Rent to property manager?

[Greg W.]

Hi all, 

Would you rent a unit in your building to properly manager . How would you structure lease so it won't negatively effect value of building. Can I list the higher rent but then agree to a monthly credit for her managing the property or is it easier to have her manage building for free in exchange for rent?

I'm refinancing in the next 12 months and want to show the most income. Will also want to consider putting clauses in place to cover if I sell the building or we end our owner/manager relationship, the lease could come to a end.

Thank you

[Ray Harrell]

It depends on how much rent the unit is worth. Is she managing maintenance as well or does she have to find someone to do that? To keep it honest, you would show the rent as income and then the management fee as an expense equal to the rent. You don't want to miss out on that deduction, unless you really want to pay taxes to show more income.

You should have a lease, and a separate management agreement in case she decides she doesn't want to manage any more she is still bound to the terms of the lease.