TO SELF MANAGE OR NOT?

I'm in a community of 700 homes in FL with one small, "informal" clubhouse with pool, exercise room, and small outdoor children's swingset/play area. Otherwise, maintenance involves mowing, grooming of wooded areas, and paving, etc. I'd like anyone's input on whether going the self managed route is even worth it or not?

From what I understand the total fees and expenditures to and through the MC last year were something like $80K, which I think is exhorbitant, but being somewhat new to all of this I have nothing to compare.

Any suggestions or help are greatly appreciated.

Mary,

Here's my thinking:

1. Hire a CPA to handle the financials.
2. Find (hopefully) a licensed LCAM WITHIN the community to manage it and PAY them $350/week. Responsibilities would be hiring of contractors for common area maintenance and clubhouse/pool repairs and other basics.
3. Have the BOD set up a committee (names withheld to protect the innocent) to look for (only) violations which would be reported to the BOD and addressed by same.

The problem we're having is that the BOD is woefully inexperienced and inept. As a result they've turned over WAY too much responsibility to the MC which is run by a little "Nazi" who is dictating to the BOD instead of the other way around.

You're welcome to blow my ideas out of the water or add improvments.

I usually limit my postings to reserve fund matters, but your message caught my eye. Your statement ... "total fees and expenditures TO AND THROUGH the MC last year were something like $80K, which I think is exhorbitant" ... is really impossible to comment on, I believe. It's like the old question "how high is high?".

First, it looks as if the total operating expenditures were $80,000 -- including "x" for the expenditures themselves, and "y" for the MC. If that's so, what then, was the MC's fee? Now you have the question broken down into two answerable questions. (1) Looking at the time the MC devotes to the job, his or her qualifications, and competitive fees in your area, does it seem that he or she is paid too much? (2) Looking at your other expenditures, (the ones you mentioned),which ones were too high or unecessary?

If you break down the problem into its bits, it's a lot easier to come to grips with the answer.

PS: Paving should probably be a reserve fund expenditure, not an operating cost.

Tom,

First of all, you're not proposing to be self managed if you want to hire someone to do the financials and someone to run the assn. Self-managed means the board does all the work. Semi-self-managed means the board might outsource the accounting.

I would suggest looking around for a bookkeeping service to do the assessment collections and prepare monthly financials. Hiring a CPA to do this would be cost-prohibitive, IMO. Your idea of hiring a PCAM who lives in the community at a reduced salary, IMO would not be a wise idea. Besides a potential conflict of interest, I just don't think it a good idea to pay any homeowner for doing anything.

The alternative would be to send out bids to prop. mgmt co's for full service. You will get an idea of what is a comparable monthly fee for the size of your assn including the type amenities you have. You may find out your present mgmt co is not charging too much. Different areas of the country demand different costs so I can't comment on that.

From reading your message, I see that the real problem is having a board who allows the manager to do whatever he/she feels is right. Your board members need to be educated to the fact that THEY are the ones in control, not the P.M. THEY are the ones who will be held resp. if something isn't done right, not the P.M. THey are the ones who were elected to carry out the resp. of managing the assn, not the P.M. If you are a board member, be the one to get this point across to them. If you're not a board member, tread lightly in trying to get this point across to them. If they don't see the light on this and amend their ways, you'll be back to square one no matter what they decide to do regarding hiring a new prop. mgr. or sticking with the old one.

Good luck,

Tom:

I don't know if self managing 700 homes is a wise thing or not, 70 homes yes, 700 probably not. Here is what I would do in your shoes....write an RFP for basic management services and have add alternates such as bookkeeping, lien filings, etc..and place it out on the street. Companies tend to sharpen their pencils more when they know there is competition. Plus you can look at the extra items they provide beyond basic management and decide if it is worth the money or is it something the board and its committees can handle. Couldn't tell you if 80k is high or not.

Just your statement that the Board is "inexperienced and inept" shows you are badly in need of a professional management company. The Board needs to understand that the MC works for them and not the other way around. If they don't understand this it may be time to replace the Board, that is if you can find anyone willing to volunteer which is always a problem. It sounds like your present company is taking advantage of the inexperience of your Board. Time to look around for a replacement.

Tom,

Florida is overloaded with licensed management companies. Get the bids from a few and NEGOTIATE a price from them. Our MC manages 565 homes and we pay far less than what you are paying and her company handles our billings and financials so there is a better deal out there if you shop. Would I self manage 700 homes? NEVER!!