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Subject: Experience Going from a Management Company to Self Managed
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ChadH3
(Alabama)

Posts:12


08/29/2019 7:31 AM  
Does anyone on here have experience going from using a management company to self-management or seriously considered it?

The contract with our current management company is coming up at the end of the year. We have a large and vocal group of homeowners who are not happy with the current management company and several of our board members do not hold a favorable opinion of the company either. We have received a few other proposals from other management companies, one of which is very promising, but just looking to explore all options.

Our subdivision will be around 330 homes by January and that will likely grow somewhere between 360-400 by the end of 2020.
SteveM9
(Massachusetts)

Posts:3329


08/29/2019 8:32 AM  
Completely depends on what your HOA requires. Every HOA is completely different.

If you have tons of amenities that need "managing" your free HOA volunteer pool is going to dry up fast.
TimM11


Posts:299


08/29/2019 9:00 AM  
My former HOA considered it in the past, but decided against it -- not enough of us (myself included) were willing to put in the time required to make it work. Plus, you don't just need volunteers, you also need volunteers with the right skill sets and knowledge. I think it could be a good option for certain HOAs, but not all (or even most). I'd look at switching MCs first, in your situation.
JohnC46
(South Carolina)

Posts:8647


08/29/2019 9:04 AM  
Posted By TimM11 on 08/29/2019 9:00 AM
My former HOA considered it in the past, but decided against it -- not enough of us (myself included) were willing to put in the time required to make it work. Plus, you don't just need volunteers, you also need volunteers with the right skill sets and knowledge. I think it could be a good option for certain HOAs, but not all (or even most). I'd look at switching MCs first, in your situation.




I agree.
BarbaraT1
(Texas)

Posts:219


08/29/2019 9:28 AM  
Self management as in volunteers do all the work? Or self managed in the sense that the HOA directly hires a manager or bookkeeper rather than a management company?

ChadH3
(Alabama)

Posts:12


08/29/2019 9:31 AM  
Posted By SteveM9 on 08/29/2019 8:32 AM
Completely depends on what your HOA requires. Every HOA is completely different.

If you have tons of amenities that need "managing" your free HOA volunteer pool is going to dry up fast.



We currently only have a pool (new this year) and that has taken up a good bit of time for myself and other board members even with the management company.
ChadH3
(Alabama)

Posts:12


08/29/2019 9:35 AM  
Posted By TimM11 on 08/29/2019 9:00 AM
My former HOA considered it in the past, but decided against it -- not enough of us (myself included) were willing to put in the time required to make it work. Plus, you don't just need volunteers, you also need volunteers with the right skill sets and knowledge. I think it could be a good option for certain HOAs, but not all (or even most). I'd look at switching MCs first, in your situation.



Thanks Tim
ChadH3
(Alabama)

Posts:12


08/29/2019 9:37 AM  
Posted By BarbaraT1 on 08/29/2019 9:28 AM
Self management as in volunteers do all the work? Or self managed in the sense that the HOA directly hires a manager or bookkeeper rather than a management company?



If we went the self-management route it would probably include getting the software that our current MC uses and then divvying up responsibilities between a few offers and adding compensation which our By-Laws allow.
BarbaraT1
(Texas)

Posts:219


08/29/2019 10:41 AM  
Posted By ChadH3 on 08/29/2019 9:37 AM
Posted By BarbaraT1 on 08/29/2019 9:28 AM
Self management as in volunteers do all the work? Or self managed in the sense that the HOA directly hires a manager or bookkeeper rather than a management company?



If we went the self-management route it would probably include getting the software that our current MC uses and then divvying up responsibilities between a few offers and adding compensation which our By-Laws allow.




Well, there's certainly no reason an HOA can't self manage. It just depends on whether members have the time and resources to do it.

One of the hardest things about relying on volunteers is that 1) if they move away, get burned out or just don't want to do it anymore, you're in a pickle, and 2) you don't have a lot of leverage if they are doing a bad job. So consider how you and other board members might deal with an officer who isn't keeping up with their assigned responsibilities, or isn't performing them well or quits.

You'd want a PO Box for association mail, and some checks and balances so that one officer isn't solely in charge of the finances. Hopefully someone from the board is available on weekdays, as that's when you'd typically meet vendors. For homeowners, you may want to establish some expectations - that you are only available between X hours on X days, unless it is an emergency.


GeorgeS21
(Florida)

Posts:1281


08/31/2019 12:38 PM  
I have considered this, as well - also due to a less than responsive PM.

