Page 8 - New Jersey Cooperator January 2019
P. 8

C  ondominium associations come in   all sizes and shapes. They can con-  tain hundreds of units, or as few as   two. While many of the issues faced by asso-  ciations are universal regardless of size, small   condominium associations do face some   unique challenges that set them apart from   their larger cousins. Those challenges touch   all aspects of life in these communities, from   legal to management to social issues.   A Cozy Alternative  Not all prospective  condo owners are   seeking the same type of living environment.   Some prefer a large, all-inclusive community   with tons of amenities and activities to choose   from, while others prefer a smaller, cozier and   more intimate community.  That type of vibe   is often found in smaller properties – typi-  cally walk-ups and brownstones – and often   in urban settings. Small associations are not   unusual, and indeed dominate the available   housing stock in certain locations. For ex-  ample, “if you want to live in Jersey City or   Hoboken,” says Joseph Rosenberg, Chief Op-  erating Officer at Atlantic Management in Se-  caucus, “that’s pretty much what you’ve got!”    Small condo associations also make up a   sizable portion of the market in parts of New   York City; and in Chicago’s Lincoln Park. Ac-  cording to Frank Lombardi, a principal with   the law firm of Goodman, Shapiro and Lom-  bardi, which has offices in Massachusetts and   Rhode Island: “Small associations under six   units are \\\[also\\\] very common in New Eng-  land. In fact, they may constitute as much as a   third of all associations in the region.”   According to Kevin McIntyre, a real es-  tate operator in Chicago: “People who buy   in small associations are usually drawn to   the low common charges. Carrying costs   in larger buildings are much higher, due to   those buildings offering more services. They   may be looking for a more traditional neigh-  borhood as well, something more personal,”   like the aforementioned Lincoln Park, where   brownstones are the order of the day.   “There’s no particular profile of a typi-  cal owner in a small association,” says Ariel   Fox, a property manager with Cornerstone   Management Systems in New York City. “It   has more to do with the type of building. We   manage old-style tenement buildings where   the units are smaller, and the owners tend to   be single, perhaps buying their first unit. We   also have conversions of old mercantile build-  ings where you may have say, eight floor-  through lofts on eight floors. Those buildings   attract families and investment bankers.”   To Hire, or Self-Manage?  David Abel, a property manager in Bos-  ton with national firm FirstService Residen-  tial, says: “Many small condo associations   are mostly the result of conversions of our   old housing stock. The apartments are worth   more as individual units than the property is   as a whole.” Put another way, three condo-  minium units are worth more individually   than a three-family house.  “The problem with small associations,”   Abel continues, “is that they’re small. They of-  ten can’t afford proper management. A four-  unit association has the same ‘moving parts’   as a 150-unit association – but in a larger as-  sociation,  management  responsibilities  are   not usually undertaken by the board.” In a   small association, the few members may be   responsible for everything from day-to-day   maintenance, to tax filing, to conflict resolu-  tion between neighbors.   Florin Nenciu owns two condo units in   Chicago. He lives in one located in a 16-unit   building, and leases the other in a three-unit   property. In the 16-unit building, the associa-  tion itself owns a unit that is leased to a build-  ing  custodian  and  handyperson  who  does   maintenance and things like snow shoveling   in return for the living space and a stipend.   In the three-unit building, the cost of hiring   people to do chores and maintenance is just   too high to be easily absorbed by three own-  ers, so they pitch in themselves to help. Own-  ing a unit in a micro-association is like living   in a private home; if it snows, you better grab   your shovel.   Abel lived in a six-unit association at   one time. He told his neighbors that while   he wasn’t offering to take over the manage-  ment of the property, he would be willing to   oversee certain aspects of day-to-day upkeep   and maintenance. “The catch-22,” explains   Abel, “is that small associations can’t afford   the cost of management, and managers can’t   work for the fee that a small association can   afford. That often leads to self-management,   or to one or two people assuming the bulk of   the responsibility,” which Abel likens to being   one’s own attorney. “As the old adage goes, a   man who represents himself has a fool for a   client.”   Management Issues  “From a manager’s point of view,” says   Abel, “it doesn’t pay to handle small associa-  tions. The manager has the same responsi-  bilities as in larger associations; they have to   produce financial statements, arrange and   attend inspections, monitor compliance re-  quirements, set up and attend meetings, and   handle communications with and between   board members. The management model to   tackle this problem of scale is to ‘bundle’ sev-  eral small associations together.”   He further explains: “Let’s say you have   four or five client buildings located on the   same street, or within a couple of blocks of   each other. On the same street, you can cov-  er all \\\[of those associations\\\] with the same   cleaning service or lawn maintenance. There   are a couple of management firms in Boston   who do this.”   “Typically the problem with small asso-  ciations and corporations is that they don’t   have full-time staff,” says Fox. “That can be   challenging, because what would normally   fall under the responsibility of the super, like   meeting a contractor, for instance, is then as-  sumed to be done by the manager – which   isn’t the case.”   Fox’s firm doesn’t formally bundle prop-  erties for more efficient management, at least   not in the sense of going out looking for those   types of arrangements. But, he says: “We do   have areas where we’ve picked up a number of   properties on the same block, and that makes   things more worthwhile for us, because one   agent can handle a number of buildings at the   same time.”    À la Carte Services  Rosenberg explains that for some small   associations, the cost of full-time manage-  ment is just too high on a per-unit basis, so   they offer an alternative: à la carte services.   “Recently, we began offering bookkeeping   services,” he says. “We collect the monthly   charges and pay the bills. Everything is done   online. If it works well, we will expand the   program.”    The cost of keeping an attorney on retain-  er is far too high for most small associations,   so in most cases legal services are procured   on an as-needed basis. Professional services   such as lawyers, accountants, and architects   are treated similarly to contract services such   as lawn work, snow removal, building clean-  ing, and minor maintenance. The association   seeks those services only when they’re need-  ed.   Running Small Associations   Unique Communities, Unique Needs  BY A J SIDRANSKY  MANAGEMENT  8 THE NEW JERSEY COOPERATOR   —JANUARY 2019  NJCOOPERATOR.COM  ISTOCKPHOTO.COM

   6   7   8   9   10