Taking Care of Business - Issues to Consider When Hiring Outside Management
Question: Our board is debating whether to hire a professional management company. Some members think that’s a good idea; others think we’re small enough to handle the management ourselves. First question: Is professional management essential? Second question: If we decide to hire a manager, what should we consider?
Answer: Very small associations my not have the option of hiring outside management, because most management companies prefer not to handle associations with fewer than 15 or 20 units. Even if you can find a manager willing to work with you, you may find the cost-per-owner prohibitive for your community, depending on its size and the financial profile of its members. Self-management can work very well when owners have the desire, the commitment, and the skills required to handle the work. It can be a disaster if owners lack any or all of those essential traits. It is important neither to over-estimate the owners’ abilities nor to underestimate the scope or difficulty of the management tasks.
I can’t cover all the issues you should consider if you are going to hire a manager, but I can highlight a few of the most important:
• Select carefully. Interview several managers or management companies. Experience, reputation (check references) and personality are all important. You want a manger whose personality and style are a good fit for your community. And you definitely want someone with experience managing smaller communities.
• Require all the managers or management companies you interview to submit a detailed accounting of the services they are providing for the fee they quote. Make sure you understand what is included in the base fee and what services, if any, will incur additional fees.
• Don’t focus on price alone. You will get what you pay for. The manager’s fee should match the quality and level of services your community wants. You shouldn’t pay for services you don’t want or need, but if you want top-tier service from a top tier company, you’re going to have to pay for it.
• Have an attorney draft a written contract specifying in detail the services the manager will provide, and make sure your attorney reviews the final contract before you sign it.
CAI publications can provide more detailed information and advice about selecting a manager, including a checklist for interviewing managers. Visit www.caionline.org.