Rental Property Investor · Houston, TX · Member since 2016 · 20 posts · 5 votes
We have 11 units in #DFW and hoping to start to do Property Management for other investors in the area to help supplement our cashflow and scale our business. Does anyone know of any legal work-arounds we can do this without being an agent or licensed broker?
Would it be best to speak with a broker and ask if he will take a small cut to allow us operate under him even though I don't have my license?
Do I first have to half my real estate license no matter what?
Do I network with another agent, and ask to run this all through them at a small fee?
In reality, very few brokers are going to allow an agent under them to do property management as the broker is responsible for the actions of their agent. Property Management is the biggest source of lawsuits in the real estate business. As a broker, I would not consider it for a second
Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes
7y
I looked deeply into this 15 yrs ago. I sold two rentals to 2 out of area people that needed help overseeing the renters and properties until they retired here a few years later. A management co does 3 specific things here that designates them as a mgt co, requiring a license.
I was an 'administrative consultant' and drafted a scope of work agreement. Management, manager, agent was not mentioned anywhere. I DIDNT place or remove tenants, hold deposits or collect rents or collect a commission on placements. I charged a reasonable admin fee when I helped place a tenant the owner approved, but it wasn't a % or called commission.
I didn't sign leases or any ppwk on the owners behalf. I was not their agent, nor did I represent them in any way. I also did not perform any labor that requires a license. No plumbing or electrical, etc work.
The renters were given deposit slips to the local bank for rent. My admin fee (whopping $90) was ach auto drafted from the owners acct.
As additional protection I had a recorded memorandum of option agreement and a real exclusive option to purchase (at a sky high price). I also had ROFR to try and meet the owner interest requirement.
This was a ton of hassle for little monetary benefit. I sold the houses and helped the new LLs but would never do all this on purpose. I always say I don't mind mowing a lawn or cleaning a toilet, as long as it's mine.
Why would anyone want to do this for someone else other than because all existing PMs are crooked rats. Gotta have a why. It aint the money if you're treating your owners right.
Attorney, CPA, Broker & Author · Scottsdale, AZ · Member since 2018 · 532 posts · 488 votes
7y
@Jerry W. I always counsel my clients that it's easier to avoid problems than it is to get out of them later. However, not everyone agrees with that philosophy.
Like most things, that philosophy works, until it doesn't.
Investor · Thermopolis, WY · Member since 2012 · 4k+ posts · 4k+ votes
7y
@Stanley Bronstein, I understand completely. Educating stupid people with fines and jail has funded both of my kids through college and then some. It amazes me how many people believe that their opinions have any value when their entire basis is well I believe this. What is the basis of having attorneys and brokers if you disregard the advice of everyone posting. Why would you spend vast amounts of time and money to start a business that is illegal when you could do it legally? Anyway the original poster here is smart enough to know the difference between correct advice and completely baseless completely incorrect advice. While bad advice happens all the time this is dangerously bad advice.
Property Manager · Virginia Beach, VA · Member since 2016 · 2k+ posts · 2k+ votes
7y
This is a great thread! Not surprisingly, VA comes in with the least amount of legislation on this. Without a license someone could get paid to collect rent and oversee maintenance. They cannot however, show properties they don't own, hold deposits in escrow, prepare or sign leases, or get paid for procuring leases. Syndication services like the Zillow Rent Manager have made it easy for people to skirt the law, because anyone can open an account, regardless of licensing.