We live in a world of add-ons. Ever since the term supersize was coined by the fast food industry back in 1994, the idea and its implications have spread to many aspects of the American lifestyle. We've become accustomed to ‘value added elements,’ buy-one-get-one offers offers, and other perks when we make purchases. Because bigger is better, right?
Well, maybe...or maybe not! Whether we are talking hamburgers, sneakers, or property management, is it really the size or sheer quantity you’re after, or is it the value and the quality of the goods or service that matters? When it comes to property management, what types of services does your board or HOA really require? How much is enough—and how much is overkill (or over budget)?
Don’t Assume - Do Your Homework
When a board is shopping for a new management company, there's often a tendency to seek out a larger firm with the expectation that bigger will mean better. But before making that assumption, the board should first identify and define the services which its individual property actually requires, and be sure it is clear as to what is wanted and needed. Once the board has drafted a list of goals and objectives for a prospective management company, it will be much easier to judge whether a particular firm can deliver the desired outcomes. As Dan Wurtzel of FirstService Residential, a management company with offices throughout the Chicagoland area, puts it, “The more boxes you can check off, the better the fit.”
Richard Holtzmann, president of Prairie Shores Management in Chicago, recommends that associations start the managerial search by compiling a “detailed and lengthy RFP,” a request for proposal bid document, which includes the history of the building, how frequently the board meets, what projects it plans to undertake over the next year, etc. “Boards should disclose as much information as possible up front, so that the right management company can decide if it wants to partner with that association and that board.”
A Matter of Scale
For his part, Wurtzel oversees departments that collectively manage nearly 500 condominiums and cooperatives, as well as 78,000 rentals. Despite the size and scope of FirstService, says Wurtzel, “The key to successful management is not size, but providing exceptional service.”
The ability of a management firm or community association manager to provide that service depends not only on your board's expectations, but also the size of building portfolio each manager at a given firm handles, and the location, type, and size of those buildings. You may want to look for a management company with a low building-to-manager ratio; that could indicate that your manager will be more accessible and responsive to your needs than one who's juggling more properties might be.
Steven Greenbaum, a New York City-based property manager, is a proponent of this low building-to-manager ratio. With between 35 and 40 total properties, he considers his company a boutique or mid-sized management firm. “A manager should have no more than six properties to oversee, with those properties located in a cohesive geographical area,” says Greenbaum.
He believes a small company with fewer properties may be able to spend more time on site, and he favors at least one regularly scheduled weekly visit, and one weekly unscheduled visit per property. Greenbaum says that a company’s back office administrative support allows each manager to effectively spend the necessary time required visiting the individual properties. “This team approach also allows for positive peer support and staff interaction, he explains.”
What’s the Difference?
If superior service can be delivered by any size property management firm with the dedication and leadership to embrace excellence, then what—if any—differences are there between a large and small/boutique firm?
Large and small firms can differ in a number of significant areas, some of them obvious and others more subtle. Perhaps the biggest difference rests with the question of personnel.
Unlike giant national conglomerates, Holtzmann’s operation consists of a relatively modest 17 full-time employees. “The advantages of working with a company of our size is that the property manager assigned to a particular client is not overwhelmed juggling other buildings,” he says. “His or her time can be allocated toward working on projects, attending meetings, and visiting the reasonable amount of buildings that he or she is managing. I know that a lot of management companies visit the building only when there’s a board meeting. We have a policy about visiting our clients at least weekly, unless there’s a project going on. In those cases, we go even more frequently.”
In smaller firms, property managers may report directly to the company owner—which can mean greater accountability and faster turn-around on inquiries and service requests, whereas a larger firm may have in-house maintenance pros, or an architect on staff, and even an in-house attorney.” Greenbaum notes larger firms may have accounting departments to handle budgeting, and financing, and may be able to negotiate a better deal with vendors.
Wurtzel agrees: “Our company uses a mix of in-house resources, advanced technology, and strategic affiliations to offer our clients exclusive benefits,” he says. Those resources include an attorney and compliance counsel, as well as banking, financial and insurance programs, online sale and lease applications, discounted tax services, and proprietary building management software. “Our clients also have access to a team of customer care professionals 24 hours a day, seven days a week,” he explains.
Different size firms also attract managing agents and property managers with varying mindsets. Continuing education is often provided by firms of all sizes, as well as through professional organizations.
In Illinois, community association managers are required to be licensed and must take 20 hours of pre-licensure education and pass an exam to get their Certified Manager of Community Associations (CMCA) accreditation. Outside of private management companies, local branches of organizations like the Community Associations Institute (CAI) offer management pros lots of opportunities to stay informed and hone their skill set. CAI-Illinois offers a wide array of educational and accreditation courses for managers (and board members too), covering topics ranging from legal issues to building rapport between boards and property managers. Other CAI-based accreditations include the Professional Community Association Manager (PCAM), the Association Management Specialist (AMS), the Large Scale Manager (LSM) and the Accredited Association Management Company (AAMC) for management firms.
The Institute of Real Estate Management (IREM), which has its own Chicago chapter, also offers a variety of coursework for management professionals awarding designations such as the Certified Property Manager (CPM), the Accredited Residential Manager (ARM) and the Accredited Management Organization (AMO) for individual management firms.
The Chicagoland Cooperator’s two annual Expo events in Rosemont in the spring (May 18, 2016) and Chicago in the fall (November 15, 2016), are also fantastic opportunities for managers to learn and network, regardless of whether they’re independent operators or members of a huge management conglomerate.
Finding the Perfect Fit
Once a board of directors has defined the needs and wants for its property, it is time to narrow the field and find a good personal fit or perhaps work on adjusting the fit with the current management firm. Greenbaum mentions that a small firm can still offer additional support on an as-needed basis, especially when there is mutual respect and a desire for everyone to “be good to the building,” and a property manager is willing to reach out to the appropriate outside professionals if a situation arises that he or she just isn’t equipped to handle alone.
When your list of 'must haves' is in order, and your priorities are listed, Greenbaum recommends asking for references for property management firms from other professionals you are currently working with. “Your accountant, attorney, and/or engineer will have a good understanding of your needs,” he says.
Ultimately, it may be that the size and scope of a given property management firm isn’t as important as the quality of the relationship between individual managers and associations. The experts all agree that doing what is right is not a function of size, but rather an attitude of professionalism, achievable in any firm determined to deliver quality service. Look for the right size firm to partner with to achieve the goals and objectives of your property.
According to one long-time property management pro, “It is all about the individual in charge and their dedication to the job and perfect service.” When a board is looking to change management companies and searching for a better fit, she has a few questions she suggests board members consider before making any changes. If a property is experiencing a reoccurring change in managers she recommends the board evaluate itself, and ask the hard questions “Are you part of the problem? Are you a good partner? A board should perform due diligence, taking into account the human perspective and personalities.”
When all is said and done, the real value added bonus comes with having the best fit in management size and style to match your needs!
Anne Childers is a freelance writer and a frequent contributor to The Chicagoland Cooperator.