As a CEO of a condo management company over the last 13 years, I have come across some interesting beliefs shared by board members, homeowners and people affiliated with the industry in some way, shape or form. So here are the top 10 myths:
- MYTH: Hiring a low cost/cheap condo association company saves the condo association money.
FACT: it will probably cost the association more money overall than hiring a more skilled and more expensive condo management company that specializes in condo association management. The condo management fee is only 1 line item on the expense side of the budget. What matters most is the overall benefit of the management company not just the 1 expense line item. The cost benefit of hiring a highly skilled condo management companies actually pays for itself in savings and avoided stress and aggravation. You really do get what you pay for. - MYTH: A real estate company that knows a lot about real estate sales (ie. buying and selling real estate) is probably a good company to hire as a condo management company.
FACT: condo management is very specialized and has very little overlap with buying and selling real estate. Real estate brokerages don’t have the specialized expertise to provide excellent condo management services. It’s always better to hire a specialist than a generalist. - MYTH: Hiring a property management company that has lots of experience managing apartment buildings is a good choice.
FACT: the overlap between apartment management and condo management is still not that high. There are some similarities but mostly involving physical maintenance of the property. The biggest difference is dealing with condo owners versus apartment tenants and the specialized issues that come up with dealing with the homeowners and assciations. The difference is worlds apart. - MYTH: The only way to get higher board meeting attendance is to pass a special assessment or raise the assessments.
FACT: Increasing homeowner engagement within the community is a much better way to drive up board meeting attendance. - MYTH: Condo management contracts that include “project management” means that the property manager will oversee all projects in detail.
FACT: Actually, the property manager might never even show up over the course of the entire project. Don’t believe everything that is “sold” to you by your condo management company especially when it seems to good to be true. A property manager can only do so much. Then again that probably explains why there is such a high turnover of property managers in the industry. - MYTH: Condo management company contracts that are “all inclusive” mean that there are no “extra charges”.
FACT: Most condo management contracts are very vague and offer very little detail in terms of what is actually included. In fact, most associations fire condo firms because of extra charges and lack of transparency in the services and agreement. Alternatively, you might not get the service you requested because the company over promised. Either way, it’s an unacceptable situation. - MYTH: When searching for a new condo management company, its better to hire the company with fewer ala carte fees.
FACT: What is MUCH more important is to find the company that will provide the best value not the cheapest price. In fact, condo management companies often over promise and stretch their property managers too thin which results in frustrated condo association boards. - MYTH: Since we just got assigned a new property manager (the 3 new one in a year), things will get better.
FACT: High property manager turnover is an epidemic in the portfolio condo association industry. A better approach is to stop accepting mediocrity and switch to a higher performing management company that will deliver more value and greater consistency. - MYTH: A condo management company with lots of employees and lots of buildings under management makes them a more qualified company that a smaller sized company.
FACT: Sometimes size does matter but NOT when it comes to portfolio condo management services. What matters most is the quality of the company employees, the level of expertise, and the business model of the condo management company. - MYTH: Hiring a condo management company with bigger buildings means that they are a better quality company than companies with smaller buildings.
FACT: What is more important is the business model and whether or not the condo management company can deliver value. GM was a huge car company with over 70% market share. Their competitors delivered a better product and took away their huge market share. Similarly, older more established condo management companies that handle larger sized condo buildings don’t necessarily deliver the best value to the associations. The board of directors should look for the best value not simply the company that manages the biggest buildings.
Bottom Line:
There are many mistaken beliefs in the condo association management industry and board members and homeowners are becoming savvier in their decision making process especially around hiring condo association management companies. The bottom line is that when condo associations look to hire a condo management company, they should look for the best value not the cheapest company or the company with the biggest buildings or most buildings.
About the Author:
Salvatore J. Sciacca aka “Condoboss” is one of the nation’s leading experts in the community property management industry. He is also the President and Founder of Chicago Property Services, Chicago’s #1 community property management company specializing in management and operations of condos/townhomes/HOA’s of 100 units and under. Salvatore is also the founder of managmycommunity.com (MMC), which is a state-of-the-art online support portal for community associations.
With over 20 years of industry experience, Salvatore is recognized for his extensive knowledge of capital planning, preventative maintenance, cost-saving measures and community building techniques. He holds industry stature as a Certified Manager of Community Associations (CMCA), the designation of Association Management Specialist (AMS) and is fully licensed as a manager (License #: 261.001386) through the State of IL.
Salvatore’s contact information is:
312-455-0107 x102
ssciacca@chicagopropertyservices.com
www.chicagopropertyservices.com