Management fees-are we to high ?

Started by ColinJ • 12 replies • 2100 views

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ColinJ (Virginia)
Posts: 2

Posted:

Hi,

I am going to be on the board next year and have always thought our fees were to high based of a percentage of incoming monies.

We have 550 houses in our subdivision. Pool club house, tennis courts.

As a whole we take in about 250,000 in total HOA dues and the management company charges us
60,000.

This is in the 24-25% range.

Thank you for your input.

RogerB (Colorado)
Posts: 5,067

Posted:

ColinJ, considering management fees based on the services rendered is a better guide than "a percentage of incoming monies". Why not use a detailed specific RFP to solicit competative bids from your management company and several other management companies? That would provide the best guide to answer your question on cost. Then if necessary interview those you are interested in to get an idea about quality of service.

For services other than any maintenance and/or management of the pool, club house, and tennis courts, a considerably lower fee is possible.

ColinJ (Virginia)
Posts: 2

Posted:

Thank you, and let me say that the 60k is their fee, the upkeep of the common areas of course is budgeted.

RogerB (Colorado)
Posts: 5,067

Posted:

Posted By ColinJ on 11/30/2005 7:14 AM

Thank you, and let me say that the 60k is their fee, the upkeep of the common areas of course is budgeted.

IMHO $60K is way too high for most situations.

Roger

ChadS (Indiana)
Posts: 2

Posted:

My property management firm in Indianapolis charges $4 for every $90 per quarter per residence (we pay $30 a month), this amounts to $16 per residence for the year, we have 490 residences in our subdivision, it comes close to $8000 ($16 times 500 approx.). By comparison, $60K is way too excessive, start working on taking bids from multiple property management firms right away. Hope this helps.

Chad

ChadS (Indiana)
Posts: 2

Posted:

I live in Indianapolis and our HOA fees are $30 per month. The property management firm gets $4 per quarter per residence i.e. $16 per residence in a year. We have about 490 residences, say 500 to be approximate. That comes to $8000 per year for the property management firm. The home prices range from $130K - 250K. Hope that helps. Going by what you say, it might be time to take bids from multiple property management firms.

Chad

KathyS (California)
Posts: 145

Posted:

Seperate from any other cost in our 230 home association, management charges us approx. $40,000 a year. We pay $25,000 just for the service. The rest is overhead. Paper, envelopes, postage etc. Their inspections of the association are an additional $60 an hour.

CarolB (Arizona)
Posts: 9

Posted:

From my experience, in Arizona, most management companies charge $X per home. For example, our current management company charges $5 per residence for our community (to increase to $5.50 in 2006).
It also depends on the quality and type of services provided to your community. Your fees do seem high and I suggest preparing a Request for Proposal with detailed service levels and going out to bid.

LarryV (Arizona)
Posts: 4

Posted:

Depends on what they do. Some management companies receive funds from the preparation of papers required for the sale of a property of $150 - $300, which helps reduce their charges and reduces the HOA assessment fees. There seems to be a "going rate" in most communities (perhaps unpublished) for $ per unit based on the amenities that the HOA has. Try asking some other property management companies what their guideline is, or get some estimates from them. In our area for a community your size general charge is in the $5/unit range.

LisaS (Illinois)
Posts: 341

Posted:

We do not employ a management comany, although I am a Realtor and I am familiar with many locally in Illinois.

Here, there are a few larger communities who use one particular management company (handpicked by their developer). They have been 'in charge' for a long time. They remain because people are afraid of the unknown, and the fees distributed over a large community don't affect any one household too substantially. As well, they customarily charge high fees (approx $150) for processing papers for those moving in/out. Here these fees are gravy- they do not offset the Association's management fees. This is because they can't be certain of the turnover rate for any given year. You would think that the HOA would at least get a rebate from a portion of the lucrative fees-but they don't.

What you are being charged seems very high. Property Management is a business. Decide what services you need and send them out for competitive bed. Negotiate. You would never buy a car or a house without a little research and comparison, so why settle at $60,000 here.

Lisa

DonD (North Carolina)
Posts: 4

Posted:

ColinJ: What services do they provide
for 60K? (ie) bookeeping, common area
maintaince, bad weather emergency repairs?
Do they charge extra for additional help?
The list goes on and on.
We Have 600 multiuse properties, and employ
a property manager plus a full time employee.
several weeks in the summer a part time person.
Have found there are too many hidden costs in
management fees.

CareyD (Indiana)
Posts: 15

Posted:

Your Management are to high.
But I do have a question
How are you maintaining 550 units and all your amenities
for $28.79 of income after the management takes its fees

AlexL1 (Florida)
Posts: 305

Posted:

Colin: Even without knowing more about it... it sure sounds as if you are being ripped off

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