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BradP
(Kansas)

Posts:1742

08/03/2008 6:44 AM
George: You are right on the fact that professional management eliminates neighor against neighbor conflict and lingering animosities and you can't put a price on that. And you are also right that associations can effectively self manage but, the caveat is you need a plethera of good, dedicated volunteers and that does not always happen. I disagree with you that PM offers no value, it does...it just really depends on the association. If you drive through a self managed hoa with overgrown yards, funky paint colors and lots of delinquency on assessments I can show you an HOA that would derive great value from a PM. Size doesn't necessarily matter, I am not sure if you have ever served on a boarc, but I Can tell you people get burnt out, they get tired of doing it and it takes many, many strong people to be self managed. That is difficult in any association.

RogerB
(Colorado)

Posts:3725

08/03/2008 7:47 AM
I see valid agruments for and against professional management. For a previous discussion you can review the thread - Self-management vs. professional management RogerB (Colorado)Posts:3593 12/29/2005 10:04 AM 1. Which do you prefer and why? 2. What do you see as the pros and cons of each? 3. What is your major complaint on management of your association? 4. How do you evaluate management of your association? 5. Where do you think self management is more effective? 6. Where do you think professional management is more effective?

Roger Borcherding Official HOATalk.com Sponsor DARCO Property Management (Colorado) (303) 925-0150 *See legal notice below (end of page) or go to www.hoatalk.com/legal

GeorgerwilliamsW
(Indiana)

Posts:768

08/03/2008 8:45 AM
Posted By BradP on 08/03/2008 6:44 AM George: You are right on the fact that professional management eliminates neighor against neighbor conflict and lingering animosities and you can't put a price on that. And you are also right that associations can effectively self manage but, the caveat is you need a plethera of good, dedicated volunteers and that does not always happen. I disagree with you that PM offers no value, it does...it just really depends on the association. If you drive through a self managed hoa with overgrown yards, funky paint colors and lots of delinquency on assessments I can show you an HOA that would derive great value from a PM. Size doesn't necessarily matter, I am not sure if you have ever served on a boarc, but I Can tell you people get burnt out, they get tired of doing it and it takes many, many strong people to be self managed. That is difficult in any association. I don't want to parse words here, but I think we, in fact, agree. I can't be sure. I didn't say that professional management offers no value. I wrote, "The bottom line is value added for the individual homeowner." "If you drive through a self managed hoa with overgrown yards, funky paint colors and lots of delinquency on assessments I can show you an HOA that would derive great value from a PM." But if that is the choice of the homeowners--overgrown yards, funky paint colors and lots of delinquency--perhaps that is the way the homeowners want it to be, as compared with the alternative of a professionally managed association. I would posit that such conditions say something about the culture of the neighborhood, and the desires of owners, rather than about the value of professional management.

BradP
(Kansas)

Posts:1742

08/03/2008 9:38 AM
My association falls into the "optimum 150 - 300 some" homes for self management and I would pay for a PM. People do choose to let their yards get overgrown, but that hurts the association as a whole with reduced property values which begs the question....Who is the HOA responsible to, the association as a whole or this individual homeowner who wants to express themselves with a crappy yard?

GeorgerwilliamsW
(Indiana)

Posts:768

08/03/2008 12:14 PM
Posted By BradP on 08/03/2008 9:38 AM My association falls into the "optimum 150 - 300 some" homes for self management and I would pay for a PM. People do choose to let their yards get overgrown, but that hurts the association as a whole with reduced property values which begs the question....Who is the HOA responsible to, the association as a whole or this individual homeowner who wants to express themselves with a crappy yard? Brad, I agree completely. That is the whole issue in a nutshell. It is a question of balance between individual property rights and common interests. When we elect people to a board of directors we empower them to use their best judgment in achieving that balance. By the way, the size thing is just my observation of what I see around Hoosierland. It has no particular scientific or theoretical basis. And there are plenty of exceptions. It is not a hard and fast rule.

