How often has your HOA switched property management companies? Why?

My wife and I have owned a 2-person property management company in Southern Utah for several years. We were hired several months ago to manage a 50 townhome HOA.

We would like to work for a few other HOA's. We're extremely client oriented (about 25% of our business is from referrals) so we know we'll be good at this. Plus, I have had 3 years experience as an HOA president about 10 years ago.

* Our main concern is how can we do a "better" job than the other management companies in our area?

* What would cause a HOA Board to fire a management company?

* What are the main complaints about a management company that you or your board might have?

Thanks for you input!

Don

Before I moved into my community, it had had two property managers before our current one. I don’t know all the details on what happened to them, but from the bits and pieces I’ve heard, certain things weren’t being done and price may have also been an issue. I also heard things ended so badly for one property manager, he reportedly foams at the mouth whenever someone mentions our community to him!

When I was on the board, our homeowner’s survey always asked people if they thought the property manager was responsive to their questions, returned calls or emails within a reasonable amount of time, was professional in her response and so on. For the most part, people seem happy with them – the ones who don’t like the property manager don’t bother to provide any details as to why, so there’s no help there.

We have a very good property manager, but the company she works for is very large (I won’t name names, but some of you can probably guess whom I’m talking about). On one hand, larger companies often have more access to resources, but on the other, I think medium to small communities like ours get lost in the shuffle.

Because the property manager is so large, some of our contractors, such as our bank and association insurance are out of state – that’s not necessarily a bad thing, pricewise, but I would prefer someone with a local office so the board can call with questions and most importantly, come out to the community to meet with the board. You can only do so much with phone calls and emails.

Before the property manager sold out to this larger company, they would do weekly drive throughs in the community to identify maintenance issues and/or check on contractors working out here, but today, our manager has 10 other communities to look after and there’s no time. I also think the big boys/girls tend to nickel and dime HOAs on various services. So, ensuring a personal touch and communication is key.

Over the last 10 years, we went through 5 MCs. None lasted more than 3 years. Some lasted only 1 year. Every time we made a change, we lost around 3 months of productivity on both ends. We gave a minimum of 90 days notice, so the old company skated for the last 3 months of the contract. Every new company promised the world, but it generally took them 3 months to get up to speed on how things should run. Every hand-off was convoluted. For example, our FY ends on 3/31, which is when we make any changeover. Today, a bit more than 6 months after an MC change, our auditor is still validating the old closing and new opening balances on homeowner accounts receivable.

We transitioned from full service to financials only (with the last two companies). This change occurred because:

1. We had been burned by some contractors that MCs brought in - In our opinion, the MCs allegiance should have been with the HOA rather than the contractors; and

2. The MCs kept us in the dark about homeowner communications. In practice, some MCs were making themselves look good to the homeowners at the expense of making the board look bad. For example, one homeowner complained of termites being brought in with the mulch. No other homeowner complained about termites in the mulch. But the PM pacified the complaining homeowner by promising that samples of mulch from around the community would be collected and tested. The board was never told. The testing was never performed. So when the homeowner heard that the testing wasn't done, she found fault with the board.

If I had to choose one thing that would make an MC stand out, it would be an action list or log that is diligently maintained. Something that would show the board all contacts and all resolutions (or non-resolutions) with vendors and homeowners. Something that the board can review as a history of what the MC is responding to and dealing with. Many MCs have promised such an action list, but we are still waiting for the first MC that provides a list that is reasonably reliable.

I think that some MCs are fearful of providing such a list because they think that it will be used as a tool to renegotiate their fees when we see how little contact there actually is. This attitude does a disservice to the community if the board is kept in the dark. In our situation, we would be willing to pay a premium for the additional effort to maintain the list. But I am not sure how many other communities would see things the same way.

Don

Allow me to add that it can be a fine line when it comes to a MC's relationship with owners. If the BOD wants the MC to be the bad guy, enforcer, etc. then you will always be disliked by a certain % of owners. A certain % of owners will always be asking that your company be replaced.

Do set up a chain of command. You do not want owners calling all hours of the day with trivial requests. In all cases other then an emergency, owners should go thru their BOD. Also true with dissenting BOD Members. Have them go through their own chain of command.

Often a BOD has to be counseled not to block legal requests such as financial information requests, nor play election games, have secret meetings, etc. Sometimes the BOD is the bad guy and in that case, a MC should fire the customer.

I disagree with JohnC, Don. Residents should contact the MC with questions, etc. If owners have questions about board policy or suggestions to the Board, they should attend meetings.
But we're a 211 condo, very complex high rise with a full time onsite PM and Mgr. Asst. No one would agree to be on the Board if our PM did not field all request, etc.

But the level of service you offer, of course, depends on what you as agent want to offer and what prospective Boards want as services. Make a clear contract and have your attorney check it.

