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Building a Customized Management Agreement

Owner Agreements and Agency Law

Build a killer management agreement: term, authority, fees, disclosure and what never to put in it.

78 lessons 16h 4m of video 9 modules

Taught byRobert M. Locke, RMP®, MPM® & Monica Gilroy

Read the full transcript

Introduction to Property Management Training

Well, greetings. I'm Robert Locke. Thank you for taking the time to hang out with us today. We are starting a series. I've been coaching property managers all over the country on either rebuilding or replacing their property management agreement, and I've been kind of saying to them over the phone the same things over and over and over again.

So I thought what I would do is trap all that, do a series of videos about how to build a killer property management agreement, and then offer it on our website and stream it out to people over a period of time. So we are building a series of how to build a killer property management agreement. There's about 40 training videos. Some of them are six minutes, some of them are 10 minutes, some of them might even go up to 12 or 14 minutes. And so we'll be streaming it out every week for as long as they are.

And you can disconnect any time. We're not trying to lock you in. And this will be covering the best language and the best strategies for a property management agreement. Kind of doesn't matter what part of the country you're in or what your business model is or how you do property management. We're going to cover a ton of big-picture philosophies and legal issues and then get way down in the weeds and do some specific language conversations as well.

So whether you're an owner, broker, or just somebody in the business, it'll be, we think, of great help to you. Monica and I are doing these videos. I don't know how many I can get her to do. Sometimes she'll do every third one, sometimes every fifth one. But we've got her coming into the studio as a lawyer to address some of these issues so that you can get the best advice we can on certain topics.

Importance of Management Agreement

Now, why do we spend so much time on the management agreement? Well, the management agreement is really the foundation of your management company. It's amazing to me how many people want to start with a rental agreement. Fact of the matter is, the rental agreement is not where you start. Your management agreement is the foundation.

It defines your property management style. It defines your relationship with your owner. It also defines the relationship with the tenant. It kind of defines how profitable you're going to be. And people kind of on the surface say, "What does my management agreement have to do with profitability?" And the answer is, it has everything to do with your profitability.

One of the big topics on our website here is how to turn a nickel-dime business into a money machine. And the things that you say or don't say in your management agreement is going to define that to a great extent. It'll also define how much your company is worth. When we sold Crown four years or two years ago to NRT, that was a Fortune 500 company. They wrote us a very big check for that and just kind of walked away, and the reason is because it gushed money.

And so your management agreement and how you build it, the theory of going into that management agreement, is going to define what your company is ultimately worth. And we can help you make it worth a lot of money so that someday you can step out of it and sell it like we did and retire. And ultimately, how much fun you're going to have. Now, people kind of say, "Robert, the word fun and property management don't belong in the same sentence." I believed that for 20 years. Yeah, 20 years.

2000, I really started putting my shoulder behind the business. When we got ready to sell, we were making a ton of money, and so we had seven letters of intent and ultimately sold it to Realgy, a Fortune 500 company. So the way you build your management agreement is ultimately going to decide how profitable you are, how much your company is worth, and ultimately how much fun you're going to have in the business.

Management Agreement Details

Now, let me say it another way, because I don't want you to miss the point. The management agreement defines your style and your model. It defines the speed at which you operate. Part of our training is going to help you understand that how you manage at 50 properties is not how you manage at 200. As a kid, I did go-karts, and it was really fun going on go-karts, but you couldn't go 50 miles an hour in a go-kart.

And things that work at 50 miles an hour don't work at 200 miles an hour any more than managing 50 properties is done the same way you manage 300. And so since this is really a nickel-dime business, it needs volume, and volume requires speed. And how you set up your management agreement is going to define how fast you can operate. It's going to define how safe you operate, how scalable you are. I come across plenty of people who have a management agreement in place that works really good for 200 properties, but it won't work at 400 because what works at one speed doesn't work at another speed.

And many people build systems that prevent them from being scalable. And so the management agreement is going to ultimately define that, again, how profitable you're going to be, and then ultimately the value of your company in the end. Now, some of this material is going to be at a 30,000-foot level, where we're going to talk about management theories and different styles in property management, and we're going to talk about different ways to do property management. Some of it is going to be way down in the weeds. Some of it is going to be actually not just legal theories, but language, terms of labels, disclosures, what to include and what not to include.

