Acquiring real estate through business entities is a popular choice for wealth management, asset diversification, and passive income. Larger portfolios with several types of properties will often employ property management companies to run the day to day operations. But what if you only have one or two rental properties and want to run them yourself? Here are some basic considerations on how to run your own property management company and still protect your assets and income.
Let’s assume you’ve formed your LLC and the property you are managing has been moved into the LLC already (or your multiple properties are in a Series LLC, with each property in their own series). The first step for you then is to form a new LLC that will be your management arm of the venture. This could be as simple as “Nathaniel’s Texas Rental Property Management Company” so don’t fret about the name so much. This new LLC will be “hired” by your holding LLC in order to manage the properties. The basic idea is insulation—we want your personal assets and property to be insulated from any liabilities that occur to the best of our ability when the opportunities present themselves.