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Looking for a Property Manager?
Published May 22, 2004 as
Board needs guidelines when choosing a building manager
When you live in a home governed by an association, one of the most important people in your life is the manager. The board of directors consists of laypeople who do not have the time or the experience to manage millions of dollars worth of real property.
It is a fact of life that most associations, regardless of size, need some degree of professional management services - whether it is bookkeeping, collections, payables, bid review, inspections, etc. These services can be obtained from experienced and qualified professionals. However, too often a board will be presented with a standard form contract by their chosen manager, without understanding what they are really signing. When choosing a property manager it is important to have a “meeting of the minds” to establish guidelines and a job description.
1. Who is going to manage the property? This does not mean which person, but rather, it is a question about the board’s intent. All too often a board of directors will hire a manager, sign a standard full-service contract, pay top-dollar for quality service and then micro-manage the property themselves. The board argues that they are not getting what they are paying for . . .?
A board of directors is typically composed of a diverse group of personalities from different backgrounds. Sometimes a board will have members who feel comfortable overseeing all of the daily activities, regardless of how competent their manager is. This is an unnecessary duplication of effort. If the Board is going to take a hands-on, caretaker approach, then they need to have a customized contract limited to specified services. If this is your situation, you should hire a management company to do financial work only. It is more cost effective and efficient.
On the other hand, sometimes a Board is composed of busy people who have neither the time nor inclination to monitor the property on a daily basis. This is when a full-service agreement is appropriate, but then the Board must let the manager manage!
2. Check references. It is not enough just to get a list of names of other associations that the manager represents. A conscientious board should get references for similar types of properties. The inquiry is not whether they do a good job, since only positive references will be provided. Rather, the inquiry should be how they deal with specific situations and whether the manager’s approach to a similar property will be compatible with yours.
Also check credentials. Although the State of Illinois does not license property managers, many of them carry certifications such as a CPM (Certified Property Manager) or PCAM (Professional Community Association Manager), etc., which requires long hours of course work and study. Someone who never reads a book or attends a seminar is likely to make it up as they go along.
3, You get what you pay for. Board’s that consistently hire the lowest bidder for their property will never reach their full potential appreciation in value. This is particularly true in hiring a property management company. If a company is bidding a fee proposal that is lower than industry standard, that also means that their employees are being paid below standard. Are highly qualified professionals going to work for a company with a substandard wage structure? If you pay peanuts, you get monkeys.
When a board hires a property management company, they are not just hiring bookkeeping and customer service businesses, they are also paying for consulting, advice and expertise. As a board member, I would always want to hire the best person, not the cheapest. There will be far greater savings in the long run.
Another consideration is the total cost of the services. Some companies offer low rates but have all types of hidden charges and add-on fees that dramatically raise the actual fee.
4. It’s not always someone’s fault. Some properties were not constructed using the best techniques or the highest quality materials. These buildings are deteriorating at an accelerated rate and require significant rehabilitation. Many communities unfortunately are hard-pressed to pay their bills and still take on multi-million dollar construction projects. While not getting into a discussion here about properly funding reserve accounts, it is not uncommon for some individuals to place blame, rather than attacking the problem itself. If a property is under reserved or undercapitalized, it may not be the manager’s fault, or the accountant’s fault or the lawyer’s fault.
Unfortunately, all too many relationships are unnecessarily terminated because new board members need someone to blame because of an association’s financial ills.
5. Who did you really hire? In evaluating a management company, by all means visit the manager’s offices. Take a tour. Follow a delinquency or service request through the different steps. Review samples of financial reports. If the management company cannot impress you this way, they will never be able to do it with your property.
In evaluating a property manager to determine a good match, the main areas to consider are: trouble shooting abilities, responsiveness, follow up, proactive advice, efficiency, etc.
Pricing, attractive brochures, dazzling sales presentations, etc. can be impressive. However, it is the level of hands-on, personalized service, problem-solving capabilities and the ability to enhance the appearance and value of the property that are really the most important considerations.