It is not required but highly recommended. The Property Management Agreement is signed by IRAR for the benefit of the IRA at the direction of the IRA account owner. You can hire any third party who is not a disqualified person.
Some of our clients use a property manager for the purpose of consolidating the various expenses. Another advantage when partnering with others, is that your tenants do not have to write multiple rental checks to the various investors. Tenants write one check to the property manager, who then distributes the percentages accordingly.
Property managers send the IRA’s percentage to IRAR for deposit, along with the profit and loss statement. It is preferred that the profit and loss statement be sent monthly. If a property management company is not managing the property, the rental income should be sent to IRAR to be deposited directly to your IRA account, unless an LLC was used to make the real estate investment.
Tip: Do not engage in sweat equity. This means you are personally involved in hands-on work adding value, like doing repair work on the property. See IRC 4975.