GrahamO
(Ontario)

Posts:51

08/05/2008 4:42 AM
GeorgerwilliamsW— We’re chiming in a bit late here, but I still hope our suggestions will be studied and will end up being helpful. We have two main points to cover. THE FIRST is that the costs for Property Management Services do not relate in any way to your overall costs or to your current unit-owner fees. To take a percentage of this or a ratio of that is exactly what you should NOT be doing. For example there are those that believe the amounts for funding the reserves should bear a certain percentage of the operating budget. This is so very wrong that we have written an article on the subject and if you contact us we’ll send along a copy by e-mail. THE SECOND point is to realize that every community is different … in size, in design layout and facilities and in respect to how they want to have the property managed. Therefore, looking at other communities’ property management costs is can be very misleading. Don’t do it. Here’s what we think you should do. Number One, sit down and decide exactly what you’d like the PM to do. As a starting point here’s a list http://www.brookfieldresidential.com/cms/CorpInner/ctm_displaypage.asp?page=SEREXCE&PageGroup=CORPINNER&flag=-1 offered by a very large PM company up here. Use it to check off the things you’d like your PM to do. It’s very long and inclusive and you’re sure to want only a fraction of the services that could be specified. Once that’s done, get in touch with a few PMs in your area, show them the list and ask them to quote a monthly or annual fee for carrying out those duties. Also get a list of their clients — not just their favourite clients but all of them so you can call them. It’s a “from the ground up” approach and it’s the only sensible way to proceed. Good luck.

Graham Oliver Official HOATalk.com Sponsor Author of "Reserve Fund Essentials" Oliver Interactive, Inc Reserve Fund Software & tools Learn More about our FREE Reserve Planning Tools *See legal notice below (end of page) or go to www.hoatalk.com/legal

JohnK3
(Pennsylvania)

Posts:565

08/05/2008 9:50 AM
Graham, You wrote: >>>THE FIRST is that the costs for Property Management Services do not relate in any way to your overall costs or to your current unit-owner fees.<<< Is that a mistype? Our PM charges, before we went self-managed, were about 33% of our total dues. I'd say that related to our overall costs and fees.

GrahamO
(Ontario)

Posts:51

08/05/2008 12:42 PM
To JohnK3 You can always work out a percentage of course, (in your case 33%). But a percentage for one HOA should never (repeat: never) be used as a guideline for a different HOA. The percentage is "interesting" but other than that, it's quite useless as a guideline for arriving at a fair fee-level. My recommendation is a task-oriented approach -- decide on the tasks the PM must carry out and get quotes and references to help choose one particular PM.

Graham Oliver Official HOATalk.com Sponsor Author of "Reserve Fund Essentials" Oliver Interactive, Inc Reserve Fund Software & tools Learn More about our FREE Reserve Planning Tools *See legal notice below (end of page) or go to www.hoatalk.com/legal

KirkW1
(Texas)

Posts:1190

08/05/2008 3:18 PM
I personally think the best thing to do is to put together a list of benefits of hiring management. Include the intangibles such as reducing neighbor to neighbor conflict since a person can call the manager to complain about their neighbor and thus the complaints can be dealt with by a manager who checks things out. Then consider all of your options. For instance, you could decide to get a lockbox at the bank for deposits to go to. This will eliminate the chore of collecting the checks and driving to the bank. To some it will always come down to a matter of "this is X dollars," or "this is Y percent of our budget." At our last meeting someone exclaimed the reason our dues are so much ($200 a year) is because $20,000 goes to the management company. The thing is that there is always something that some will insist could be cut to save money, while others believe is essential to the value of properties.

GeorgerwilliamsW
(Indiana)

Posts:768

08/08/2008 2:29 PM
Hmmm. . . This article just published seems almost to be part of the discussion here. HOA Governance: Making the Outside-Managed vs. Self-Managed Decision August 2008 http://www.hoaleader.com/public/148.cfm

SheliaH
(Indiana)

Posts:92

08/10/2008 1:52 PM
A timely question, since our management company fee is a considerable chuck of our annual budget and I'd love to find ways to reduce our administrative costs. We're relatively small, compared to your community (156 units) and this year, the management company fee works out to a little more over $13 per month per unit (this year's maintenance fee is $129 a month). Our management company collects assessments, assists us with preparing the annual budget and selecting vendors, runs monthly financial reports, collects delinquency information from the attorney and passes it on to the BOD, and does the initial collection process and violation notices (if late notices and CCR violation notices don't work, the BOD takes a vote to turn the matter over to the Association attorney). That's a lot for $13 - do other management companies do the same thing for a cheaper price? I don't know, but as we try to keep costs under control while wrestling with reduced income (thanks to foreclosures), this is a question i think we'll take on in the very near future. In any event, I think you have to look at what you want you want the management company to do, talk to similar sized communities to see how they approach it and who they use, and then look at price. No one likes to pay extremely high fees for anything, but I've learned you truly get what you pay for. If the BOD wants to cut costs by doing certain task themselves, they had better make sure qualified people are available to do it, otherwise it'll be cheaper in the long run to have the management company do it.

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