RE Sales Associate/Broker Relationship for new VR Management Co.

[John McCormack]

We come to the all-knowing massively experienced forum members for their help and guidance once again! We are on a fact finding mission to determine the best way to start a new company for short term rentals and trying to determine the best practices to do so.

What is known thus far:

- I have to have a RE license in order to manage properties for third parties when accepting commissions for bookings. I have obtained license and in search of broker to hang license.

- I have to work under a broker for 2 years before I can apply for my brokers license in state of FL

- I have to split my commission profit with broker and all funds/payments must be made out directly to the broker

- the percentage commission I negotiate with property owners is my decision

Determine best path to form Vacation Rental Property Management company being aware of my new status a sales associate

- can I start my own business entity to establish and brand my VR management company now, or would/should I just wait the 2 years, get brokers license and then do so. Concerns: time wasted building future company and not having the company name/business/brand out there first. In FL, I believe RE sales associate can form business entities for tax purposes but it must specifically be the name of the person such as: John Smith, LLC. I do not want to brand the business with this name

- type of business entity to form?

- amount and types of insurance to carry? E&O, separate commercial liability?

Any suggestions for approaching RE brokers who might be interested in forming a relationship based upon our future VR Managment business

- after working under broker for 2 years and then deciding to part ways what is the best way to retain properties brought on by myself. Is this and up-front individual conversation with each broker during interview process to find out more?

- again, spending 2 years building up a rental portfolio which we anticipate to have healthy returns and under the banner of the broker, how would one part ways amicably.

Future Goals

- not necessarily to bring on as many properties as possible. We value quality over quantity and working with owners/investors who “get it” and are open to our input and control in order to help them succeed as we are VR owners/operators ourselves.

- residential sales/buyers agent for out of state visitors who may transition into snowbirds and/or 2nd home investment properties

We’ve already spoken to attorneys and it seems we have “very good questions”. Some research has already been put into this but we wanted to get a sounding boards from others who may have already gone down this path. We value everyone’s input no matter how small or large and being a part of this community! Thanks much for any help you can provide and we look forward to your answers!

[Patrick V.]

I can add a few comments as I went down this path some time ago. First, you should be able to find a broker to hang your RE sales license with for little or nothing. There's brokers everywhere including semi- retired, etc who you should get to know and approach. I paid zero to my broker when I was doing PM. Second, you need to find a marketing angle. Just like most businesses, everyone and their brother wants to do VR PM now, including venture capital backed companies charging as low as 10%. Find good software, figure out how to do dynamic pricing/yield mgmt so you can show owners how you can increase income (price for max revenue in season, occupancy in off season), hire good housekeepers and make a good corny website. I made several, and the corny ones play better than the corporate looking stuff. If you can go after higher end homes and luxury, it's alot better use of your time than signing up owners with little rentals. Those aren't even worth it. Good luck!