One likely looks upon a towering high-rise shining upon the Manhattan skyline, and assuredly thinks to oneself, “that building must be quite the endeavor to manage, should it be a condominium or co-op residential property.”
And that hypothetical person would not be wrong; a lot of elbow grease goes into the day-to-day maintenance of such a building. But what one may not consider is how much work is necessary to keep even the smallest residencies running on all cylinders. Tinier associations even have problems unique to them, issues that the giant developments never even consider.
One major problem with managing a smaller condo or co-op, especially in New York City, is the lack of managing agent options available in the first place. Depending on the size of your association and the array of management companies in your area, many may not see you as a profitable client.
“I don't find managing small properties to be cost effective,” says Jeffrey Stillman, vice president of Stillman Management in Harrison, New York. “I usually charge a minimum fee of at least $20,000-$25,000. That typically breaks down to $300 per unit at our buildings. But take a 50-unit building, and $300 per unit is only $15,000. So my minimum would be a problem, for them.
“That said, I manage a 30-unit condo where the units go for a $1,000,000 each,” he continues. “They pay me a lot of money because they can afford it. Every building wants TLC, but the question becomes whether or not they can pay for it.”
All Hands on Deck
A general headache for any association is getting everyone to participate in the politics thereof and involve themselves in the day-to-day. When the pool of potential volunteers is smaller, a board needs a larger percentage to step up in order to function.
And Stephen Elbaz, founder and president of Esquire Management Corp., in Brooklyn, notes that, especially when dealing with smaller buildings in Manhattan, occasionally the unit is the owner's second or third apartment. Even when they do ostensibly join the board, they me be unable to be found when they're needed.
There can also be financial hurdles that apply mainly to smaller associations.
Peter Von Simson,CEO of New Bedford Management in Manhattan, notes that a capital project can have a greater impact for a smaller association than a larger building. “The cost of a roof replacement, for example, can be considerably greater per unit, simply because there are fewer apartments between which to spread the cost,” he explains.
And Elbaz says that co-ops can have a hard time refinancing a mortgage for under $1,000,000. “I had a building in the West Village that wanted a $750,000 mortgage and a $250,000 lien of credit,” he recalls. “Many banks were uninterested solely because the loan just wasn't large enough. It had nothing to do with credit or collateral; simply that the size of the building greatly narrowed the market of banks willing to lend. Banks require the same administrative work for a million-dollar loan as they do a 10-million dollar loan. And 10 one-million dollar loans [are] much more work than one 10-million dollar loan.
“Also, in a small building, if you have a unit or two or three that aren't paying maintenance or common charges, for whatever reason – be it loss of job, divorce, a death – it greatly impacts the building moreso that it would a larger one,” Elbaz continues. “In a 10-unit building, if two units aren't paying, you're not collecting 20 percent of the money that would go to utilities, supplies, maintenance, insurance etc., and that can be a disaster.”
A similar hurdle that smaller properties may encounter is having an on-site super, or similar full-time staff. Many of these buildings aspire to the amenity standards of larger condos and co-ops, but the budget just isn’t there. And the lack of a super on-hand can beget further issues that the big boys would not face.
“When there’s no resident super, emergencies and small repairs become problematic,” says Steven W. Birbach, president and CEO of Vanderbilt Property Management, LLC in Glenwood Landing. “We generally have to call in another super in case of emergency should the part-time super prove unavailable. Additionally, it costs more to have to call an outside vendor for small repairs that a super would normally handle in a larger property.”
The same holds true for doormen. “To have a non-union doorman stationed around the clock in any building, you’re talking about five human beings with salaries, workers’ comp, uniforms, etc.,” says Elbaz. “This can cost between $250,000-$275,000 per year. In a 300-unit building, that’s less than $1,000 per apartment, which boils down to $80 each month. For that much, people feel that there’s value to have a 24-hour doorman. In a 10-unit building, that’s a wholly different situation.”
So before you scoff at the hardships of the little guy, consider that they’re dealing with problems that are proportionally huge.
Mike Odenthal is a staff writer at The Cooperator.