Condominium and cooperative management companies are plentiful in Chicago. And since there are hundreds of management companies vying for your attention and your business across Chicagoland, it can be tough for them to set themselves apart from their competitors.
Hiring a Manager or Self-Managed
According to the Community Associations Institute (CAI), a nationwide organization providing information, education, and resources to community associations, there are about 60,000 community association managers nationwide, and there are 10,000 community association management companies. Between 15 and 25 percent of common interest communities—co-ops and condos, respectively—are self-managed and don’t employ an on-site manager or management company.
Therefore, it takes a lot for a management company to stand out in the crowd.
Some attempt to do so by marketing themselves as “boutique” firms, specializing in a certain type of building or level of service. Others go broader, offering everything from day-to-day administration to maintenance services and capital project management. Still, others focus on bigger building complexes, which inevitably need more services than smaller communities.
There are plenty of differences from one management company to the next, so before randomly choosing one, there’s a lot you need to know so that you can find the perfect fit.
Is Licensing Required?
Start by finding out if they’re licensed or have some professional accreditation.
In 2010, Illinois enacted the Community Association Manager Licensing and Disciplinary Act, which now requires management companies to have a license. The law also mandates education and testing for companies. Companies in business before 2005 are exempt from the state training and testing, so boards may want to ask such companies if they seek their own outside training. Trade organizations like CAI and the Institute of Real Estate Management (IREM) provide educational instruction and accreditation related to the management field. Kara Cermak, CMCA, AMS, PCAM, and the president of Rowell Inc., a management firm in Elgin, says the new state law will have lasting effects. “People will have to commit to learning our skill set and all that comes with it before deciding they want to join our industry. They will have to obtain a basic education and learn about the ethics of community association management first, and whatever minor inconvenience comes with that, is still better than the alternative,” says Cermak.
While the basics typically remain the same throughout the years—collect the income, pay the bills, watch the staff and keep excellent records—new technology has made these transactions much faster than in previous years.
Instead of collecting maintenance and common charges via check and the postal service, most management companies pay and get paid electronically by transferring the money through PayPal or a credit card. Many now even handle the application and transfer process for sales and leases electronically. This means that every large management company should have someone who is up to date with computers and mobile devices.
The change in technology is also changing other aspects of the job of managing a property. “The biggest change that the advancements in technology have had on management companies is the shift from being office-based to field-based. Successful management companies are able to resource their community managers and field personnel with hand-held devices with full access to stored client data, allowing personnel to be more active at their client’s properties,” says Patrick Kennelly of Chicago-based Phoenix Rising Management Group, Ltd. That means managers can spend more time on-site, since they can now make transactions and pull up any necessary information wherever they are.
A More Complex World
The duties of management companies are shifting as well. Managers now need to have the unique ability to deal with board members, unionized staff, lawyers, accountants, engineers, tradespeople and contractors, possibly all in the same day. And of course, they are still managing your home, quite possibly your single largest investment. Along with the new state-sanctioned property management training, racial and sexual harassment training is now standard for handling any staff, and documentation is absolutely essential to avoid being caught up in unnecessary litigation.
Some management companies hire architects, engineers and green energy specialists as consultants to help them through the maze of tariffs, exclusions, degree days and peak loads. Outside help has also been important for property managers who are looking to keep up with the latest industry trends. Keith Nelson is chief operating officer of Ocius, a Chicago-based firm that develops mobile software for property management, like paying bills, inspecting equipment, and helping managers use newer communication methods like Twitter and Facebook. “Seventy-three percent of all apartment residents don't even have a home phone anymore. They use their mobile device as their primary method of communication. So, whether it's tweeting out information, whether it's facebooking postings, other social media outlets, being able to communicate bi-directionally has been incredibly important,” says Nelson.
Buildings have also added more amenities in recent years to attract buyers and renters: pools, large fitness facilities, movie rooms, just to name a few. Residents expect more, and part of that is more immediate communication from management. “Within the next five years, [mobile] communication between the residents and a property will be not only the preferred method, but the expected method,” says Nelson.
Management companies need to know their clientele, so boards should know their management. Before selecting a management company, make sure to visit other buildings the firm manages to see if yours is similar. If the management company specializes in large high-rises and you have a 10-unit building, then it may not be worth it to pay the higher fees for this agency.
Do you want a management company that only does management—or would you prefer to have a larger company that manages buildings, but also does real estate development and other real estate transactions? Some boards decide to have the larger company so that they have more people to help for every situation. Or, they may want the real estate brokers so they can possibly cut a deal whenever a new unit is for sale.
Some of the most important things to find out from a prospective management company include who the person responding to after-hour phone calls will be, and how the company will offer service when a manager is out sick or on vacation, says Kennelly. “Will your manager have time to administer the contracts at your property, respond to other emerging requirements and still be able to address the above? How about when they are managing a dozen or more other associations too?” says Kennelly.
Regardless of your choice of comprehensive or combined management companies, you’ll still need to do more research before you make your final decision. Make sure to interview the board members in the management agency’s current properties to see if they’ve had any issues. Sometimes, the management firm may appear qualified, but if they rack up late fees or are slow to move on vacancies or broken equipment, it’s a good bet that it probably won’t work out.
Finally, ask for the management firm to give you a detailed breakdown of their costs and fee analysis. If there is an energy saving incentive available that the management company arranges for the community, for example, are they going to take a cut of the savings? Will you have to pay extra any time they fill a vacancy or is it a set fee annually?
Professional residential management is a service industry, and it’s no secret that some service providers perform better than others. To evaluate how your property's management measures up, it's necessary to assess both how the company functions as a whole and also how your individual manager is performing.
Danielle Braff is a freelance writer and a frequent contributor to The Chicagoland Cooperator. Editorial Assistant Tom Lisi contributed to this article.