S
cott Brady, broker-owner of Partners Real Estate Group, was forced to diversify his business model when the COVID-19 pandemic threatened a market shutdown and rent holidays in California. With a property management arm through Progressive Property Management, Brady sought something more resilient to government regulations and economic downturns. He discovered association management, which involves helping homeowners' association boards carry out their decisions and plans for property upkeep.

    Unlike property management, where managers make decisions on behalf of owners, association managers support the board's efforts. Research revealed a significant demand for this service, particularly in California, where 67% of association boards are unhappy with their current management company. With nearly 30% of homeowners in Southern California living in HOAs, Brady saw an opportunity to adapt his business model.

    Brady established Progressive Association Management and applied the same business model used in property management. He noted that association management requires a different skill set but shares similarities with property management. Unlike property management, which is heavily regulated, association management is unlicensed and unregulated in California, making it a lower-risk venture.

    Brady is currently testing his model through a Southern California-based firm and hopes to partner with real estate brokerages to establish joint ventures. In these partnerships, Brady's company would supply associations in need of management, while the brokerage would provide agents seeking additional revenue streams. The arrangement would split fees between Brady's company, the brokerage, and the managing agent.

    Brady sees association management as a way for struggling or new real estate agents to generate stable income without requiring significant changes to their skills or lifestyle. He believes this model can help brokerages increase margins while avoiding regulatory concerns associated with other joint ventures. As the industry faces pressure on commissions and margins, Brady expects more brokerages to explore alternative revenue models like association management.