MC charging $37 per unit per month among other issues

JonathonS (California)
Posts: 1

Posted:

Hello,

I'm new to the site and was hoping for some direction. I'm not even sure where in the world to start so forgive me if this is a little all over the place. I'd like to thank all of you in advance for your help and putting up with my serious lack of knowledge as I am a first time board member.

I'm part of a new 3 member board for my association. This association has been severely neglected over the last decade. It had the same president and mostly same members for longer than reasonable in my opinion. The 2 members resigned (3rd sold and was never replaced) after a law firm bill debacle that we are now going into fee arbitration with the state. We also just replaced our landscapers since they raised their rates 10% each year with no questions or resistance from previous board(president). What I would give for a guaranteed 10% raise every year!

But back to the task at hand. Our association is small, 20 detached condos with one sorry excuse for a park and 3 stretches of green belt/bushes. We have found that our property management company has been charging us a base bookkeeping fee of $263 a month for collecting dues, running financials, and managing the one landscaping vendor as well as occasional misc vendors. However in addition they charge $15 per email which seems to add up to $400+ ($495 this month since we were pissed and wanted to know why). So our total outgoing to property management this month was $740!

So I guess my questions are: Besides shopping for a new management company is there anything that can be done? If hiring a new management company is the way to go do any of you know of decent reasonable $10-$20 per unit per month management around north county san diego specifically escondido 92027? I've contacted two and am awaiting replies.

P.S. Apparently the previous board(president) has been operating our budget in a deficit for the past 6 years lol! If I didn't laugh I'd cry.

What else should this noob look into? I don't even know what I don't know....
Best,
-JJS

MelissaP1 (Alabama)
Posts: 13,836

Posted:

I would create a list of what you want your MC to do. The cost of which will then be divided amongst all the owners equally. Think your kind of going into it backwards. The MC is to work for the board. They are hired contractors. Also a HOA doesn't necessarily need a MC. Some are actually self managed. MC's are a paid service to assist the board in operations.

So be careful of the relationship created with the MC. They are NOT members of the HOA. Not necessarily responsible for rule enforcement. That has to be part of the contract if that is desired. Of course at an extra expense.

Establishing what your HOA wants out of the MC is the most important. Shop around to get a few quotes. See what services they provide or do not. Be careful of hiring a MC that wants to take over. The lines do get blurred. Find out how they prefer to hire contractors. Do you have to use theirs only?

Will tell you that we were self-managed and just used our "MC" as an accounting firm. Plus a POC on occasion for communication purposes. They cost us $250 a month. I am sure costs are much higher now. We did pay for their supplies such as the check ledger and postage. We hired our own contractors separately. So it is possible not to have a MC.

Former HOA President

SheliaH (Indiana)
Posts: 6,964

Posted:

Don't worry about the lack of knowledge - everyone here started where you are and asking questions is how you learn. If all of you are new, education will be key in deciding what direction you want to go. I'll get to the education part in a moment, but first, I agree that getting a good property manager is a start because he or she will be responsible for the day to day operations while the Board oversees the overall direction of the association.

$37 per unit may seem a lot to you, but collecting dues, preparing financial reports and managing assorted vendors isn't necessarily cheap. However, some managers nickel and dime the association (I think the $15 for emails is excessive), and that's why you start with Melissa's suggestion that you determine what you want your manager to do. You should also be reading your documents, as they provide information on how the association should operate and what the manager doesn't do, the Board (you and your colleagues) will have to do. There are only 3 of you and even with dividing up the work, you may find there's a lot that you won't have the time or expertise to handle.

Once you decide what you want to do, prepare a request for proposal and send it out to property managers - Google or check your phone book to look for companies that specialize in HOA management. Be sure to ask for references and check them - talk to board members in communities that are similar to yours in size and amenities. While you're working through that, this would be a good time to sit down with your current manager and have a serious discussion about services and costs - to keep your business, it may be willing to change some things.

That said, I don't see you finding anyone who will take $10 to $20 a month to manage your association. Inflation alone will make that impossible, plus you have to remember economies of scale - the more homes to manage, the cheaper the cost because the cost can be spread out over more people. There are only 20 homes in your community, so you may find $47 is a bargain - you can always drop services you reall dont need (like the $15 email business). In fact, I have a feeling your assesments may be too low to do whatever you want, so brace yourself for a spike. Be sure to keep your fellow homeowners in the loop as to what to expect and ask for their ideas and suggestions. Perhaps there are tasks the association may want to take on that other homeowners can do for you to save money (provided they're qualified to do so).

If you find another company you will need to work with your soon to be former company in developing a transition plan. Changing property managers isn't as simple as changing your email password - there needs to be an inventory of what documents the property manager has, arrangements need to be made to get them turned over to the new company (ALL OF THEM), financial records need to be closed out so you won't owe the old company any money, you'll need to shut off access to the association accounts, etc.

And now for my final suggestion that everyone else knows is coming. You and your colleagues are new to all this, so I suggest you check out the website of the Community Association Institute (CAI). This is an organization of HOAs and business that provide services to them, and they have a ton of educational materials for new and experienced board members. The subjects include selecting and working with a property manager, so you might want to invest in a few books on that, along with best practices for board members (how to hold effective meetings, reserve studies, etc.) If there's a local chapter in your area, it may have seminars you can attend and the national organization also has on demand webinars you can watch. You and your colleagues should pick a subject area and start educating yourselves.

Keep on coming back to this site with your questions - there are lots of people who'll be happy to give you suggestions and tell their stories. Good luck!