But, with 320 properties, and many amenities, it would be a nightmare ... while I put in about 20 hrs a week redirecting the PM staff, and sorting out issues, it would be a drop in the bucket compared to not having an accountant, automatic coordination between PM and attorney ... lots of etc, etc, etc.
KerryL1
(California)

Posts:6606


08/31/2019 12:52 PM  
welcome, back , George. I agree with you entirely.
JohnC46
(South Carolina)

Posts:8647


08/31/2019 1:21 PM  
Our HOA could easily be self managed. 112 homes, $95K budget, no amenities. That said, we have never had anybody willing to do the work it would take. We will stay with our $6K per year MC.
DouglasK1
(Florida)

Posts:1439


08/31/2019 4:18 PM  
My former association of 60 or so homes was self managed since turnover. An association of that size is a handful for 5 board members to handle. Unless you plan to hire at least bookkeeping help, I think a 300 home association would be a lot to self manage.

Escaped former treasurer and director of a self managed association.
GeorgeS21
(Florida)

Posts:1281


08/31/2019 4:40 PM  
And, as a btw, I am also on a board of a 189 single family home association - it is self managed because they don't have the money to hire a PM. Big difference is zero amenities, so few contractors and very limited interaction with owners on a daily basis.

They NEED a PM badly as it is an elderly demographic ... but, association membership is voluntary.

It is what it is ... I’m the secretary and pretty much drive the boat - don't want to, but no other choice. Since I don't live in the community, I refused to be pres. We are able to keep up with billing and receiving dues and maintenance, but only by the work of two people.

So, for those of you thinking .... yeah, I live in and am the pres for one community with 314 properties and a PM, and the secretary on the board of a community where i have rental properties.
SamE2
(New Jersey)

Posts:145


09/01/2019 5:55 AM  
We are self managed and always have been but only have 24 units. I think since you are getting bids from management companies you should have a list of duties the management company performs. How much time would it take to do yourself? How much does the management company cost per unit? You already have members complaining about the management company what makes you think they won't complain about the volunteers? Some people get funny about money and having a qualified outside insured person handling the money quiets them. If we could afford it we would have a management company just so they could be the "bad guy" enforcing rules, fining members and doing special assessment instead of a neighbor having to be the bad guy. If you want to change management companies anyway you could self manage for a period of time and then look at it again in 6 months or a year. I think you have some people complaining no matter what you do and it is a lot less personal when they are complaining about the management company then the BOD or volunteers.
MelissaP1
(Alabama)

Posts:8497


09/01/2019 8:14 AM  
We were always self-managed. No one wanted a MC. We were okay with an accounting firm. Who did a little MC work like being a go between members and the board. Like collecting the mail or getting phone calls. Which they forwarded to us. They were not in any decision making role.

It's very difficult to get volunteers never the less those qualified to do some of the positions a HOA needs. So you may have a strong board 1 year who is fully capable of doing the job but the next not so much. Remember the ONLY qualification is to be a homeowner. That doesn't lend a lot of confidence in qualifications/skill.

I think one can do a combination of both. Decide what your HOA wants the MC to do. My opinion do not think they should be responsible for enforcing violations. That is sending out violation letters or issuing fines. Feel that is a BOD responsibility. Along with making decisions of appearances through the ARC committee. Basically many things covered in the CC&R's or By-laws should be the HOA's.

The MC role can sometimes get blurred. Especially those who want to attend each board meetings and act like they own the place. Our relationship with our accounting firm was they did not issue money out unless board voted and it noted in the meeting notes. They didn't tell us what to do.

So I would review what you would want of a New MC. There is no reason why can't negotiate the terms. Just don't sign multi-year contracts. Leave an opening to change yearly if need be.

Former HOA President
RichardP13


Posts:0


09/01/2019 8:28 AM  
Based on Melissa's expert analyst, MC's should be banned, and that all HOA's, no matter the size, should be self-managed. I got out of mine, so I am safe.
KerryL1
(California)

Posts:6606


09/01/2019 11:08 AM  
In CS, Melissa, and maybe many other states the MC doesn't issue fines only the board can make that decision though whatever due process there is in their docs or state laws. The MC certainly can mail out the fine not or violation notice. Th latter would be based on the HOA's rules, etc.

Many MC contracts include the manager attending all board meetings and even writing the minutes. The contract, of course, will make sure the PM "doesn't act like their own the place." And the board must enforce it.

Many bylaws, including ours give the board the authority to delegate all kinds of tasks to an MC including "basically things covered in the CC&Rs."

I can agree that th number of duties a board wants is based on a lot of factors including the HOA's budget.
RichardP13


Posts:0


09/01/2019 11:27 AM  
Chad

Can an association or a group of individuals self-manage their HOA, sure, but for how long? Before anyone answers you question, they have to answer truthfully. They need to know the number of units, what amenities is the HOA responsible for, what state regulations are imposed on HOA, what type of HOA are you talking about, detached homes, attached townhomes, condos, how old is the complex, what is the age group of the owners, what is the financial status of the HOA.

