Setting up a management S-corp for managing rental property owned by an LLC

[Nick Am]

I own a rental property through a single member LLC (say LLC-A) and I am in process of purchasing another property under the same LLC-A. Currently, I am self managing all the operations. LLC-A is a disregarded entity for tax purposes and I report the rental income/expense on Sch-E.

I want to setup a management S-corp (LLC-B) to look after the management of properties owned by LLC-A. For this I plan on charging 10% of rental income as management fees to LLC-A.

Some of the benefits of this vertical integration brought by LLC-B is:

(a) Ability to contribute to retirement plans (solo 401K, etc)

(b) home office deduction

(c) health insurance plan premium, among others. 

Some of the issues I have clarified so far from this and other forums:

1. Is juice worth the squeeze? --> Definitely. If the management fees stay in Sch-E, it is exposed to ordinary income both at Federal and state level, which is way higher than SE taxes of 9.55% (15.75-6.2 (personal social tax already maxed out)).

2. Why make passive rental income active and pay self-employment? --> Passive income doesnt mean tax free income. It is in fact taxed at much higher rate as ordinary income. 

3. Business justification of LLC-B --> This is can be a problem. However, I see this as a vertical integration and bringing more capabilities in house to make more money instead of hiring an outsider firm.

My question is such a setup valid? Has anyone done this without creating troubles with IRS? Can there be any issues due to business purpose of LLC-B? Want to hear opinion from the experts in the field here.