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9.16.2013

Seven Benefits of Hiring a Management Company

Over the years, I have worked with several associations as an interim manager, or on a consulting basis, with the understanding being that the goal was to eventually hire a professional management company to provide ongoing management services for the Association.

Many individuals who are elected to serve on their Association’s Board of Directors quickly discover that they do not have an adequate background for all of the tasks that they must perform as a board member. They realize that they don't have the resources, experience, or knowledge to respond to all of the issues that arise in the management of the Association. As a result, the decision is often made to hire a professional HOA management company.

Some associations resist this process because they fear that assessments will have to increase dramatically in order to cover the cost of the management company. So part of my job becomes convincing the Board themselves that professional management is the proper course of action. The second part of the process is convincing members who are not on the Board, and who are not even providing unpaid volunteer services for the Association, that this is the way they should go. (Typically, only the Board of Directors are volunteering significant time to the Association.)

What exactly are the benefits of professional management for the Association? Here, in no particular order, are seven.

Community Appeal - Everyone wants to live in an Association that is well-maintained. The professional community manager generally has experience in dealing with a number of associations, as well as with the vendors that provide their maintenance services. This increases the likelihood that the Association will establish an appropriate maintenance plan that, over the long-term, will result in better maintenance and lower overall cost, making the Association more attractive to prospective purchasers and possibly translating into higher sales prices for sellers.

Financial Administration - One of the most distasteful tasks for volunteer board members is attempting to collect past due assessments from their friends and neighbors, because it can potentially adversely affect their relationships with those individuals. Because a professional management company is independent, it does not have this conflict of interest. The management company’s only task is enforcing the policy established by the Board for the collection of past due assessments, regardless of whom those individuals may be who still owe. Therefore, the management company is generally far more effective in collecting past due assessments than are volunteer board members.

 

Legal Issues - The volunteer board member is unlikely to be aware of today’s laws specific to homeowners’ associations. This is particularly true in states containing large numbers of associations that have established highly regulated frameworks, such as exist in Florida, California, Nevada, and Hawaii. A board member cannot be expected to have knowledge about all of the laws that potentially affect the Association. A professional manager is much more likely to be familiar with the laws affecting the Association, as well as have the professional contacts to whom the Association should be referred for specific legal issues.

What is it that you really gain from hiring the management company?

Expertise - The management company will typically possess knowledge of a wide range of topics related to the management and maintenance of a homeowners’ Association. Board members are much less likely to possess this kind of background. Also, the professional manager will normally have training, and in many instances will hold professional designations or certifications. At a minimum, these designations demonstrate a level of commitment to the industry.

Experience - The Association management company generally has years of experience in working with similar associations. As a result, the company can draw upon that experience in dealing with specific issues for your Association. In many instances, this is simply experience in dealing with people, because Association management is, above all, a people business.

Systems – Generally, the management company has spent many years and thousands of dollars in establishing the appropriate systems for the management of an Association. This not only includes investments in technology (both hardware and software), but also in the training of its staff. It requires having knowledge of laws and regulations affecting the Association, in order to ensure that any established processes and procedures are in accordance with those laws and regulations.

Connections – In most cases, the manager also has access to an entire network of individuals with whom they have worked in the homeowners’ association industry, allowing them to tap into their expertise in specialized areas. The value of these connections acquired through years of experience cannot be underestimated. For instance, the management company very likely has dealt with virtually all vendors that provide a specific service in your local area, such as landscaping, maintenance, pool service, etc. They already know which vendors they can rely on, and which have not been able to gain such a reputation. This knowledge in itself can save the Association from making costly mistakes.

Once the Board and community members are on board with the idea of hiring a professional management company, the next step is actually going through the process of hiring one.

 

 

 


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