We'll talk about exculpatory language and the five filters that you want to have in your head as you build your management agreement. So some of this on the front end is going to be big picture, and very soon we'll get down granularly and actually give you language that you should consider putting in your management agreement. Now- This will be completely free to you if you're engaged with our site. And if you go to our homepage in the far upper left-hand corner, up in the left-hand corner, you're going to see a website option. It's a button that gives you eight different ways to be engaged with our company.

And so this series is completely free if you're a subscriber, a super subscriber, if you're on a 12-month consulting agreement, if you're on a revenue-sharing program, or if you're not. If you're not engaged with us in some financial way, then after about video number seven or eight or nine, there's going to be a small monthly fee involved if you want to continue it to the end. We're not trying to handcuff anybody. You can quit at any time. And we are open to giving a ton of stuff away.

We're not trying to sell everything. We give a lot of stuff away on this site. But somewhere along the line, we've got to figure out how to monetize it and how to pay our overhead here. Because we got two full-time staff and an office and studios and all that stuff. So we do have an overhead.

We'll push out a bunch of them for free. Somewhere along the line, if you're not engaged with us in other ways, you'll be asked to pay a small fee to continue. Okay? So join us on this adventure. This is going to be fun.

I'm bringing Monica in. We're going to do some debates together. I'm going to take some issues, then she'll do a couple of videos, and you'll gain a ton of information. I'm telling you, what I have been able to teach other property managers over the phone over the last year about the strategies to build in a good management agreement are accelerating them by five and 10 years, making them much safer to operate as a business and making them a lot more profitable.

Engage with the Class

Okay? Now, if you're out on YouTube or you found this video somewhere, the way to engage with this class, go to trainingpropertymanagers.com. There's a button all over the place called Courses or Workshops.

Sign Up for Free Videos

Go to the online one, and you'll find the one that says Building a Killer Management Agreement. Go there, sign up for this, get a bunch of free videos, see what we're bringing to the table to contribute to your success as a property manager. Well, thank you very much. We've got one last short video for you to watch before you go. Thanks for taking the time to meet with us today.

About the speakers

Monica K. Gilroy Esq.

Real estate litigator, The Gilroy Firm

Founding principal and managing partner, The Gilroy Firm
J.D., University of South Carolina School of Law, 1993; B.A. Political Science, University of Wisconsin, 1990
Named a Top 50 Woman Attorney in Georgia
Past Chair, Real Property Law Section, State Bar of Georgia
Outside national counsel to NARPM and General Counsel of its Atlanta chapter
American Land Title Association (ALTA) National Education Committee since 2014
ALTA National Title Action Network (TAN) Chair since 2020; ALTA National Title Professional designation
AV peer review rating, Martindale-Hubbell
Peer-nominated Georgia Super Lawyer in real estate since 2008
Hundreds of jury trials, bench trials, arbitrations and mediations; licensed arbitrator and mediator; Special Master in Fulton County

Robert M. Locke RMP®, MPM®

Property management trainer and consultant

Residential Management Professional (RMP®) designation, 1998
Master Property Manager (MPM®) designation, 1999
Led Crown Management to the Certified Residential Management Company (CRMC®) designation, 2000
Founded Crown Management in 1980 and grew it to over 1,000 single-family homes under management
Sold Crown Management in 2015 to a Fortune 500 company
Past president and board member, Atlanta chapter of NARPM
Certified instructor, National Association of Residential Property Managers
Georgia Association of Realtors Partner in Education (PIE)
Expert witness on real estate disputes in magistrate, state and federal courts
Licensed in real estate since 1973; B.A. in Business and Marketing, Michigan State University, 1969

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What this course covers

Killer Management Agreement 5 lessons
Customized PMA 16 lessons
Monica Gilroy 3 lessons
Killer PMA, Never Put In 9 lessons
Killer PMA 3 lessons
Never Put in Your PMA 11 lessons
Things You Always Put Into Your PMA 6 lessons
Enticing Owners to Sign the New PMA 3 lessons

Build a killer management agreement: term, authority, fees, disclosure and what never to put in it.

