A real estate company built an in-house brokerage to keep commission revenue from selling properties they manage. Since property managers hold the lasting client relationships in turnkey real estate, controlling the sale keeps that relationship and the money in-house.
When you're in the turnkey real estate business, the real relationship is with your property manager. We can sell you a great product, but you are going to have a relationship with the property manager for the next 15, 20, 30 years. If they are doing a bad job, you don't want to buy anymore in that area, because that's where the relationship is. So we brought property management in house, and since we brought property management in house, we went ahead and built a brokerage, because you have to have a broker to have a property management company. So having a retail arm of that, where you can have agents in there that are buying and listing properties, that meant that every time we bought a property that was a retail flip, not selling to an investor, actually selling to an owner occupant, we could go ahead and list it through our brokerage and keep all the money in house.
Physicians and High Earners — What Real Estate Can and Can't Do for Your Taxes