If I were to consider self-management (and I did for the association I lived in), the first question has to be, what if a group of homeowners turn against you and you decide to throw in the towel, then what. The second question, and it's really not a statement, but a point of fact, YOU will be the one doing all the work. You have to decide how you are going to manage the complex, what software are you going to use. The complex I lived in had 317 unit and a convent (yes, a convent, the home built in the 1930's by the Al Capone crime family). It had 81 acres, had to do the monthly water billing and collection for 468 homes, we were a gated community with 12 gates and 2 telephone entry systems, 10 private streets, a park, swimming complex. On paper, it was one of the simplest communities to operate until you factor in people. Then it goes straight to hell in a hand basket. Owners don't like getting notices to put their garbage cans away, owners that believe their dispute with their neighbor must involve the HOA, owners that can't control their tenants, owners that feel they should be able to pay their HOA fees whenever they damn well please. They are detached homes, really the easiest to managed.

Let's say you live in a stacked condo. Bad roof, bad pipes, aging building, aging owners, no money and you have to fix the roof, re-pipe the whole building of 18 units. You live in a complex where the developer only created a limited number of guest parking. It worked fine when the complex was new, families were young and you hadn't accumulated as much crap as you have now and you also are storage for your grown kids. Now can you guess why Boards hire management companies. They sure don't want to be dealing with the problems of the neighbors they live around.

How much can a management company really help? Well the going rate is $10.00 a door for detached homes, $15.00 for attached, but you could have a minimum of $350.00 per month. So 7 unit HOA could pay what a 35 unit HOA pays. It is nothing for a MC to put 10-20 properties in one manager's portfolio.

I can go on and on. One person stated The MC role can sometimes get blurred. Especially those who want to attend each board meetings and act like they own the place. Our relationship with our accounting firm was they did not issue money out unless board voted and it noted in the meeting notes. They didn't tell us what to do. I don't want to "run" the association", but I if don't who will, the Board? I attend almost Board meeting, at least the one's I know about. I set the agenda, because they don't, I run the meeting because they won't, I pay bills and all utility bills are on auto-pay, because if they had to approve, they would be turned off.

So everyone is clear, I was hired by the Board, BUT I work for and represent the association.
MarkM19
(Texas)

Posts:402


09/01/2019 2:23 PM  
Chad,
You want to know what could go wrong? The easiest answer is EVERYTHING.

Part of the good thing about a Managed association is they have an infrastructure that is in place. They have ways to cover sick days, vacations, bad employees and about a hundred other things that go wrong all the time. As a Board member with a PMC in place you have a little shelter from the storms on the horizon. You become Self Managed and the board will be the Only throat to choke and guess what they know where you live so you will never get to get away from the new Job you will undertake.

Get bids and take your time picking a good company that can do the job. You already know what you don't like about the current PM. Don't make the same mistake and you will be better off in the long run.

I have been on boards for nearly 10 years now. If you decide to try this and it works perfectly you will get Zero Credit. If it fails you will get 100% of the credit.
RichardP13


Posts:0


09/01/2019 3:09 PM  
Most people who get on a Board especially if it is self-managed and do much of the work because most everyone else backs out, do it for pride.

The last thing you want to see in your community newsletter is your name, and you being removed from a position that you dedicated so much of your time to.
MarkM19
(Texas)

Posts:402


09/01/2019 3:25 PM  
Richard,
I totally agree with you. The problem is most humans do not come with the thick skin that it takes to have people takes nasty shots at them. It is definitely not a job for the meek.

I am always shocked with the lack of knowledge people have that move into HOAs. Just this week I had a HO who saw me out at a playground watching a vendor replace a broken play structure. He actually asked me who pays to fix stuff like this? I jokingly told him the property manager will knock on everyone's door and collect a $1.25 for this repair. Almost none of the HOs I have spoken to over the years truly understand how Reserves work in an HOA. I had another HO say we should not have to pay dues for a year since we have so much money in the bank. We had over 500K and we have over 1350 homes. That is less than $400 per home. If anyone thinks that they are in great shape financially if they have $400.00 needs a finance class.
RichardP13


Posts:0


09/01/2019 3:33 PM  
I consider myself a relatively intelligent person. I worked for the world's largest mortgage company. I had a real estate sales license. I knew a few things relative to my work at Countrywide. You know how much was covered in my real estate license classes, ZERO. I learned in a hurry.
ChadH3
(Alabama)

Posts:12


09/02/2019 7:49 AM  
Thank you all for the great feedback!
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