A co-op or condo that embarks upon the road to self-management is committed to undertaking the supervision and administration of the building without the assistance of an outside full-service property management firm. There are, however, varying degrees of participation required on the part of board members and shareholders, depending upon the level of self-management the building chooses. At one end of the spectrum would be a building that hires onto its payroll its own property management staff reporting directly to the board. At the other end, all building tasks would be done using only board and shareholder volunteer labor, from billing and paying to hauling garbage. The middle of the self-management spectrum is probably the most typical: The board and volunteer shareholders take on some duties and contract with specialists to do the rest.
Schwab House, a 625-unit co-op at 11 Riverside Drive, has been self-managing for a decade. Their fully-computerized four-person property manager's office is representative of state-of-the-art self-management. Meanwhile, in numerous small co-op buildings, including some of New York's earliest co-ops in Brooklyn, everything is done by volunteer shareholders without outside assistance.
Remarkably, the Schwab House's Property Management office is self-funding. This is because, in addition to collecting all transfer agent fees, they have contracted to manage the 225-space garage as well as the sponsor's apartments. With management expenses offset by management revenues the Schwab House is able to provide the board with immediate financial control while spending literally no money on building management. Although having 625 units and a garage permitted this opportunity, the board treasurer at Schwab House speculates that any building with more than 200 units could potentially support and enjoy the benefits of having its own one-person Property Management Office.
Proceed With Caution
A building is a candidate for self-management only if it expects to improve the building's value or quality of life or actually save money by switching from professional management. The ideal candidate for self-management must have certain characteristics. If your building is far removed from the ideal self-management candidate described below, further analysis would probably reveal that a full-service managing agent is economically and practically better than attempting self-management. However, a building approaching the ideal profile might take the time to do the exercise in the accompanying box and if the job can realistically be done better and/or cheaper, self-management would be worth serious consideration.