Property Management LLC

[Jason Schwerin]

I own and manage a single-family home and a 4 plex in Metro Detroit. I own the 4 plex 50/50 with my parents and it's starting to become tedious trying to track who's putting what into the property as far as expenses and sweat equity is concerned. My parents live on the other side of the country and we've agreed that I will manage the property on behalf of all of us and I will be the public face for the tenants. My parents put up most of the money for the down payment and they're crediting 10% of the rents as equity to me each month as payment for managing the property until we reach an equal equity position. 

I have an LLC I created 2 years ago that's been sitting around doing nothing. I was thinking of having a lawyer draw up new articles for it and using it as a property management LLC to manage the 4 plex, my single family, and future homes. Since I would still be self-managing my own rentals and not managing anyone else's I don't believe I would need a real estate broker license. Seems to me it would provide a more consistent face to the tenants and would streamline income and expenses tracking and payments.

Is this a reasonable thing to do/ good idea?

[David Wolber]

@Jason Schwerin That's exactly how I started my PM company. I created MOXIE Management, LLC to be the company that managed all my properties, this way i could hide the fact that I was the owner. Although many have figured it out...

I then grew it once I had the Realtors license and could manage other properties as this is required in my state.  Well technically a Broker's license like you mentioned, however I found a broker that allows me to run with no interference. 

I think it does help stream line the finances because now MOXIE holds the SDs, not me.  MOXIE collects the rent and distributes the owner's payments, not me. It allowed us to create a great system at the start so when we add properties to our personal or management portfolio all the rental stuff goes through MOXIE's systems and is a clean turnover.  

I would VERY HIGHLY RECOMMEND to NEVER own anything in your management company LLC. As it is the most exposed of the businesses, it's the first to be blamed and called out in a lawsuit. We own very little assets in the companies' name for that reason. We'd be a very small target for a lawyer. If we do then we give them the little cash that's in the account and that's all they get really.

-Dave