Does running other owners' short term rentals make me a property manager in my state?

Tasha Morgan· Short-term rental host turning it into a property management company· Named it, Real Estate·Aug 8

I host two short term units of my own and I have gotten good at the unglamorous parts, the turnover crew, the pricing calendar, the 11pm message about a broken coffee maker. Three owners on my street have now asked if I would run theirs, and the number I had in mind was twenty percent of gross.

That is where it stopped being a side hustle question. Collecting money for someone else's property for a fee is, as far as I can tell, exactly the thing that requires a real estate license in a lot of states. My state commission site has a page about property management that manages to be four paragraphs long and answer nothing. A co-host arrangement where the owner keeps the listing in their own name and pays me a service fee looks like a different animal, but I do not know if it is different legally or just different in vibes.

So my actual questions:

did you get licensed before taking outside owners, or work under someone who was
flat monthly fee or percentage of gross, and does percentage change how owners behave
who holds the money, them or you

I am named and registered but have not signed a single owner yet, and I would rather find this out now than after.

3 replies

Rachel Goldstein· Registered·Aug 8

In my state the line is basically whether you are handling someone else's money and negotiating terms on their behalf for compensation. If yes, that is brokerage activity and it needs a license, and the commission does not much care what you call yourself on the listing.

Your co-host framing may genuinely land on the other side of that line where you are, but that is a question for your own commission or an attorney, and I would put it in writing to them and keep the answer. What I will say is that the enforcement stories I hear locally start with an owner dispute, not an audit. Somebody gets angry about a damaged unit and then everyone's paperwork gets read.

Tasha Morgan· Named it·Aug 8

Getting it in writing and keeping it is the tip I needed, because I have had two phone conversations with the commission and both were friendly and neither is worth anything now.

The owner dispute point is the one that actually scared me straight. Three of the four owners are neighbours, which I had been treating as a reason it would all be easy, and it is obviously the reason it would be catastrophic. I am going to price out getting licensed under a broker for a year rather than inventing a structure that only works while everyone is happy.

Rob Mackenzie· Open·Aug 9

Two businesses sold, one of which I nearly lost over exactly this kind of handshake, so with feeling: never take the first owner on the terms that feel neighbourly. Written agreement, defined scope, a spending limit above which you call them, and a termination clause you would be fine with them using.

On the fee, percentage of gross aligns you and the owner, which is right, but it also means you eat the bad months together and owners forget that part. I would take percentage with a monthly minimum. And I would not hold their money until you know for certain you are allowed to.

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