I'd say that whatever level of service, make sure you communicate frequently and clearly with Owners. Have a protected website for directors on which you keep them up to date on projects they've assigned you--an Action List as NpS also suggests. Our PM keeps ours reasonably up to date.

Make sure your board members do not interfere with your work by questioning vendors or directing them. You should do that if you offer than level of service. None on our board of 7 may direct any onsite staff (appx. 17) or the several vendors a month who come on our premises.

That's why, JohnC, I wrote it depends on the level of device that HOA is paying for and what the contract states.

Our community's first property management company had been hired by the developer. While there never seemed to be any real reason for dismissal, the Board essentially accused the management company of being in the back pocket of the developer.

The second property management company was very good. However, the Board had a vendetta against the CAM (who resigned after documented harassment by a Board member) and then continued to be difficult to work with (the next CAM resigned) and then finally ended up with a CAM who was newer to the profession and was not able to deal with what had become an out-of-control Board. The final straw was that the management company followed the Association's "procedure" in a matter and even though they followed the procedure, they were accused of doing this without Board approval. So the Board fired the management company altogether.

RFPs were sent out and lo and behold, only 2 companies sent proposals that met the RFP. Seems like the community is running out of options for reputable management companies. The next management company was hired and truth be told, does not seem to have the same capabilities or be as sophisticated as the previous management company. So the Board likes to point fingers at this management company EVEN THOUGH THEY SELECTED this management company.

Truth be told, you can be the best management company in the world, but if you end up with unreasonable clients then you won't be with them for long.

What I would like, as an owner, is to have a management company that actually manages the property: submits bids, screens proposals, screens applications, does routine rounding in the community not just for persistent violations but also evaluates the infrastructure and reports to the Board when something needs repair/maintenance/replacement. If the Board is reasonable then the CAM should be able to address minor issues that fall under a set dollar amount rather than be micromanaged and have to ask permission to replace a light bulb or address a minor but needed repair. I think it is important that a Board and the management company share mutual goals and work together in a partnership to achieve those goals (which hopefully is to keep the community in top condition).

I disagree with the philosophy that "the management company is there to serve the Board/do what the Board tells them to do". I expect the management company to provide guidance/counsel and to assist the Board in making sound business decisions, to keep the Board informed of any legislature that impacts the Association, and to assist the community in following local ordinances. CAMs can be valuable team members and should be allowed the opportunity to do their job (especially to do their job that allows them to adhere to the law).

The sections in my neighborhood that are in a Valid HOA, went through 2 Management companies in 8 years and looks like their 3rd ones departing now after the HOA Board members once again lied to them about whom was in their HOA. Most of the time HOA's goes through numerous Management companies is due to the actions of the HOA board members and those management companies knows this and has a clause so they can wash their hands from any legal issues being caused by elected board members that thinks they can do whatever they want too. Don't blame Management company's most likely the causes are from within the HOA elected boards. Might want to clean house and get people in that actually knows how to run a HOA.

Even though I am very new to this site, let me offer my opinion. Our association just changed management companies 6 months ago. It was a pain but worth it.

Here are a few of our reasons:

They are a huge management company that represent a lot of associations in our state. Their service was starting to go subpar. They didn't act on board requests in a timely matter. In the 7 years we had this particular company, we went through 5 different account managers. Each time we complained the company's solution was to give us a new account manager.

We had to use a list of their "preferred" vendors for just about everything. I questioned why they used a particular company for a specific thing and was told numerous times that the company was "great and easy to work with". I discovered one of their "preferred vendors" significantly overcharged us.

Right before our transfer date to the new management company, they contacted the city and changed our water billing rates. We ended up getting overcharged $12000 by the city before it was discovered.

The management company also services our master community (I am in a sub-association). Of course, our homeowners would send in their sub association dues only to have it credited to their other account.

Even with all the headaches of changing, it was totally worth it. We now have a company that has a self-imposed limit of 40 properties. I know the board has been extremely happy so far. They have a no-frills company. We only get charged for what we use. We are saving about $400 per month over the last company.

JerryD5, Our management company has experienced the problems you encountered with a huge management company in Colorado. Our company took over management of some of those HOAs. For example, one HOA President personally told me "You company is unbelievable! You have done more for us in the first two months than the previous (huge) management company did in several years."

Costs are important. Our costs, compared to the huge previous management company, have often saved HOAs more than we are paid by reductions in almost every area of expenses. For example, with one HOA we recommended a better insurance company, added coverage, and reduced insurance cost by over 400%. Were there "kick backs"?

I recommend being careful to only hire management companies who limit the number of HOAs per Agent; who have a record of keeping experienced Agents with an HOA for many years; who give prompt personalized professional services, are open and honest, and keep costs down.

For the record, our management company has never been terminated by an HOA. Meanwhile, our management company has terminated two HOAs when their Board did not act in compliance with their fiduciary duty. One of those two rehired us after all of the Board members were replaced.