If it is not right do not do it; if it is not true do not say it. Marcus Aurelius

SheliaH (Indiana)
Posts: 6,964

Posted:

Don't worry about the lack of knowledge - everyone here started where you are and asking questions is how you learn. If all of you are new, education will be key in deciding what direction you want to go. I'll get to the education part in a moment, but first, I agree that getting a good property manager is a start because he or she will be responsible for the day to day operations while the Board oversees the overall direction of the association.

$37 per unit may seem a lot to you, but collecting dues, preparing financial reports and managing assorted vendors isn't necessarily cheap. However, some managers nickel and dime the association (I think the $15 for emails is excessive), and that's why you start with Melissa's suggestion that you determine what you want your manager to do. You should also be reading your documents, as they provide information on how the association should operate and what the manager doesn't do, the Board (you and your colleagues) will have to do. There are only 3 of you and even with dividing up the work, you may find there's a lot that you won't have the time or expertise to handle.

Once you decide what you want to do, prepare a request for proposal and send it out to property managers - Google or check your phone book to look for companies that specialize in HOA management. Be sure to ask for references and check them - talk to board members in communities that are similar to yours in size and amenities. While you're working through that, this would be a good time to sit down with your current manager and have a serious discussion about services and costs - to keep your business, it may be willing to change some things.

That said, I don't see you finding anyone who will take $10 to $20 a month to manage your association. Inflation alone will make that impossible, plus you have to remember economies of scale - the more homes to manage, the cheaper the cost because the cost can be spread out over more people. There are only 20 homes in your community, so you may find $47 is a bargain - you can always drop services you reall dont need (like the $15 email business). In fact, I have a feeling your assesments may be too low to do whatever you want, so brace yourself for a spike. Be sure to keep your fellow homeowners in the loop as to what to expect and ask for their ideas and suggestions. Perhaps there are tasks the association may want to take on that other homeowners can do for you to save money (provided they're qualified to do so).

If you find another company you will need to work with your soon to be former company in developing a transition plan. Changing property managers isn't as simple as changing your email password - there needs to be an inventory of what documents the property manager has, arrangements need to be made to get them turned over to the new company (ALL OF THEM), financial records need to be closed out so you won't owe the old company any money, you'll need to shut off access to the association accounts, etc.

And now for my final suggestion that everyone else knows is coming. You and your colleagues are new to all this, so I suggest you check out the website of the Community Association Institute (CAI). This is an organization of HOAs and business that provide services to them, and they have a ton of educational materials for new and experienced board members. The subjects include selecting and working with a property manager, so you might want to invest in a few books on that, along with best practices for board members (how to hold effective meetings, reserve studies, etc.) If there's a local chapter in your area, it may have seminars you can attend and the national organization also has on demand webinars you can watch. You and your colleagues should pick a subject area and start educating yourselves.

Keep on coming back to this site with your questions - there are lots of people who'll be happy to give you suggestions and tell their stories. Good luck!

If it is not right do not do it; if it is not true do not say it. Marcus Aurelius

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Jon

The $263 per month sounds fair. The Email charge is outrageous. With only 20 units and not a lot of amenities, you should a look at being self managed.

RichardP13 (California)
Posts: 3,868

Posted:

I happen to own a management company is So. Cal.

For reference, the Department of Real Estate has suggested management fees up to $50.00 per door. The DRE is used when HOA are originally set up by developers. A standard price is $10.00 per door for detached homes and $15.00 for townhomes/condos. I have a minimum price of $350.00. I have managed communities of 7, so the price would be $50.00 a door. Let's say it was 2000 homes, the price could be under $5.00 a door, so size does matter.

Now, the most important question to ask yourself, that the others didn't ask, is what the association is responsible for providing to the membership. You could self manage yourselves, but are YOU willing to put in the time and energy to run the association yourself. The other might be on your side today, but push comes to shove, will they be there tomorrow. In addition, while I wouldn't charge for emails, an attorney will charge $400.00 an hour to write an email, $15.00 is cheap and I think I give pretty opinion.

Just a same list of things that you will have to do that they other folks don't do or are not required to do in their states.

1. Hold at least quarter open meetings providing an agenda and meetings for each.
2. Providing monthly financials per Civil Code for the Board to review.
3. Conducting Annual Membership meetings and Elections and sending out nominating and election ballots per your Election Rules.
4. Creating, maintaining and distributing Annual Budget and Annual Statement documents on an annual basis to your owners.
5. Sending out Annual Financials to owners within 120 days of close of fiscal year.

A good reference on what an association is responsible for providing to its membership and list of disclosures that they require can be found at www.davis-stirling.com.

At the end of the day, you have to determine whether you are willing to do the work or have someone do it for you. Either way, the association is the responsible party.

I happen to be vacationing with my family in Julian, close to you. I am also working because of technology, outside of onsite inspections, I can run my business from anywhere in the world.

EdC5 (Florida)
Posts: 117

Posted:

Like Richard I also manage communities, although I'm in Florida. My prices start at $10.00 per door for HOAs with detached homes, and $17.50 per door for condos, coops, MHPs, and HOAs with zero-lot-line homes. I also agree with Richard on the point, "... ar YOU willing to put in the time ...". In both California and Florida there are hundreds of pages of statute regarding community associations, and are you willing to put in the time to learn and follow all of it? One point no one is every willing to bring up is that it (once the paperwork is set up) takes almost as much work to manage a community of 20 homes as it does to manage a community of 2,000 homes.

Edward J Cooke, CMCA, LCAM

JohnC46 (South Carolina)
Posts: 14,265

Posted:

ED

You start at $10.00 per door but do you have a minimum before you accept?