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By the term “resident manager,” we mean a manager of a rental property who also resides at the subject property. In some states the law requires a resident manager for residential buildings or complexes of more than a certain number of units. For example, California requires one for 16 or more units. Even when there is no such law or when the number of units is fewer than specified in a law, a resident manager is sometimes of benefit to an owner because it reduces the owner’s day-to-day involvement with the property
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While most states require a real estate broker license (or working for a broker) to manage property owned by another, the laws usually allow for a non-licensed resident manager who is employed by the owner or by the licensed property management company employed by the owner. The laws regarding resident managers should be confirmed for your particular state, as penalties for unlicensed activities for which a license is required can be quite severe.
There are several reasons why one should want the resident manager to be an employee and why the government will consider them as such. This includes the very specific management procedures that you should establish in detailed written form. You must be concerned about everything the manager might do as your agent and how the manager accomplishes the tasks. You cannot only care about the end result – low vacancy rate and 100 percent of rents collected – because there are many ways to accomplish these end results that would violate a lot of laws as well as open you up to other civil litigation, perhaps even to criminal prosecution.
Landlords often find a resident manager from among existing tenants. While this may sometimes result in an adequate candidate, it is usually best to select a qualified manager and make him/her a resident rather than attempt to turn a resident into a competent manager.