Legacy Planning for a Property Management Business

Two guests are joining The Property Management Show today, and they are Scott Brady and Garrett Brady from Progressive Property Management in southern California.

Scott has been on the show before, and tends to talk about forward-looking topics that involve challenging the status quo. Garrett is his son, and a big part of the company’s future.

The topic today is legacy planning, which can be rather difficult for property management companies. Scott and Garrett are sharing their journey and where they are.

Progressive Property Management Then and Now

Scott has a story that’s similar to many property management company owners. He began as a real estate agent and had a brokerage business. The recession arrived in 2010, and he wanted to be prepared for the next recession. So, he started Progressive Property Management in 2012. It became incorporated in 2015.

The company grew organically through marketing and relationships. Over the last 12 years, they’ve grown to about 1,000 doors under management. Garrett joined the residential side in 2018.

The business model is unique. It’s a virtual company that hires real estate agents to be property managers. Three years ago, they began an association management department, and now manage around 130 associations with about 7,000 owners, total. They use the same business model; people are hired to be off-site property managers for these communities. The team at Progressive takes care of all back office operations.

About three years ago, Scott was diagnosed with cancer, and he realized the company was not prepared to be sold or handed off. Decisions were made, and a choice had to be made: did Scott want to prepare the company to be sold, did he want to hire someone to run it while he lived off the cash flow, or did he want someone in the family to take it over?

He’s made a decision, and he and Garrett have been busy structuring their legacy plan over the last three years.

Garrett says the company – and the entire industry – was old school in 2018. There wasn’t a lot of technology, and everything was very regional. He’s been able to see the industry move from the stone ages to embracing modern technology. It’s a more appealing industry to join. So while it was a family business that he was happy to join, he now sees the value of real estate and how it interacts with so many other business sectors.

Legacy Planning: Starting the Discussion

The diagnosis spurred the discussion around legacy planning.

Scott hired a consultant outside of the property management industry and the first thing he recommended was to have Garrett go to graduate school. This did not make sense at first, but it was pretty transformative. He earned his position with his education and his experience, not because of nepotism.

The next step was to invite Garrett to earn some controlling interest in the company. Every year that he’s worked for the company, he’s earned 2.5 percent ownership in that company. By now, he’s up to 15 percent. The idea was to have Scott maintain the controlling interest, but to give Garrett a path towards more ownership.

Garrett has skills that Scott doesn’t have, and they both recognize that.

Scott excels at sales and marketing while Garrett is all operations. Scott said he knew the future was in the company’s operations. With 130 associations under management, they need good systems.

Garrett does all the hiring of remote team members and he trains them, too. The company now has 13 remote team members and 13 full-time employees. The future isn’t expanding full-time payroll, but in hiring remote contractors.

Understanding his own skill set allowed Scott to bring Garrett in, and together they sit down and look for the next opportunities while ensuring everything is running properly.

Marc Cunningham mentioned to Garrett that he had to do a buy-in for his ownership in th...