To Be Managed - or Self-Managed? Examining the Age-Old Question

While the majority of co-op and condo communities in New York hire professional management firms to handle their day-to-day operations, many others choose to go the self-managed route, which can include hiring on-site staff or having residents themselves handle the tasks usually carried out by hired help. Their reasons for doing so are as varied as the buildings themselves, but ultimately, it’s about finding the best fit for unit owners and boards alike.

Management companies are usually the solution of choice because “Hopefully, a management company brings in the kind of expertise on buildings, building systems and protocols that allows them to solve problems,” says Greg Carlson of Carlson Realty, Inc., in Forest Hills. “Their managers are trained to be management people. You’re hiring a professional.”

And you will introduce that professional as part of a larger functioning unit. The systems works best, Carlson says, “when management is part of a team. Everything should be seen as a team approach with the board, manager, attorney and accountant all working together. There’s the basic trust of working together.”

The Self-Managed Advantage

That idea of a team approach, though, also drives the proponents of self-management. “Our residents don’t have to go through channels,” says Rochelle Captan, who has headed up the on-site management team for the self-managed Amalgamated Warbasse Houses in Brooklyn for more than 30 years. “The relationships we’ve established, the one-on-one connections. Our office staff have excellent relationships with the people here, and know everyone by their first name.”

The personalized nature of self-management can be a significant draw for residents and boards when determining the future course of their management decisions.

“Self-management results in much better client service,” says Brendan Keany, on-site manager for Chelsea’s Penn South/Mutual Redevelopment Houses, the largest co-op in Manhattan with 2,820 units and more than 5,000 residents. “People get to know you, and you have a much better relationship with them. You get familiar with day-to-day operations in a way you don’t quite get in managed buildings.”

Increased familiarity is another aspect of self-management that appeals to many co-ops and condos.

“The advantage is that you’re at the site, looking after the property and it’s the only property you have to look after,” says Keany. With a management firm, “the manager is assigned to your building, but has multiple other buildings competing for their attention. If you’re on-site and self-managed, you’re only looking at the building you manage. Your time is not spread among many.”

By the same token, focusing on one community also means less time spent at board meetings, running from co-op to co-op perhaps dozens of times a month. It allows, too, for a consolidation—not only of time, but of resources. For example, “we do all of the bookkeeping in-house,” Keany says. “That’s often a somewhat fractionalized scenario in a management firm. Here, everything’s in the one place. Everything is at our fingertips.”

In turn, that sort of attention to individual details can mean better client service.

“The follow-through tends to be much greater,” Keany says. If you’re working with many buildings, “you can easily get lost.”

For a community as large as Penn South, the self-managed scenario is very much akin to running a small municipality. Everything from maintenance to security is handled in-house, including the operation of a central power plant.

“We’re intimately involved with all of that,” Keany says.

It’s the same with Amalgamated Warbasse Houses and their 2,585 units and more than 5,000 residents. Their on-site staff is more than 100 strong, with more than 70 employees working in maintenance, 14 working in security, 18 running the power plant and nine individuals manning the office. It’s more than a full-time job, one which requires a serious commitment, Captan says. “Everyone has to be working at top efficiency,” she says. “You have to stay on top of problems, both fiscal and physical, and keep your eyes and ears open at all times.” And yet, she says, “I find that self-management makes it easier to keep up with all of the problems and handle everything more efficiently.”

Knowing the History

In some cases, self-management can allow for a greater institutional memory for the co-op or condo community. Because many people move into larger communities such as Penn South and Amalgamated Warbasse and ultimately spend much of their adult lives there, board members tend to stay in place and have a better understanding of what’s come before them. “We have a 13 member board, and that continuity is very helpful,” says Captan. And because she has been there for so many years, she says, the board feels comfortable with her and her staff. “They just pick up the phone and call me,” she says.

Having an on-site management staff with longevity in their roles can be a big boost, says Keany, who’s been with Penn South for 24 years. “The benefits are tremendous,” he says. “Self-managed buildings tend to keep personnel around, and they acquire a fair amount of institutional memory, which can be tremendously valuable. They can answer the question, ‘When did we do this? Why did we make that decision?’ Money can’t buy that.”

Making the Choice

While self-management works extremely well for co-ops and condos the size of Penn South and Amalgamated Warbasse, it may not be as effective for everyone. Some buildings that decide to go it alone can “become overwhelmed by it,” says Carlson. He cites a recent spate of environmental regulations affecting residential buildings in the city, noting that for many smaller buildings relying on residents to run things, those types of details can fall through the cracks and not get handled properly. One new lead paint regulation comes with a $32,000 fine for violations – per day. “That’s an expensive ‘Oops, I didn’t know,’” says Carlson.

It can be difficult, Carlson says, because sometimes residents attempting to self manage, “don’t keep up-to-date, or don’t have the resources, or the just don’t travel in the same circles,” meaning they might miss important information that can affect their building down the road.

In many instances, the decision over whether to be managed or self-manage is based on two things: size and money. For small co-ops or condos with perhaps six to 12 units, “There’s not a lot going on, and it’s more or less like owning your own home,” says Carlson. In cases such as these, it may make sense for the community to keep things in-house, especially considering that management firms generally have minimum fees that may be burdensome to a small building working with a break-even operating budget.

On the other hand, for smaller buildings, problems also can arise in finding appropriate contractors and knowing what questions to ask. Management companies have short-lists of professionals they can call upon for things such as legal help, as well as for more basic things like plumbing and maintenance work. For residents sorting out management issues on their own, these types of questions—who can I hire? Who can I trust?—can be time-consuming and frustrating. It takes time, and sometimes a process of trial-and-error before board members and on-site resident managers to know who they can count on.

For many smaller buildings, the solution may lie in a hybridization of sorts between managed and self-managed, handling many aspects of building administration among themselves, but consulting an outside management firm for assistance with specific tasks such as bookkeeping or fee collection. Firms often will allow a community to select from a menu of services and pay a la carte.

When larger buildings are considered—say, those with several hundred residents—a professional management firm absolutely makes sense, says Keany. A building that size “is not necessarily something you want shareholders to handle themselves. If you’re a building between 100 and 300 units approximately, it doesn’t make sense because your costs [to hire full-time, on-site staff] are going to be too high. We’re of a size that makes sense. We’re a city within a city. There’s an economy of scale involved.”

In the end, the choice between managed and self-managed comes down to what works best for the individual building and its residents. A solution that might work perfectly for one community might not work for the building next door. It all boils down to specific needs and tangible details such as size, scale and yes, money. And ultimately, there’s no easy solution. Perhaps deciding between managed and self-managed comes down to a variation on that age-old adage: you’ll know the right solution when you see it. n

Liz Lent is a freelance writer and a frequent contributor to The Cooperator.

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Comments

  • I find this article very helpful, and it is true that the decision depends on the size, scale, and money, along with other factors. However, the ultimate issue is that the current to- be-managed model is fundamentally flawed. If interested, you can find my blog article at iopenbid.wordpress.com