Curriculum

Killer Management Agreement5 lessons · 1h 9m

Series Introduction Free 9:02
Introduction Locked 18:26
How Do You Want to Operate? Locked 11:30
PM Styles and Structures Locked 11:50
Who Decides Locked 17:43

Customized PMA16 lessons · 4h 44m

Class 2, Lesson 3: Term and Anniversary Dates Locked 18:07
Class 2, Lesson 4: Authority and Decisions (Full Session) Locked 38:31
Class 3, Lesson 2 (72-Min Full Session) Locked 72:35
Advertising Locked 4:43
Insurance Locked 6:13
Lockboxes Locked 7:03
Management Fee Does Not Cover Rehab, Renovation, Replacement and Restoration Locked 12:31
Minimum Account Balance Locked 8:21
Entire Agreement Clause Locked 5:10
Indemnification Locked 10:16
Notices and Final Wrap-Up Locked 19:22
Reimbursement Locked 15:04
Security Deposits Locked 13:37
Termination Locked 21:32
The Right to Modify Locked 14:12
Preventing Document Creep Locked 16:29

Monica Gilroy3 lessons · 29 min

Killer PMA Contracts Use Labels Locked 9:18
Killer PMA Exculpatory Language Locked 6:46
Use Labels in Your Management Agreement Locked 13:00

Killer PMA, Never Put In9 lessons · 1h 11m

Things That Change Locked 5:55
Things That Move Locked 16:08
Operational Issues Locked 5:39
Things You Can't Control Locked 7:46
Adding Other Documents Locked 10:18
Unfair Terms Locked 5:29
Things That Increase Liability Locked 6:31
Things That Reduce Value Locked 5:18
Standard Forms Frustrate Growth Locked 7:44

Killer PMA3 lessons · 37 min

Don't Collect Data in the PMA Locked 7:24
How and When to Disclose Fees Locked 15:30
Signature Page Madness Locked 14:28

Never Put in Your PMA11 lessons · 1h 37m

Things That Move Locked 16:58
Operational Issues Locked 7:48
Things You Can't Control Locked 8:19
References to Stipulations or Laws Locked 7:29
Incorporating Other Documents Locked 10:39
Things That Change From One Owner to the Next Locked 8:25
Be Fair to Both Parties Locked 8:18
Things That Increase Liability Locked 3:47
Things That Hurt Business Value Locked 5:19
Things You Can't Monitor or Enforce Locked 10:38
The End Date Locked 8:56

Things You Always Put Into Your PMA6 lessons · 1h 7m

Contracts Must Have Start and End Dates Locked 12:48
Exculpatory Language Locked 6:45
Preliminary (Labels) Locked 14:53
Signature Page Madness Locked 11:24
Who Decides Locked 10:56
Who Signs the Management Agreement Locked 10:12

Enticing Owners to Sign the New PMA3 lessons · 24 min

The Cover Letter Locked 6:43
Tips Locked 8:48
Timing Locked 8:22

Recordings and extras22 lessons · 4h 47m

Enticing Owners to Sign the New PMA (Introduction) Locked 7:55
Customized PMA Docs Intro Locked 11:59
PMA and Lease: Introduction to Training Locked 6:03
Onboarding Lesson 7, Step 4: Close on the PMA Locked 10:46
Class 2, Lesson 1: Start of the PMA Training Locked 17:50
Kristi Malcolm: PMA and Lease CYA Locked 0:59
The Property Manager's Model: Building a Customized PMA Locked 10:27
Final Comments on the PMA Locked 5:37
Getting Existing Owners to Sign the PMA Locked 13:59
PMA Preliminary Training Videos Locked 5:03
Things You Never Put in Your PMA, Part 1 Locked 31:27
Things You Never Put in Your PMA Locked 40:59
Things You Never Put in Your PMA (Things You Always Put In) Locked 43:23
Changes to Your PMA Locked 18:23
Getting Owners to Sign the PMA: Guarantees Locked 3:30
I Didn't Disclose Post Move-Out Collections in My PMA Locked 7:58
Why Embrace Our Customized PMA Locked 11:07
Customized PMA Module 2: Training Videos Locked 3:48
Customized PMA Module 1: The Agreement, Training Notes and Sample Locked 9:50
Customized PMA Training: Item 6, Charging Fees for Hard Costs Locked 7:56
Customized PMA Training: Final Issues (Page Numbers, Initials and Copyright) Locked 6:56
How to Get Owners to Sign Your PMA With Guarantees: Training Tips (PMA Module 8) Locked 11:30

Robert M. Locke, RMP®, MPM®

National property management trainer and landlord-tenant litigator. Built Crown Management to 1,000 houses and sold it in 2015 to a Fortune 500 company.

Monica Gilroy

Real estate trial lawyer, general counsel for NARPM’s Atlanta chapter and frequent NARPM speaker. Twenty years co-developing these documents and courses with Robert.