Setting up a management company for your own rentals

[Chris Weiler]

I have a number of rentals under multiple LLC’s. Does anyone have experience setting up a separate entity to manage the properties? I heard 2nd hand from an attorney that we would need a broker’s license in the state of the properties to do this. Is this correct? It seems a little absurd that I would need a license to manage my own properties. The reason I was hoping to set up the management company was to avoid having to write multiple checks from all the LLC’s. For example, if I have a guy mow a few dozen lawns, it would be quite obnoxious to have to write him 10 separate checks per month. I figure if I have one management company, I could just write one check. Before I shell out more money to talk to another attorney does anyone have any practical experience, thoughts or recommendations?

[Bill Gulley]

Let me start by saying a couple things, I don't have a law degree and your attorney does, especially in Cali, secondly I understand why he said that, but there are ways around it I would think.

1. An individual hired in a company usually does not need a license, only if they are a leasing agent, representing different owners. Your MGT LLC should not be required to have a license (and you) if those are the only properties it does.

2. You could make the MGT LLC a member of the other LLC.

3. You might convey a small percentage to the MGT LLC so that it has an ownership interest, but limited so that any liability issue would have little to gained.

4. You could take the application and execute the lease under one company, limiting the involvement in the operations and perform all other activities in the MGT LLC. (RE License is only for the leasing of the property).

5. You could form the MGT LLC and just do it. If you ever had an issue, like an eviction or seeking collections, the owner LLC would need to perform that. If the CAREC had a problem with that they would most likely issue a cease and desist order under those circumstances, since you own both LLCs.

Probably the best thing to do is to call the real estate commission and ask, explain you would own both companies. Just know thatwithout the MGT LLC being able to act as an agent, in court actions, building permits, etc. need to be accomplished by the owner of record. Good luck