Charles T. from Arlington. I've been targeting property management companies as referral sources since they handle utility issues for multiple commercial tenants. Got interest from a PM company managing 47 retail centers, but they want to know how to structure a referral arrangement. Do you pay referral fees? What percentage? How do you handle it when the PM company wants to stay involved in the process?
Property manager partnerships - how to structure the relationship?
Great question Charles. Randy D. here. Property managers can be excellent partners but you need clear agreements upfront. I typically offer 10-15% referral fees paid after I collect from the client. Make sure the PM introduces you directly to the tenant - don't let them try to be middlemen on the technical work. Also clarify whether you're auditing just electric or all utilities. Many retail centers have complex allocation issues between landlord and tenant meters that require PM cooperation. Have you identified which rate schedules these retail centers are on?
Charles, Beth H. from Jacksonville here. I work with several PM companies and learned the hard way to get everything in writing. Some PMs tried to claim referral fees on renewals and follow-up work. I now specify referral fee only applies to initial engagement per property. Also make sure you can work directly with tenants - some PMs get territorial about 'their' relationships.
Nora V. in Denver. I've had mixed results with property managers. The good ones understand utility audits add value for their tenants and reduce complaint calls. The bad ones see it as competition for their maintenance markup revenue. Charles, I'd suggest starting with one property to prove value before signing any big agreements. What types of retail tenants are in these centers?
Thanks everyone. Randy, most are on Oncor TOU-GSD schedules, mix of restaurants and retail. Beth, definitely getting everything in writing after reading your experience! Nora, it's mostly chain restaurants, a few grocery stores, some service businesses. The PM seems legitimate - they've been managing commercial properties for 15 years. Should I ask for an exclusive arrangement or keep it non-exclusive?
Wade F. from Shreveport. I'd avoid exclusive deals with PMs until you know how much business they'll actually generate. Some promise the world and deliver nothing. Restaurant chains on TOU schedules are usually good prospects - lots of demand charge optimization opportunities. Just did a Subway franchise that saved $320/month by shifting equipment schedules.
Larry T. in Baton Rouge here. Charles, one thing to watch with retail center audits - make sure you understand the lease terms for utility cost pass-throughs. Sometimes the landlord gets the refund even though tenant pays the bills. Had a $12K refund get tied up in landlord-tenant disputes once. The PM should help clarify this upfront.
Brett O. from Springfield. That's a great point Larry. I always request a copy of the lease utility provisions before starting work. Charles, for restaurant chains you might also check if they have corporate energy management contacts. Sometimes individual franchisees can't authorize audit work without corporate approval.
Excellent points everyone. Larry, I hadn't thought about the lease complications - definitely need to understand who gets refunds. Brett, good call on corporate approvals. I think I'll propose a pilot program with 3-5 properties to start, non-exclusive arrangement, 12% referral fee. Does that sound reasonable?
That sounds like a solid approach Charles. 12% is fair and the pilot program lets both sides test the relationship. Make sure your agreement specifies when referral fees are earned - I recommend 'after successful collection from client' to avoid disputes. Keep us posted on how it goes. Restaurant audits can be very profitable once you understand their operational patterns.
Carla M. from Phoenix jumping in late here. Charles, one more tip - ask the PM company if they have any properties with recent tenant turnover. New tenants often don't question inherited utility bills and sometimes rate schedules aren't optimized for new business types. Found a yoga studio on an industrial rate that should have been commercial - easy $180/month savings.