In Texas, is a real estate license required to manage vacation rental properties? No lease or rental agreements. No contract negotiations. No property sales. Just advertising and taking reservations for nightly rentals, managing finances, managing maintenance, collecting payment of nightly fees and hotel taxes, managing cleaning services. Basically, the same stuff that a hotel manager would do, but for private owners of residential homes that are booked on a nightly basis by tourists.
If TX requires a RE broker’s license to be a property manager for someone else’s property, then your operation will also unless the property you are managing is property you own.
That’s what is unclear to me. Is my proposed activity “property management” by a legal/RE definition of the term? I would NOT be managing any rental contracts or leasing agreements. Just taking nightly reservations, performing maintenance & cleaning, etc. Average bookings would be for three nights. Do hotel managers require a RE license?
Texas Real Estate rules state: "(b) Unless otherwise exempted by Texas Occupations Code, Chapter 1101 (the Act), a person who manages real property or collects rentals for an owner of real property and for a valuable consideration must be licensed if the person also rents or leases the property for the owner. "
FAQs from TREC Enforcement regarding “property management” says, "Q: Does a property manager have to be licensed? A: It depends on what the property manager is doing for the property owner. Collecting rent and seeing to the upkeep of the property do not currently require a real estate license. If the duties include showing or leasing the property for the owner for which the manager gets paid, a license would be required. See Rule 535.13(b). "
I would not be showing or leasing the property (unless taking a reservation is considered “leasing”, or giving a confirmed guest the keys is considered “showing”), so it does not seem to me that a license would be required. This would obviously be different if I was planning to negotiate and execute leases or rental agreements. TREC regulates and even promulgates the forms for those type of contracts. They do not (as far as I know) regulate hotel management or design or regulate any of the paperwork or agreements between hotels, motels or B&Bs and their guests.
Woohoo! Just got off the phone with TREC and was advised that I would be NOT be required to obtain a RE license because I would be collecting and remitting Texas hotel taxes. My faith in humanity is partly restored. :cool
The rule they referred me to is the Texas Real Estate License Act # 1101.005 (10)(C).
A subject I know a little bit about…
Before you wade into that pond, you must do some research or you can sink.
Does Texas require that rentals be more than 30 days or they are subject to GRT (Gross Receipts Tax)? Do your hotels there collect GRT? If so, you may be liable to collect and report that tax. In this state if you perform a service–property management, cleaning, etc.–you owe the state GRT on that service.
Your state taxing agency can come after you like a hungry shark if they find you aren’t paying that tax. That is their job! Think “Jaws”.
Is there a Lodging Tax in your municipality? Is there a requirement that you pay Lodging Tax? Do your hotels charge it?
Here those two taxes amount to around 14% of the nightly charge–that is why you always pay more than the quoted room rate when you check into a hotel or motel.
Certain cities are now going to prohibit the rental of private homes for stays less than 30 days. This was recently written up in TIME. Scammers have stolen money by renting out non-existent homes in some places.
Most resort areas have property management companies that rent out private condos and homes. They keep around 50% of the rent for that service. It is not an easy job to do 2 and 3-day check-ins and check-outs. You had better be well-compensated or you will burn out.
You may be able to avoid the property management requirement if you lease the property from the owner, with the contractual right to sublease it. Then it will be entirely your baby. But you need to have that leasing contract done by an attorney familiar with state law.
In short: you can easily violate real estate law and the tax codes if you move blindly ahead on your idea. Now why do you want to manage the property?
Wow, you just scared me. A little research shows that Texas DOES collect a GRT, but exempts business with less than $300K gross receipts. I’ve got a ways to go before exceeding that mark. I’ll double check this with my tax accountant.
Is there a Lodging Tax in your municipality? Is there a requirement that you pay Lodging Tax? Do your hotels charge it?Yes. 13%. We collect and remit it (We already manage one unit that we own).
Certain cities are now going to prohibit the rental of private homes for stays less than 30 days. This was recently written up in TIME. Scammers have stolen money by renting out non-existent homes in some places.Sounds like the wrong solution to a real problem. Shouldn't affect me. I'm in an unincorporated area of a county that doesn't even have building codes. Think wild west.
[Quote]You had better be well-compensated or you will burn out.
Thanks. We will be.
You may be able to avoid the property management requirement if you lease the property from the owner, with the contractual right to sublease it. Then it will be entirely your baby. But you need to have that leasing contract done by an attorney familiar with state law.Hmmm. That is an interesting idea and certainly would streamline a number of issues.
Now why do you want to manage the property?Glutton for punishment I guess.
Thank you very much FurnishedOwner.
If you are going to be doing short-stay rentals, VRBO (Vacation Rentals By Owner) and Home Away have websites on which you can advertise.
Thanks. I already use them for the place I own and highly recommend them. Listing prices strike me as high, but the bang for the buck makes it money very well spent.