Starting a PM company to Handle my rental property

[Jared Chipkin]

I currently own one rental property (plan on purchasing many more) I would also like to start a property management company that takes care of everything. 

What is the best way to set this up?

I purchased the first house under my name as I am just starting out. In the future I will purchase them in an LLC.

I was planning on setting up the PM company to be single owner LLC under my name, but my fiance is also available to be owner if it makes more sense.

I assume I would have the tenants pay everything to the PM company and have the PM company bill me for repairs (that I perform or hire others to perform)

Another part of the equation is that I make about 100k a yr at my full time job so I am hoping these investments substancially lower my personal tax burden. (My fiance is currently unemployed.)

Please let me know if anyone has experience with setting something like this up and what you would recommend.

Thank you!

[Harrison Smith]

@Jared Chipkin Here are some of my thoughts on this and how my company has structured the PM company.

1. I am assuming your current job is not in real estate. Due to that, your tax advantages are limited due to the passive nature of your investing. I would recommend putting the PM entity in your fiance's name and have her be the lead on that. Once you are married, you could file jointly and she would be able to claim status as a Real Estate Professional. This would allow all of your losses to flow through, without limitations due to them being passive. I would consult a CPA, but your maximum tax benefits lie in the ability to claim status as a real estate professional, which you won't be able to do while continuing in your job but she could if she was dedicated to working in real estate (agent, PM, investor, etc.). 

2. The PM company should collect all rents, pay all expenses, bill you for repairs like any other customer, collects its fees (% of rent, placement fees, turnover fees) then remit to you the remainder (profit). You can have that remitted to the LLC that holds the asset and use that money to pay future bills, draw for yourself, or invest in additional properties. Keeping the businesses separate and treating yourself like a customer will help make this work much easier.

Hope this helps. Let me know if you have any questions.