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Updated almost 10 years ago,
Mobile Home Park Management - Active or Passive?
I am planning on creating an LLC to acquire a mobile home park. The LLC will likely have a dual share structure. One class, which I will be the only member, will receive a certain % of cashflow in exchange for a small capital contribution and work done towards putting the deal together/management of park. Basically my compensation for putting the deal together and managing the park.
The other class will receive the remaining % of cashflow. I will have units in this class as well as outside investors.
My main question is: Is any of the cashflow I receive considered active income? I don't believe it would be since this is a rental activity and rental activities are considered passive. Managing a mobile home park is not much different than managing a single family residential. All of my income from both share classes should flow through from the partnership to my Schedule E, correct? None of the payments should be considered guaranteed payments either since they are a percentage of cashflow?
Another question: Is there any sort of advantage to setting up a manager LLC? Seems like that would then make the management income active in nature.
Thanks in advance!