Businesses today wrestle remaining competitive in a tight market, and the property management field is no exception.
“There are more companies now, and they are offering low prices which makes it very competitive,” says Marian Servidio, a property manager with Park Place Management Company, Inc., in South Burlington, Vermont. She explains that new start-up management companies will often “low ball prices to get one or two associations that they can manage from home and then they grow from there.”
Michael Phillips, chief operating officer of The Copley Group in Boston, Massachusetts, adds, “In recent years the market has been more increasingly driven by a change in how the market operates. It’s become more difficult to get new business where you can charge a price which allows the company any way of making a profit.”
Big vs. Small
Jason Rickman, CMCA, AMS, the chief executive officer of Rickman Management in Worcester, Massachusetts, says, “There’s a minimum amount a property management company has to charge in order to make a profit. This minimum cost can be difficult for smaller associations to fit within their budget. In many cases, smaller associations have to raise monthly fees well above market rates to bring on a professional management company. This rise in fees can create unit owner animosity toward the management company for simply trying to provide a service at a reasonable price.”
In fact, how to make a profit these days is a concern for many management companies. “There are costs to running a management company,” says Phillips. “The biggest costs are the people who work for you, but you also maintain an office which means rent and overhead costs, and if you want to manage a condominium building well from top to bottom, there are costs associated with that. It’s hard for a company to manage condominiums without a decent fee.”