Too Small to Count? Small Associations Can Have Big Management Challenges

When it comes to managing buildings, sometimes bigger is better. Larger properties with more units typically have a full property management team to run the place, a bigger budget and a much bigger reserve to tap into for unexpected repairs and projects. Bigger properties also maintain a wide variety of trustworthy vendors that they can turn to when something goes wrong. On the other hand, smaller properties—especially those of 12 units or less—can have a much tougher time handling all of the day-to-day building operations.

“Many management companies have a hard time with smaller buildings,” says Patty Coleman, property manager at Pyramid Real Estate Group in Stamford, Connecticut. “Some companies don’t work with small properties and many companies try to sell ‘full management’ to small communities at a low price, but give terrible service because the economics don’t work for the management company. They have to give a manager too many small properties to cover their salary and at that point the manager can’t be responsive or keep up with all the items.”

Fewer unit owners also means less money coming in to take care of unexpected repairs such as roofing issues, leaks, fallen trees and driveway repairs as well as other capital expenses. “Smaller properties lack a revenue stream,” says Mark Liberman REB, CAM, principal of On The Mark Management LLC in Milford, Connecticut, a property management firm that handles properties ranging in size from four to 212 units.

“With insurance skyrocketing in our neck of the woods due to natural disasters, such as Hurricane Sandy, how do you maintain spending money when these necessities to protect the association have to be paid?” he asks. “They’ll need to do a special assessment or pay over time.”

Short on Volunteers, Too

Smaller buildings also lack enough experienced volunteers to handle all of the day-to-day responsibilities. “For example, they do their own books and we find that they are not always done right,” says Coleman. “Smaller boards also don’t like to have to deal with collecting money from neighbors and they aren’t on top of time frames—and they lose out on community income. Additionally, there are fewer volunteers to be active on the board and pitch in.”

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