Need a Brokers License to Manage Property?

Question

Hello BP community.

I have a 13-unit portfolio (Short-term and long-term) in Ohio that I've been managing from California. I'm building up pretty good systems where many of the issues take care of themselves (Basic repairs, rent collection, regular maintenance).

Many of my other friends that are invested in the area want me to manage their properties. I'm also moving there next year for some bigger projects.

Doing some research I discovered I need a broker's license in the state of OH.

Is there any way around this? Can I partner with a broker and work with him?

I'd really like to take outside clients.

As always, any advice is appreciated.

Remington Lyman · Answer

There is no way around this in Ohio. All of the monies must flow through a brokers bank account

Brandon Rush · Answer

Hey Matt,

Great to hear others want your services! I am in Connecticut and you need to have a broker's license here as well to run a property management company, "BUT" you can perform property management services as an agent working under a normal broker. The same may apply in OH. If that's the case, all you need to do is find a broker who is willing to sponsor you as an agent and allow you to perform property management services. They will get a cut of your profits being your broker, but this may be your way in.

Hope that is helpful and good luck!

James Wise · Answer

No way around it. Before you can become a Broker and start your own property management brokerage in Ohio, you'll need to become a licensed agent and work under a Broker for 2 years. During that 2 year period you'll need to work 40 arm's length transaction sides. Additionally, there are some college requirements as well.

During that two year period some Brokers will let you offer management services under their Brokerage or have you pipe it back up to the house so to speak. I did the first one of these for 2 years from 2013 to 2015 before I obtained my Brokerage license. In either scenario though, the Broker is going to take their cut. With management margins being what they are in Cleveland, it's not really profitable until you open your own Brokerage.

Bill B. · Answer

You may want to try giving one property to a well respected PM and see how it goes. I certainly managed my own when I started. But they EASILY pay for themselves these days.

They raise rents faster and higher than I would.

They have leaks, water heaters and ac units fixed within a couple hours of the tenants online complaint.

They keep me on the right side of any fair housing complaints, lawsuits, fines.

They put an established company face on the interaction as opposed to “the guy who owns the house.”

They do all the advertising, the move in and move inspections, security deposit deductions, late fees, evictions.

I have about the same number of properties and I spend about an hour a month working on my properties and 90% of that is bookkeeping. This “costs “ me about $16k year on $240k in rent. It less than my property taxes, less than insurance and Hoa dues combined. And again, the main point is I’m pretty sure they are getting at least an extra $100/mo per property so it’s “free”.

Matthew Masoud · Answer

The reason I manage my own portfolio is that I’ve been through a handful of property managers that truly sucked. ever since I’ve taken over my own portfolio Ive significantly increase the Noi on all my properties.

Es Stones · Answer

I was going to suggest a partnership where you become a minor owner as well.  You could draw up papers and make your ownership  stake(probably best in an LLC) limited to the compensation for your management efforts and shelter yourself from being pockets in a default situation.

Ben Smalley · Answer

You need to be licensed to manage properties for third-party owners. However you can perform work on an hourly basis. There is also an exception if you are an owner -- essentially you can manage your own properties. I have heard others you have a 1-5% stake in the property LLCs they manage but I would consult an attorney for sure.

Jennifer Jo McCallon · Answer

Everyone here is offering you great advice, I'd just like to add, it really isn't that hard to get your license, it doesn't cost much, it doesn't take that much time and the exam is probably not the hardest you'll ever take (assuming you went to college). Just go for it. It is worth it to educate yourself on the state's laws anyway.

Bob Stevens · Answer

Sorry for the bad experience, I know those that try and go it alone in the Cleveland markets typically do not have a pleasant experience, . Keep up the good work,

Bob Stevens · Answer

No way around it ,unless you go on title , or work for the LLC,  but  why would you want to LOL. PM is a thankless endless business . How are you going to handle the all the inspections, deal with the courts, evictions,  repairs etc. Sure lots of fun for a few props but what happens when you now have dozens. Simply hire a PM co out there and let them deal with it. The management fee is meaningless. MUCH more costly to go it on your own.

Good Luck

Need a Brokers License to Manage Property?

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