Property management subsidiary?

Question

Can a property management company be established as a subsidiary to a brokerage? For example, if I have an LLC for my own property management company and would like to work under a brokerage is there any reason my LLC couldn't be set up as a subsidiary under the brokerage and then break off in a few years.

I will soon be a licensed broker, but need to work under an employing broker for two years per Colorado law. I’d ideally like to keep the property management financials and operations completely separate from the employing broker during that period. Is this common practice or does it at least seem possible?

Thanks for your insights!

Michael Smythe · Answer

Depends on state laws and if the broker wants to deal with whatever extra hassles involved.

Bill S. · Answer

@Joe Fish how that is handled is up to the employing broker you work under. Most of the big name brands want no part of property management. Some will allow you to manage properties that you own 100%. You have to ask as different offices of the same brand have different rules.

In Colorado, it is legal for you to manage your own properties without a real estate license. If you have a license you must have a trust account for your tenant's security deposit. If your "property management company" has a different ownership than the properties it manages, then the property management company must have a licensed broker (independent or employing) running the operations. This is if you own 50% of this deal and your best buddy from college owns the other 50% and you are 100% owner of the PM company, it is my understanding that you must be a licensed broker to manage the property. I am using the  legal state defined terms for "broker". The first 2 years out you can only be a "broker associate" like you mentioned.