Page 8 - New England Condominium January 2019

8 NEW ENGLAND CONDOMINIUM - JANUARY 2019 NEWENGLANDCONDO.COM C ondominium associations come in all sizes and shapes. They can con- tain hundreds of units, or as few as two. While many of the issues faced by asso- ciations are universal regardless of size, small condominium associations do face some unique challenges that set them apart from their larger cousins. Those challenges touch all aspects of life in these communities, from legal to management to social issues. A Cozy Alternative Not all prospective condo owners are seeking the same type of living environment. Some prefer a large, all-inclusive commu- nity with tons of amenities and activities to choose from, while others prefer a smaller, cozier and more intimate community. That type of vibe is often found in smaller prop- erties – typically walk-ups and brownstones – and often in urban settings. Small associa- tions are not unusual, and indeed dominate the available housing stock in certain loca- tions. For example, “if you want to live in Jersey City or Hoboken,” says Joseph Rosen- berg, Chief Operating Officer at Atlantic Management in Secaucus, New Jersey, “that’s pretty much what you’ve got!” Small condo associations also make up a sizable portion of the market in parts of New York and in Chicago’s Lincoln Park. Accord- ing to Frank Lombardi, a Principal with the law firm of Goodman, Shapiro and Lombar- di, which has offices in Massachusetts and Rhode Island: “Small associations under six units are \[also\] very common in New Eng- land. In fact, they may constitute as much as a third of all associations in the region.” According to Kevin McIntyre, a real es- tate operator in Chicago: “People who buy in small associations are usually drawn to the low common charges. Carrying costs in larger buildings are much higher, due to those buildings offering more services. They may be looking for a more traditional neigh- borhood as well, something more personal,” like the aforementioned Lincoln Park, where brownstones are the order of the day. “There’s no particular profile of a typi- cal owner in a small association,” says Ariel Fox, a property manager with Cornerstone Management Systems in New York City. “It has more to do with the type of building. We manage old-style tenement buildings where the units are smaller, and the owners tend to be single, perhaps buying their first unit. We also have conversions of old mercantile buildings where you may have say, eight floor-through lofts on eight floors. Those buildings attract families and investment bankers.” To Hire, or Self-Manage? David Abel, a property manager in Bos- ton with national firm FirstService Residen- tial, says: “Many small condo associations are mostly the result of conversions of our old housing stock. The apartments are worth more as individual units than the property is as a whole.” Put another way, three condo- minium units are worth more individually than a three-family house. “The problem with small associations,” Abel continues, “is that they’re small. They often can’t afford proper management. A four-unit association has the same ‘moving parts’ as a 150-unit association – but in a larger association, management responsibili- ties are not usually undertaken by the board.” In a small association, the few members may be responsible for everything from day-to- day maintenance, to tax filing, to conflict resolution between neighbors. Florin Nenciu owns two condo units in Chicago. He lives in one located in a 16-unit building, and leases the other in a three-unit property. In the 16-unit building, the asso- ciation itself owns a unit that is leased to a building custodian and handyperson who does maintenance and things like snow shov- eling in return for the living space and a sti- pend. In the three-unit building, the cost of hiring people to do chores and maintenance is just too high to be easily absorbed by three owners, so they pitch in themselves to help. Owning a unit in a micro-association is like living in a private home; if it snows, you bet- ter grab your shovel. Abel lived in a six-unit association at one time. He told his neighbors that while he wasn’t offering to take over the manage- ment of the property, he would be willing to oversee certain aspects of day-to-day upkeep and maintenance. “The catch-22,” explains Abel, “is that small associations can’t afford the cost of management, and managers can’t work for the fee that a small association can afford. That often leads to self-management, or to one or two people assuming the bulk of the responsibility,” which Abel likens to being one’s own attorney. “As the old adage goes, a man who represents himself has a fool for a client.” Management Issues “From a manager’s point of view,” says Abel, “it doesn’t pay to handle small associa- tions. The manager has the same responsi- bilities as in larger associations; they have to produce financial statements, arrange and attend inspections, monitor compliance re- quirements, set up and attend meetings, and handle communications with and between board members. The management model to tackle this problem of scale is to ‘bundle’ sev- eral small associations together.” He further explains: “Let’s say you have four or five client buildings located on the same street, or within a couple of blocks of each other. On the same street, you can cov- er all \[of those associations\] with the same cleaning service or lawn maintenance. There are a couple of management firms in Boston who do this.” “Typically the problem with small asso- ciations and corporations is that they don’t have full-time staff,” says Fox. “That can be challenging, because what would normally fall under the responsibility of the super, like meeting a contractor, for instance, is then as- sumed to be done by the manager – which isn’t the case.” Fox’s firm doesn’t formally bundle prop- erties for more efficient management, at least not in the sense of going out looking for those types of arrangements. But, he says: “We do have areas where we’ve picked up a number of properties on the same block, MANAGEMENT ISTOCKPHOTO.COM Running Small Associations Unique Communities, Unique Needs BY A.J. SIDRANSKY continued on page 14