Management company vs manager for condo complex

Started by NickB7 • 10 replies • 309 views

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NickB7 (Oregon)
Posts: 12

Posted:

We are a complex of ~275 condos and we have cycled through seven managers in the last eight years. Our current manager just resigned, and we are a very young board so we're looking at our options. Have any of your HOAs switched from a manager to a management company? Or the other way around? I've read some articles on this (mostly written on the behalf of management companies), and some anecdotes from a time when our complex was (unsuccessfully) run by a management company, but would prefer to hear of any firsthand, real-world insight.

And am I foolish to think that the funds we've budgeted towards our manager's compensation package plus the maintenance allocations from our operating budget might get us in with a management company? Or do they typically charge a lot more?

Thanks in advance.

BillH10 (Texas)
Posts: 1,217

Posted:

Nick

I believe your first task as a board and a community is to take a long, deep, soul-searching look into why you have cycled through 7 on-site managers in 8 years. Have exit interviews been held to determine why the previous managers left?

Whether you use an on-site manager or a management company, there are fundamental issues surrounding the property and your association as to why you have such a high occurrence of manager turnover--nearly 100% annually is certainly well in excess of the norm.

Frankly, as the owner of a management company, if I learned you had 7 managers in 8 years, I would decline to become involved with your community unless you could provide very convincing evidence that whatever has been taking place has been addressed and will not reoccur.

Good luck.

NickB7 (Oregon)
Posts: 12

Posted:

Thanks, Bill. It is a point well taken. I've only been an owner in this community for three years, and a board member for six months. But I've come to understand that there is a very small but aggressive group of homeowners who have been known to bully our managers. I know for sure that that was the reason that the last manager left.
We've been trying to work with our association attorneys to draft a new anti-harassment resolution, but they've been extremely unresponsive to us so we still do not have one. I can see the importance of getting one in place before we bring someone else on though.

Board turnaround is extremely high too. I don't know the last time that we had anyone stay for more than a single two-year term.

It's not an ideal situation, but it's what we have and we have to start somewhere. We are a very active and energetic board, and we're working really hard to turn this around.

CathyA3 (Ohio)
Posts: 6,299

Posted:

I'm also in condos. My experience has been with management companies (a total of 4 over almost 30 years).

The benefits I saw with hiring a company instead of individual managers:

* Longevity. The companies had track records that we could evaluate. We were able to get several references and talk to board members in other communities.

* Experience. Companies work with many HOAs and COAs over the years, so they've seen it all.

* Fewer surprises. If your manager resigns, the company will replace that person. If you hire a manager directly, then you may have to scramble if the person resigns with little warning.

So I'm firmly in favor of hiring a management company.

That said, I echo Bill's comments about your community's track record. You really need to evaluate why you've been going through managers at such a rate. Do you have unreasonable expectations about what the manager is supposed to do? Do your board members not understand the difference between the board's function and that of the manager? Are you paying so little that people have no incentive to stay? Are you allowing homeowners to abuse or threaten the manager, so the person promptly quits? Are you just bad at hiring, or failed to verify references, or...? You really need to start here.

CathyA3 (Ohio)
Posts: 6,299

Posted:

Another benefit of a company vs. a sole operator:

Community management is a tough job. Managers need colleagues that they can vent to when necessary, and an individual is pretty much on their own - venting to the board isn't appropriate. And condos can be even harder since they typically need after-hours emergency service because the homes are attached. An individual can't work 24/7 = a company is better able to accommodate such a requirement.

JdW (Texas)
Posts: 40

Posted:

Late to this thread, but with 275 condos, having somebody onsite full time is needed unless you have an incredibly strong board and volunteers who are super active. I've never seen that except in retirement 55+ HOAs.

If you hire a management company, you will get a portfolio manager and will they will be "managing" 5-10 other HOAs. If you think things are bad now, just wait. There simply isn't enough mental bandwidth for one person to keep up with all of that. A typical portfolio manager has 1000+ "doors" as the industry calls it, usually some mix of large, small, as well as single-family subdivision POAs.

There is a hybrid solution potentially, which is a "short portfolio" manager within a management company. If you have someone within a management company but manages no more than 2 HOAs, that might work. In practice, this is hard to find, however.

Be very cautious about management companies and their promises. They dramatically oversell their service. Most boards don't know the right questions to ask, such as the portfolio manager's overall load.

KerryL1 (California)
Posts: 14,550

Posted:

All of the large 200-300 Unit urban high rises in my neighborhood except one have management companies who place a general manager and asst. manager on the property. Many are mixed-use. NONE are part of mgmt. portfolios, which would be craZy with complicated buildings of this size.

One nearby high rise did have a manager, who recently retired, & asst. managers as direct employees. I heard that he, with all benefits, asst., etc., was paid as much as our Mtg. company is paid. Don't know if true. To me, the PM who works for an MC has many more resources than the lone manager.

JdW (Texas)
Posts: 40

Posted:

Quote:

Posted By KerryL1 on 08/31/2022 1:49 PM
All of the large 200-300 Unit urban high rises in my neighborhood except one have management companies who place a general manager and asst. manager on the property. Many are mixed-use. NONE are part of mgmt. portfolios, which would be craZy with complicated buildings of this size.

One nearby high rise did have a manager, who recently retired, & asst. managers as direct employees. I heard that he, with all benefits, asst., etc., was paid as much as our Mtg. company is paid. Don't know if true. To me, the PM who works for an MC has many more resources than the lone manager.

High rises tend to demand good service and will pay for it but you might be surprised by how many lower-end garden-style condo complexes (that are often glorified apartment complexes) with 200+ units use a portfolio manager and then bitterly complain about the service level.

MaxB4
Posts: 3,513

Posted:

It would be typical for a management monthly fee to be about 5% of the monthly budget. If some urban high rise has monthly dues of $1450.00, you could conceivably pay a General Manager or management company almost $16,000 a month or $190,000 a year. You should get pretty good service for that price.

KerryL1 (California)
Posts: 14,550

Posted:

I can see where low rise condo projects could possibly have a portfolio Manager. One of the issues with high rises, especially mixed-use high rises is infrastructural complexity

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