We live in a world of add-ons. Ever since the term supersize was coined by the fast food industry back in 1994, the idea and its implications have spread to many aspects of the American lifestyle. We've become accustomed to ‘value added elements,’ buy-one-get-one offers, and other perks when we make purchases. Because bigger is better, right?
Well, maybe...or maybe not! Whether we are talking hamburgers, sneakers, or property management, is it really the size or sheer quantity you’re after, or is it the value and the quality of the goods or service that matters? When it comes to property management, what types of services does your board of trustees or HOA really require? How much is enough—and how much is overkill (or over budget)?
Don’t Assume - Do Your Homework
When a board is shopping for a new management company, there’s often a tendency to seek out a larger firm with the expectation that bigger will mean better. But before making that assumption, the trustees should first identify and define the services which its individual property actually requires, and be sure it is clear as to what is wanted and needed. Once the board has drafted a list of goals and objectives for a prospective management company, it will be much easier to judge whether a particular firm can deliver the desired outcomes.
Bart Steele, senior regional property manager with Premier Property Solutions in Boston, notes that the size of a management firm need not necessarily be proportional with the size of an association. “It’s a complete case-by-case basis,” he says. “The specific skills of a manager, and how they relate to an individual community, is the most important factor at hand.”
Dan Wurtzel is president of FirstService Residential, whose main offices are in New York City. (FirstService is the largest property management company in North America). Size should not be an issue, he says. Despite the size and scope of FirstService, says Wurtzel, “The key to successful management is not size, but providing exceptional service.”
The ability of a management firm or manager to provide that service depends not only on your board of trustees’ expectations, but also the size of building portfolio each manager at a given firm handles, and the location, type, and size of those buildings. You may want to look for a management company with a low building-to-manager ratio; that could indicate that your manager will be more accessible and responsive to your needs than one who's juggling more properties might be.
Steven Greenbaum, a New York City-area property manager, is a proponent of a low building-to-manager ratio. With between 35 and 40 properties, he considers his company a boutique or mid-sized management firm. “A manager should have no more than six properties to oversee, with those properties located in a cohesive geographical area,” says Greenbaum.
He believes a small company with fewer properties may be able to spend more time on site, and he favors at least one regularly scheduled weekly visit, and one weekly unscheduled visit per property. Greenbaum says a company’s back office administrative support allows each manager to effectively spend the necessary time required visiting the individual properties. “This team approach also allows for positive peer support and staff interaction,” he explains.
Margie Russell is the executive director of the New York Association of Realty Managers (NYARM), a resource group for property managers, who has an impressive real estate history as both a portfolio and onsite property manager for some of New York’s largest co-ops, condominiums, and mixed-use buildings. Like Wurtzel and Greenbaum, she doesn’t think a large firm is necessarily a better firm. “It is all about the individual in charge and their dedication to the job and perfect service,” she says.
When a board is looking to change management companies and searching for a better fit, she has a few questions she suggests the trustees consider before making any changes. If a property is experiencing a reoccurring change in managers, she recommends the board evaluate itself, and ask the hard questions “Are you part of the problem? Are you a good partner?”
“A board should perform due diligence, taking into account the human perspective and personalities,” she explains.
What’s the Difference?
If superior service can be delivered by any size property management firm with the dedication and leadership to embrace excellence, then what—if any—differences are there between a large and small/boutique firm?
Large and small firms can differ in a number of significant areas, some of them obvious and others more subtle. Perhaps the biggest difference rests with the question of personnel. The simple fact of the matter is that larger companies have more staff. “You want to be able to have a firm that’s large enough that they can hire the staff and provide the expertise to give you a fully integrated company,” says Jerry Ragosa, CPM, the president and owner of The Niles Company of Canton, Massachusetts. “You want expertise in maintenance, administrative support, accounting—and you have to be a certain size to get that. So when an issue arises, regardless of if it’s flu season or not, you’re going to get a live person to help you with your problem and you’re going to get someone who’s familiar with your property.”
Walt Williamsen, PCAM, principal of Reserve Strategies in Torrington, Connecticut, agrees. “The advantage of a larger firm is that if something happens to the manager, the larger company has someone they can put right in there,” he says. “It’s a fairly high burnout business. Managers will often give two weeks’ notice and they’re out. A smaller company might have more difficulty covering that.”
On the other hand, smaller firms can provide a more personal touch. “With a smaller company, if you get the owner and his or her spouse, I think you get a more hands-on management approach, and I think there’s a greater prospect of a long-time relationship, which is a win-win for everyone,” says Williamsen.
According to Steele, there are additional perks associated with more sizable companies: “Large firms can provide in-house snow removal, cleaning services, general repair/handyman services, HVAC, electrician and plumbing. Also, a larger firm often can negotiate better insurance rates for an association by keeping many of the association’s priorities under a large umbrella policy. Our company even files tax returns for associations if need be.”
Wurtzel agrees: “Our company uses a mix of in-house resources, advanced technology, and strategic affiliations to offer our clients exclusive benefits,” he says. Those resources include an attorney and compliance counsel, as well as banking, financial and insurance programs, online sale and lease applications, discounted tax services, and proprietary building management software. “Our clients also have access to a team of customer care professionals 24 hours a day, seven days a week,” he explains.
Different size firms also attract property managers with varying mindsets. And larger companies usually provide continuing education to their employees. The Community Associations Institute (CAI), which has separate chapters in New England and in Connecticut, and the Institute of Real Estate Management (IREM), which has a Boston chapter, provide accreditation and support for management personnel. Management companies, themselves, can also be accredited. The Niles Company, for example, is an accredited management organization (AMO), an accreditation established by IREM and the National Association of Realtors (NAR).
Finding the Perfect Fit
And don’t just lowball your selection. Remember, too, that the lowest price is not always the best bargain. “Many boards tend to go for the low bid, not for what they need,” according to Michael Packard, PCAM, CPM, a senior vice president of Associa, a nationwide management firm. “Low bids can result in a company having too many clients in its portfolio.” And that could mean the new condo community can end up at the bottom of the priority list.
Once a board has defined the needs and wants for its property, it is time to narrow the field and find a good personal fit—or perhaps work on adjusting the fit with the current management firm. A small firm can still offer additional support on an as-needed basis, especially when there is mutual respect and a desire for everyone to act in the best interests of the community at large.
Russell stresses finding an ethical company with the ability to do the job required, and to admit when there are request they cannot handle. “You must say ‘no’ if you cannot do what is asked,” she says. When your list of “must haves” is in order, and your priorities are listed, And remember, always ask for references for property management firms from other professionals you are currently working with. “Your accountant, attorney, and/or engineer will have a good understanding of your needs,” she says.
The experts all agree that doing what is right is not a function of size, but rather an attitude of professionalism, achievable in any firm determined to deliver quality service. Look for the right size firm to partner with to achieve the goals and objectives of your property. When all is said and done, the real value added bonus comes with having the best fit in management size and style to match your needs!
Anne Childers is a freelance writer and a frequent contributor to New England Condominium. Staff writer Michael Odenthal contributed to this article.