From time to time, a co-op, condo or HOA community may have to hire a new management company. It may be that the current firm just isn’t working out or the community may have decided to transition from self-management to an outside firm. Before inking a new contract however, there are a few key questions a board or hiring committee should ask of a prospective manager or management company.
Do You Have a Team?
Start the interview by getting to know the team or individual that’s being interviewed.
“Ask about their corporate structure,” says John Thiboutot, CMCA, vice president of The Niles Co., in Canton, Massachusetts. “Ask such questions as, “How many people will work with your property? Is there 24-hour emergency accessibility?”
The size of the property management team will determine how much they can take on. “This has a dramatic impact on how much a manager can take on for a portfolio,” says Nicholas Boit, president of Barrington Management in Arlington, Massachusetts. “Managers without additional internal support staff may only be able to handle four or five properties. Those that have a full support team behind them can manage a great deal more because they don’t have to deal with each issue that crosses their desk and many issues can be delegated to an assistant manager or one of the accounting team, or even the maintenance group of the firm (if they have one).”
If they do come with a staff, it’s vital to know how they are treated. “What does the firm do for its employees beyond the typical benefits package?” asks Boit. “A firm that does communal things to promote internal harmony makes for a happier firm and set of employees who will be servicing your needs. This might be as simple as summer barbeques for staff members or internal contests to promote comradery. These sort of events are equally important to the communication achieved through regular staff meetings.”
Do You Have Any References?
When it comes to asking for references, Steve Miller would, instead, prefer to ask prospective managers a more direct question, “How do I believe you?”
“Okay, the manager sold me about what they do, but how do I believe that this product or service they provide is going to happen?” says Miller, principal of SS Macguire Management LLC in Hampton, New Hampshire.
He also says the answer is simple. “If they asked me, I would tell them to call my existing clientele and they’ll tell you whether or not I can do the job,” he says. “It’s all on reputation. Some management companies are asked that question and weeks go by before they provide a list, but I give all my contacts right in the interview.”
Miller says he comes to the interview with an entire package that tells the client everything they need to know about his company.
“I’ll bring a marketing package, which includes a cover letter, who we are, where we manage properties, who’s on staff, our list of references and certificate of insurance,” he says.
A marketing package is a great way for the property management team to show what they are all about. “However, the management firm may send a marketing team to the interview,” says Boit. “They will be very good at sharing all the marvelous things the firm can do, but at the end of the day this is not who you will be working with. It is recommended that you meet that manager to be assigned to the account and even the support staff, if possible. If time permits, meet the firm at its office and get a tour. This is where your work will be done in addition to your property. Ask to meet the manager that would be responsible for your condominium. Make sure the board and the manager are a good fit.”
Calling several references is also a great way to find out how a company takes care of those clients.
“Asking for references gives the board a chance to ask questions to a fellow board member that likes the services the management company and manager are providing,” says Thiboutot. “They can give a true account of issues the manager has solved or the expertise they have in the field.”
Also, take a close look at how long these clients have using the management company—one year, five years, longer? It matters.
“In a high-turnover business, longevity is very important,” says Larry Levey, CEO of Franklin Square Management in Plainville, Massachusetts. “Frequent turnover of managers is disruptive to the association, can result in unpaid or lost bills, and can delay the start or completion of capital projects. Consistency with the same manager results in smooth, efficient operation and fewer bumps in the road.”
Also, Boit explains that a management team that has had a number of years with a particular firm will also have a great deal of real field experience. “This means that if you have an issue at hand, they have likely dealt with it previously,” he says.
Once you learn about the company and the team, it’s important to learn more about what they actually do on a daily basis. “How often are they at the property?” asks Miller. “Find out what their communication process is. Do they communicate via email, fax or cell phones? Once, we took over a property and walked it the next day. A board member came up to us and asked us what we were doing there. When we told them, they said to us that it’s the first time in five years that they saw a manager on site. They were sitting behind their desk and never saw the property.”
Levey says that response time defines a good company. “Owners and residents expect a quick response and attention to questions and problems from a member of the staff when they contact the office, by either phone or email.”
Who Handles the Bookkeeping?
One property manager steals $67,000 from an association, another $15,000. Just a few headlines of wrongdoing can change an entire industry for those who are trustworthy. “A lot of this question has to do with what’s going on in current events,” says Miller. “If I was on the board, I would ask how the manager handles the books and if they have an interest in hiring a third party bookkeeper that would cut the checks and receive the condo fees. The manager would oversee them, but have no connection in writing the checks.” Miller says that some managers will say no, because handling the financials is a profit center for their company since they offer that service.
Levey says that accurate bookkeeping is essential and a priority, so he uses a software program specifically designed for property management. “I handle bookkeeping in house, for most of the associations we manage,” he says. “This saves associations money because financial services are incorporated into the monthly fee. It facilitates deposits and payment of the bills which are time sensitive.”
He also explains that monthly financial reports are sent to the trustees electronically and include payables, receivables, expense distribution and activity reconciliation. “Owners are welcome to schedule an appointment to review the books,” he says.
Once you’ve gotten to know the interviewee well enough with these questions, there are so many other questions you can ask. Boit would ask if the company and its managers are a member of CAI (Community Associations Institute). “The importance of this question is that firms that are member of CAI are continuing to follow industry standards and continue to educate their managers on industry issues,” says Boit.“Firms that don’t do this can be out of the loop on a variety of current issues from legislative to governance to maintenance.”
He also suggests that firms list and explain three things in the last three years they have done well and three that could have been done better. “This helps to show what they can obviously be good at, but forces them to share some things that may not have gone as planned and what they did about it,” says Boit. “You will be able to tell if they are being sincere on this task which goes a long way to determining if the relationship is a good fit.”
Even in the best of interviews, there may be red flags that warn you about hiring the applicant.
“Beware the lowest management fee,” says Thiboutot. “Cheapest is not always best or a fit for the board and the condo they represent. Weigh the companies for the services they provide and what they mean specifically for your condominium. Also, with a firm that offers the moon, make sure the ‘promises’ are in writing.”
Combined with background checks and other due diligence, these questions are a good start to finding the right property manager.
Lisa Iannucci is a freelance writer and a frequent contributor to New England Condominium.