Posted by Laure on November 13, 1999 at 05:17:15:
In Illinois, I think you must be a Realtor, or a Broker.
Property management - Posted by Nicole (AZ)
Posted by Nicole (AZ) on November 12, 1999 at 22:40:18:
I was wondering if it is required to have a license to manage a property that you do not own. I have been looking into finding properties for investors to purchase and then managing them for them. I am not sure if this would require a license though and if so, can I get around it by taking a small percentage interest in the property?
Re: Property management - Posted by Den
Posted by Den on November 13, 1999 at 16:06:30:
I am a RE Broker in Mn and I manage property. It is my understanding that if you are going to be alone in this venture you must be a licensed RE Broker, not just a RE agent, an agent must work for a Broker if he/she is going to manage property or work for a seller or buyer.
Den
Re: Property management - Posted by ScottyTN
Posted by ScottyTN on November 13, 1999 at 12:28:21:
I have been trying to find out the same thing, if I would need a license or not. I have been told by the realtor association of TN that not only would I need a license, but I would have to work under a broker. In my opinion, the property management industry has been monopolized by the realtors. And the law written in thier favor. It has killed my idea and many others from operating a property management business on their own. I think the law was written in ignorance of the real nature of the business. And who else would want such a law than the realtors?
Re: Property management - Posted by Jim Kennedy - Houston, TX
Posted by Jim Kennedy - Houston, TX on November 13, 1999 at 09:17:08:
Nicole,
David is right on target and Laure is also correct, but let me add a little clarification of some of her terminology.
A ?broker? is licensed by the state to conduct real estate related activities on behalf of another and may receive compensation for doing so. A ?real estate salesperson? is also licensed by the state but must work under the direction of a licensed broker.
A REALTOR® is a broker who is a member of the National Association of REALTORS®.
A REALTOR®-Associate is a real estate salesperson (not a broker) who is sponsored by the REALTOR® in order to be a member of the National Association of REALTORS®.
The National Association of REALTORS® is basically a trade organization for the real estate brokerage industry.
The general public, including many real estate investors, frequently use the term REALTOR® when more precisely what they intend to say is real estate broker or real estate salesperson. Most people would be surprised to learn that only about 40% of all brokers are REALTORS®. I catch myself using the terms synonymously even though I know the distinction between the two.
Now that we have gotten the semantics out of the way, let me give you my take on the real question. Is one required to be licensed in order to legally manage real property for another and receive compensation for doing so?
Yes
David?s point about being an employee is why owners can hire on-site managers that do not have to be licensed.
Would holding a small percentage interest in the property avoid the licensing requirement? In my opinion, yes. However, keep these two points in mind:
- Again, David is correct, real estate licensing is controlled by the individual states. Check with your state.
- I am not an attorney, therefore my opinion is just that ? MY opinion.
If, after researching the licensing issue in your state, you decide which way to pursue your plan of managing properties for investors, make sure you identify the benefit you hope to receive. If you decide to become a licensed property manager working for a management fee, please understand that you will be going into the ?Property Management Business?. On the other hand, if you decide to use the approach of retaining an interest in the property, please understand that you will be going into the ?Property Management AND Partnership Business?. All I am saying is to think about the rewards and pitfalls of each.
Let me ask some rhetorical questions.
Do you already own properties that you manage yourself? How much property management experience do you have? Have you ever owned property jointly with someone other than your spouse? What problems might occur in a joint ownership arrangement?
Personally, I manage some of my own properties and I hire a property management company to handle some of my properties. I would not be interested in managing properties for someone else. In my opinion, that would just be a J. O. B. and I am not interested in having a job. Would I consider managing a property in which I held an ownership interest? Yes, but I would not settle for a ?small? percentage. If I found the property AND was going to manage it, I would want to retain a significant percentage. The percentage of ownership would have to be fair for both me and my partner, based upon the contribution each party is bringing to the table. If my contribution is both finding the deal and managing the project, I would want to be well compensated for my knowledge and efforts. Many people start their investing career by using partners to fund the deals and they agree to split the profits on a 50/50 basis. Generally, they graduate to a level where they no longer need ?partners? but rather money investors who do not participate in profit but simply receive a good return on the money invested.
Understand, I am not advising against your plan, just want to point out some areas of concern that you should consider so that you can take proactive measures to avoid future problems. Best of success to you, regardless of what decide.
Jim Kennedy,
Houston, TX
Re: Property management - Posted by David S
Posted by David S on November 13, 1999 at 07:55:36:
You are asking a state specific question, meaning many states have differant laws pertaining to everything, including property management.
In Georgia, for example, you are required to be a licensed Broker, or an agent acting on behalf of a licensed Broker. Now, there is a loophole; you can manage property for someone if you are the direct employee of that person or organization. The same goes for advertising and selling property. You do not need a license if you are the direct employee of the owner of record.
As with any legal question, you should check with the appropriate governing authority. Then get your atty to clear up all the mess you were just told by the governing authority’s clerk that doesn’t really have a clue as to the correct answer to any question asked.
It seems the governing authority’s clerk shoud be a licensed legal professional (atty) in order to give you legal information about matters concerning law.
Go Figure! David S