Here's the Story

There are two realities property managers wrestle with in every part of the country.

First, the property management business is a thin-margin, nickel-dime, service business and managers need lots of different ways to generate revenue to survive, including setting up separate businesses that can support (and profit off of) the management business.

Secondly, we all know that proper/adequate disclosures to our owners is critical to keeping your license but often struggle with the question ‘When And How Do I Disclose Revenue Streams I might have’ so I can charge fees, receive referral checks, get rebates, take commissions, make spreads, profit on maintenance, markup ancillary services and make money through outside companies I own. The question is, “what do I say in the PMA (that owners will accept) that permits me to make this additional revenue … and, how can I word it so the owner doesn’t get mad, or the real estate commission come down on me for not disclosing properly?”

So, this challenge has three criteria. First, it must allow us to generate profit from any and all sources (including from sister companies we own); secondly, that the owner would be OK with it; and lastly, language that satisfies the real estate commissions requirements for adequate disclosure.

We struggled with this for years and tried lots of different methods of disclosure that met these three criteria. In the mid 90’s, with attorney Monica Gilroys help, we finally settled with this language. Owners feel it’s reasonable and fair; it opens up the floodgates of new revenue streams, and, it satisfies the real estate commission's requirements of Full Disclosure. It’s called a Broad Standing Disclosure.

The Rest of the Story . . .

We’ve signed up over 2,000 owners with this disclosure and few request more explanation. Part of this package is ... The Language for the PMA .. the other part is ... The Explanation (when owners ask for clarity), and strategies for your implementation.’ We give you several options on How To Say It in the PMA … along with several talking points to defend it when you’re asked about it by an owner.

Since we included this language in our management agreement we’ve made several million dollars from ‘non-management related fees’ (ie, Procurement Fee, Renewal Fee and Monthly Fees) in our businesses. Today, over 40% of all our revenues come from ‘non-management related fees.’ This language is your Launching Pad for generating tons of revenue off your managed properties. It’s the gateway to Cashing In On Property Management.

For folks with lots of existing PMA’s in place, needing some strategies to get old owners to agree to this new language, see our Cashing In On Property Management Resources section on this site and review the section called Disclosing Fees.

“This disclosure language has served Roberts management company (and many of his colleagues) for well for over 20 years. It clearly satisfies the requirements for disclosing to owners (and the real estate commission) and meets the criteria we set up for it in the beginning. (note: never add language to your management agreement without reviewing it with your Broker and legal counsel first):” Monica Gilroy Esq, managing partner Gilroy, Bailey, Trumble LLC.

Note: When National Realty Trust (Coldwell Banker) bought Crown their legal department reviewed closely this Broad Standing Disclosure language. After careful analysis they adopted this disclosure Word-For-Word as Crown had used it for the past 20 years. This gave NRT the ability to set up a maintenance company and make spreads, receive rebates, get referral fees and make profit on all aspects of the management business. NRT is owned by Realogy, a $6B dollar fortune 500 real estate company with their own in-house legal division. This is just more confirmation that the idea and language is solid and appropriate for property managers.