption to an LLC with outside investors, so that's worth an hour with a PA real estate attorney before you lock in the structure. On compensation, what tends to work on small partnership deals is writing the management fee straight into the operating agreement as a percent of collected rent (not scheduled rent), with clear lines on what's included versus billed separately, like leasing, turnovers and project oversight. Whatever structure you pick, give the investors a monthly statement per property: rent collected, every expense with the invoice, your fee, and the reserve balance. Clean statements from day one head off most partner friction later.

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  • Clever Mukori
    Member since 2026 · 43 posts · 18 votes
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    I can't speak to how PA applies the owner exemption to an LLC with outside investors, so that's worth an hour with a PA real estate attorney before you lock in the structure. On compensation, what tends to work on small partnership deals is writing the management fee straight into the operating agreement as a percent of collected rent (not scheduled rent), with clear lines on what's included versus billed separately, like leasing, turnovers and project oversight. Whatever structure you pick, give the investors a monthly statement per property: rent collected, every expense with the invoice, your fee, and the reserve balance. Clean statements from day one head off most partner friction later.

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  • Matthew MorrowBusiness Member
    Investor · PA - NY - NJ · Member since 2019 · 924 posts · 323 votes
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    @Leah Stutz I'm not going to be the one to tell you how the exemption applies to your LLC. That's a question for a PA real estate attorney before you take anyone's money, and the Commission can tell you what they consider management for a fee. I can tell you why I got licensed. I was an investor first and got my license years later, mostly to become a better investor. It turned out to be worth a lot more than I expected. If the goal is just to collect a fee on your own deals, partnering with a broker who already does property management is a common route and a lot faster than waiting three years for a broker's license. Hope that helps you sort out the next step.

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  • Dan Worth
    Pittsburgh, Allegheny County · Member since 2026 · 52 posts · 18 votes
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    @Leah Stutz I'm not an attorney, so take this as what I've seen rather than legal advice. A lot of partnership deals pay the sponsor an asset management fee through the LLC's operating agreement for running the business, and leave day-to-day leasing and rent collection with the owning entity or a licensed PM company. Before you lean on the owner exemption with outside investors, I'd have a PA real estate attorney review how those investors come into the LLC, since that structure is likely what decides whether you're still managing your own property. If you do want a PM company down the road, partnering with an existing broker is usually much faster than waiting out the salesperson years.

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    • Leah Stutz
      OP
      Member since 2026 · 6 posts · 2 votes
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      Thanks Dan, this is what I was sort of gathering from my research but I've reached out to an attorney to confirm.

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  • Ryan BrownPro Member
    Real Estate Agent · Louisville, KY · Member since 2022 · 65 posts · 21 votes
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    @Leah Stutz, I'll back up what Dan said with some real experience. I've collected an asset management fee on a partnership deal, and it was spelled out in the operating agreement. That's the cleanest way I've seen to get paid for running the business when outside investors are involved. You're being compensated as the manager of the LLC for overseeing the investment, which is different from setting up a separate company to collect a property management fee from someone else's property. I'm in Kentucky, so I can't tell you how PA draws that line, and the attorney you reached out to is the right call there.

    The thing I'd focus on is how clearly the operating agreement spells it out. Everyone should know exactly what the fee is, how it's calculated, when it's paid, and whether it comes out before or after investor distributions. It should also say what the fee covers versus what gets billed separately, and what happens to it if you step away or the investors replace you as manager. Ambiguity there is where partner friction starts, especially in a bad year when distributions are tight and someone starts asking why you're still getting paid. If it's all in writing upfront and the investors signed off on it, it's a non-issue.

    One more thing to bring up with your attorney: once you're bringing in passive investors, there may be securities rules involved in how you raise that money, separate from the licensing question. It's worth getting both answered before you take anyone's money so the structure is right from day one.

    [email protected]502-889-0122
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