Condominium and cooperative management companies are a dime a dozen in New York City.
And since there are thousands of management companies vying for your attention and your business in the Big Apple, it can be tough for them to set themselves apart from their competitors.
Hiring a Manager or Self-Managed?
According to the Community Associations Institute (CAI), a nationwide organization providing information, education and resources to community associations, there are about 60,000 community association managers nationwide, and there are 10,000 community association management companies. Only 15 or 25 percent of common interest communities—co-ops and condos—are self-managed and don’t employ an onsite manager or management company.
Therefore, it takes a lot for a management company to stand out in the crowd.
Some attempt to do so by marketing themselves as 'boutique' firms specializing in a certain type of building or level of service; others go broad, offering everything from day-to-day administration to capital project management. Still others focus on bigger building complexes, which inevitably need more services than smaller communities.
There are plenty of differences from one management to the next, so before randomly choosing one, there’s a lot you need to know so that you can find the perfect fit.
Is Licensing Required?
Start by finding out if they’re licensed or have some professional accreditation. According to the New York State Department of State, Division of Licensing Services, a real estate management company does not necessarily need to be licensed at all.
The only reason why they’d need a real estate broker’s license is if they: “collect rent or place tenants in vacant spaces” on behalf of a landlord client, the law states.
“If, on the other hand, your services are strictly maintenance, the answer is no.”
So if you have a building where renting is allowed, then you’d want a management company that has its license. Once they have this, they can also list and negotiate the rental needs of the property. Trade organizations like CAI, the Institute of Real Estate Management (IREM), the New York Association of Realty Managers (NYARM), the Real Estate Board of New York (REBNY), and others, provide educational instruction and accreditations related to the management field.
Beyond renting services, every management company is expected to provide basic services, says James O’Connor, president and executive managing director of Douglas Elliman Property Management.
These basic services of every property management company should include: collection of maintenance and common charges, payment of the co-op’s or condo’s bills, supervision of staff, acting as a transfer agent, and record-keeping for all sales and leasing transactions, O’Connor says.
And while the basics typically remain the same throughout the years—collect the income, pay the bills, watch the staff and keep excellent records, new technology has made these transactions much faster than in previous years.
Instead of collecting maintenance and common charges via check and the postal service, most management companies pay and get paid electronically by transferring the money through PayPal or a credit card. Even the application and transfer process for sales and leases is increasingly being handled electronically.
“The days of seven shopping bags full of paperwork for one sale are becoming a thing of the past,” O’Connor says. “What all of these changes have in common is the need for management companies to design and maintain a robust combination of hardware and software. These are significant and absolutely essential undertakings.”
This means that every large management company should have someone who is up-to-date with computer technology so they are able to do everything electronically, which saves on postage stamps and time.
Supervision and Training
Staff supervision has changed as well, O’Connor says. Increased racial and sexual harassment training is now standard, and documentation is absolutely essential to avoid being caught up in unnecessary litigation. Regulatory requirements and energy deregulation have also driven an expansion of services, O’Connor says.
Local Law 11 in relation to repairs of a building’s exterior maintenance, was enacted in 1998 by the city of New York requiring landlords to hire an engineer or architect to perform an inspection of the exterior walls of buildings greater than six stories every five years. The report details any dangerous conditions along the walls, and must be submitted for review by the Department of Buildings. The report details any dangerous conditions along the walls, and must be submitted for review by the Department of Buildings.
“Every property manager has to deal with these requirements and their increasing complexity, as well as their financial impact on our clients,” O’Connor says. “We have an architect and engineer on our staff just to help our manager through this process.”
He also added staff as a response to energy deregulation, which was promoted as an opportunity for all New Yorkers to save on their utility purchases. An outside consultant helps them through the maze of tariffs, exclusions, degree-days and peak loads.
“The true savings as a direct result of deregulation were minimal, but by aggregating our clients’ utility purchases, we were able to save our clients over $3 million in the past year,” he says.
Other firms have added in-house services such as mechanical engineers, certified public accountants and attorneys so that they don’t have to continually hire outside help, says Alex Kuffel, president of Pride Property Management in New York.
As a result of the competition and the growing needs of the building, the managers need to be capable of a larger range of duties than in the past.
“Managers who excel today must be well versed in not only building systems, but also be prepared to serve as a researcher, mediator, psychologist and advocate,” Kuffel says. “A manager is often a messenger with less than stellar information, so being able to deliver that message effectively and diplomatically is essential.”
Their schooling has also adapted.
Property managers today are almost exclusively college graduates who had some prior relevant business experience, O’Connor says.
Managers need to have the unique ability to deal with board members, who, in New York, may be some of the most successful people in the world. They also have to work with unionized staff, lawyers, accountants, engineers, tradespeople and contractors. And of course, they are managing your home and possibly your largest single investment.
“We offer regular seminars and training in all aspects of residential management to guide our managers along a very personal and complex path,” O’Connor says.
Another issue that’s complicating the duties of the management companies is the world of amenities. In the past, high-end buildings may have had doormen and a small business room containing a few computers and a conference table.
But in recent years, the buildings have added more amenities to attract buyers and renters. Pools, large fitness facilities, movie rooms, online building chat and message boards, fully furnished green roofs, outdoor movie theaters and running tracks are just a few of the amenities offered in high-end New York buildings.
With each of those amenities, the role of the management team changes. By adding an online presence for the building, they may need to hire a full-time social media person who can update Facebook and Twitter feeds, as well as to monitor the message boards and continually maintain the website.
Adding a pool or any outdoor amenities means additional insurance and landscaping jobs for the management team.
“In the same way that a manager recognizes the unique strengths of the building staff, becoming an expert on the amenities of a particular building is essential since every building, from a turn-of-the-century brownstone to a recently completed Class ‘A’ high rise, has unique characteristics and areas that need extra attention,” Kuffel says. “Communication between manager within one company and across the industry serves as an excellent tool to develop a best practices approach.”
While it’s essential that management companies “do it all” so there is nothing left for the board members to juggle, this could result in an inherent conflict of interest in a building. The managing agent may be creating an energy division and a tax certiorari department—and it’s also collecting its fee from the client’s savings.
That’s why board members need to do their due diligence. Before selecting a management agency, make sure to visit other buildings they’re managing to see if your building is similar. If the management company specializes in large high-rises and you have a 10-unit building, then it may not be worth it to pay the higher fees for this agency.
Do you want a management company that only does management—or would you prefer to have a larger company that manages buildings but also does real estate development and other real estate transactions? Some boards decide to have the larger company so that they have more people to help for every situation. Or, they may want the real estate brokers so they can possibly cut a deal whenever a new unit is for sale.
But others prefer to just have a management company solely focus on management so they know there will be limited conflicts of interest and more focus on simply running the building.
“The strength of a laser is much different than that of a floodlight,” O’Connor says.
Regardless of your choice of comprehensive or combined management companies, you’ll still need to do more research before your make your final decision.
Make sure to interview the board members in the management agency’s current building to see if they’ve had any issues. Sometimes, the agency may appear qualified, but if they rack up late fees or are slow to move if there are vacancies or any broken equipment, then you’ll know that it probably won’t work out.
Finally, ask for the agency to give you a detailed breakdown of their cost and fee analysis. If there is an energy saving incentive available that the management company arranges for the building, for example, are they going to take a cut of the savings? Will you have to pay extra any time they fill a vacancy or is it a set fee annually?
“We believe that our role is to provide the best professional option available to our clients, and let the client achieve the savings,” O’Connor says.
Danielle Braff is a freelance writer and a frequent contributor to The Cooperator.