To Be Managed - or Self-Managed? Examining the Age-Old Question

To Be Managed - or Self-Managed?

 While the majority of condo and HOA communities in New Jersey hire professional  management firms to handle their day-to-day operations, many others choose to  go the self-managed route, which can include hiring on-site staff or having  residents handle the tasks usually carried out by hired help. Their reasons for  doing so are as varied as the buildings themselves, but ultimately, it’s about finding the best fit for unit owners and boards alike.  

 Management companies are usually the solution of choice because “when managed by a management company, a community has the resources of all the  employees of the company, not just a single person,” says Elizabeth A. Comando, senior vice president of RCP Management Company in  Princeton.  

 And you will introduce that professional as part of a larger functioning unit.  Comando explains, “The value of having a management team for each contract is to keep the system  afloat. When one member of the team is unavailable, the other members of the  team can step in to keep things running seamlessly.”  

 The Self-Managed Advantage

 That idea of a team approach, though, also drives the proponents of  self-management. “Most management companies would not be here on a full-time basis, says Domenick  Lorelli, former president of the Senata Bayclub, an adult community in  Bayville, New Jersey, which has been self-managing itself since 1993. “There are two big benefits [to self-managing], the first is that it's cheaper and the second is the accessibility and you know the people personally.  They [a property manager] are here only on a part-time basis. So you do not  have access to any answers or solutions to [your] questions or problems until they are on-site.  Whereas with self-management, the people live here and they are on site  everyday of the week. They can be readily [available] to talk to or if you have  any problems you can come up here [to the office] and have them handled right  the way.”  

 The personalized nature of self-management can be a significant draw for  residents and boards when determining the future course of their management  decisions.  

 “I think there is a different relationship between our outside contractors, our  professionals under contract and the staff that's paid by the board,” says Jane Balmer, an independent general manager hired by the Rossmoor active  adult community's association. “There's just a different relationship, let’s put it that way. You're here every day. You're dedicated to the community, I  guess. We have many long term employees, and I think it's because of the  special relationship between the staff and working directly for the board.”  

 Strategic structuring is another aspect of self-management that appeals to many  condos and HOAs.  

 “You must structure your communities with a series of committees,” says Lorelli. “For instance, you will have to have a finance committee, a recreation committee, and  architectural committee, a security committee and so forth down the line, or  you create your own committees as you see fit. Now each committee is guided by  a charter.”  

 By the same token, focusing on one community also means less time spent at board  meetings, running from condo to condo, perhaps dozens of times a month. It  allows, too, for a consolidation—not only of time, but of resources. About three years ago, Rossmoor made a  decision to go that route, says Balmer. “Our golf course was always managed by a management company, but since we have a  talented pro and a talented superintendent and a talented comptroller, we have  taken it in-house and we have saved a great deal of money by doing that and we  have been successful. We have all the financials, our superintendent takes care  of all of the chemicals and our pro takes care of the pro-shop and so on. It's  all being done in house.”  

 For a community the size of Senata Bayclub, the self-managed scenario is very  much akin to running a small municipality. Everything from maintenance to  security is handled in-house through the planning and execution of the  chartered committees.  

 “You have to have dedicate people who are willing to do the task,” Lorelli says. “The committees, as far as I'm concerned, are the backbone of the community,  without them you can not really function.”  

 It’s the same with Rossmoor, an active adult community with 2,303 units and more  than 3,000 residents. The on-site staff is more than 45 strong, with 18 smaller  associations and one master association of 54 directors. “It has a lot to do with the talents of the people involved,” says Balmer. “Here because it's a big operation I see board members all the time. We have 54  directors, and not only are they running their little associations, but they  are involved in the matters of the master association. I really help them with  both.”  

 Knowing the History

 In some cases, self-management can allow for a greater institutional memory for  a condo community. Because many people move into larger communities and  ultimately spend much of their adult lives there, board members tend to stay in  place and invest much of their time and energy to have a better understanding  of what’s come before them. “I stay very involved in CAI. I attend seminars,” says Balmer. “I take advantage of their educational programs, and I have board members that do  that too. We had a bus full of board members that go to the CAI Expo and attend  seminars there,” she says.  

 Making the Choice

 While self-management works extremely well for condos the size of Senata Bayclub  and Rossmoor’s active adult community, it may not be right for everyone. Some buildings that  decide to go it alone can potentially become overwhelmed as boards may often  find themselves relying on one individual for all their information and  direction, says Comando. “Having the layers provided by a management company makes the inter-personal  relationships in a community solid.”  

 It can be difficult, says Greg Carlson, a property manager and the owner of  Carlson Realty, Inc., in Forest Hills, New York, because sometimes residents  attempting to self-manage, “don’t keep up-to-date, or don’t have the resources, or just don’t travel in the same circles,” meaning they might miss important information that can affect their building  down the road.  

 In many instances, the decision over whether to be managed or self-managed is  based on two things: size and money. For small condos with perhaps six to 12  units, “There’s not a lot going on, and it’s more or less like owning your own home,” says Carlson, who is also the executive director of the Federation of New York  Housing Cooperatives & Condominiums, an education and advocacy resource group, based in Queens. “In cases such as these, it may make sense for the community to keep things  in-house, especially considering that management firms generally have minimum  fees that may be burdensome to a small building working with a break-even  operating budget.”  

 On the other hand, for smaller developments, problems also can arise in finding  appropriate contractors and knowing what questions to ask. Management companies  have short-lists of professionals they can call upon for things such as legal  help, as well as for more basic things like plumbing and maintenance work. For  residents sorting out management issues on their own, these types of questions—who can I hire? Who can I trust?—can be time-consuming and frustrating. It takes time, and sometimes a process of  trial-and-error before board members and on-site resident managers know who  they can count on.  

 For many, the solution may lie in a hybridization of sorts between managed and  self-managed, handling many aspects of development's administration among  themselves, but consulting an outside management firm for assistance with  specific tasks such as bookkeeping or fee collection. Firms often will allow a  community to select from a menu of services and pay a la carte.  

 When larger buildings are considered—say, those with several hundred or thousands of residents—a professional management firm absolutely makes sense, says Lorelli. “I would think self-management works best in a smaller community. We're about 312  homes, but my own personal feeling is that up to 400 homes you can manage  yourself. Once you get beyond that, it becomes a real full time job, and you  can't handle it—whereas if you are small you can handle it.”  

 In the end, the choice between managed and self-managed comes down to what works  best for the individual development and its residents. A solution that might  work perfectly for one community might not work for the community next door. It  all boils down to specific needs and tangible details such as size, scale and  yes, money. And ultimately, there’s no easy solution. Perhaps deciding between managed and self-managed comes down  to a variation on that age-old adage: you’ll know the right solution when you see it.   

 Liz Lent is a freelance writer and a frequent contributor toThe New Jersey Cooperator.

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