Many homeowners wonder what their property management company does for the for their management fee and what exactly are their monthly dues are paying for. However, a professional management company is a service many communities cannot afford to be without.
Property Management can be broken into four main categories: Building & Grounds, Financial, Administration and Technical.
1. Building & Grounds
For many, their home is their largest asset. It is smart that you maintain, and even improve, the value of this investment over time. A professional management company helps you: Hire and coordinate community services such as landscape, snowplow, garbage, cleaning and maintenance. They ensure all contractors and serviceman are properly insured. They evaluate their work and often negotiate lower pricing because of the amount of business and relationships with the local vendors. They know who does the best work for the best price, taking the guesswork out of it for HOA Boards.
Develop a five-year capital project plan anticipating the needs of the community and making sure they are financially prepared to take on these projects. When a large project is planned, project managers obtain bids from several trusted contractors, compare each proposal and advise Boards based on their experience. Once the project is underway, they may also be asked to act as a general contractor.
Coordinate annual inspections and maintenance of building. Property Managers ensure all state inspections, elevator, dryer vent cleanings, fire and carbon dioxide alarms, furnace/ ac maintenance, etc. are completed annually. These inspections not only keep residents safe but also reduces costs by ensuring a longer life for utilities. Respond to homeowner maintenance requests. The most time consuming and common annoyance for self-managed communities are handling homeowner maintenance requests. From small complaints such as garbage in the hallways, to major roof leaks or burst pipes, a property manager handles all insurance claims, repairs and complaints. Enforce the rules and regulations of your community as determined by your Master Deed and Bylaws. These rules have been put in place so that your neighborhood or building retains the quality and appearance that you bought into. A property manager makes sure these rules and regulations are adhered to, applying fines and notices as needed. They will also act as a buffer between the Board and a disgruntled or difficult homeowner. Attend Board Meetings. A good property manager attends all board meetings and consults the Board. They act as your HOA partner and will communicate regularly on all issues pertaining to the health and wellbeing of your community and its members.
Pay bills and collect payments. The most basic function of a management company’s accounting department is paying the monthly bills and collecting the maintenance fees. It is important that companies offer a lockbox or online payment option for homeowners to secure the transfer of monies. It is also important that bills are paid on time to avoid late fees. A professional accounting system should be used to properly maintain financial records and owner ledgers. Maintain owner ledgers. It is important that some expenses paid for by an association are reimbursed by individual homeowners. This can mean assigning collection fees, late charges, repair bills, and NSF bank fees to homeowner ledgers. Maintaining records of these charges & notifying homeowners when additional charges appear is important. Provide monthly financial reports. Each month your association should be provided with financial reports reviewed by a qualified CPA or Controller. At minimum, your Board should receive an Income Statement, Balance Sheet, Bank Reconciliation, A/R Report as well as a A/P Report. Accurate reporting and review are essential in properly budgeting and managing the financial health of your investment. These results should be shared with all homeowners at the Board Meetings. Schedule financial audits and submit annual Federal and State Taxes. All corporations are expected to file taxes (annually) and perform audits (as needed) by law. Create annual budgets. Financial planning is important to properly secure and fund your investment and future capital projects. How can you properly charge residents a monthly maintenance fee if you do not know your current expenses and how might they change in the coming year. expected to be for the year? A reserve bank account is essential to prepare for large projects or emergencies. Proper reserve funding can prevent frequent assessments which often catch homeowners by surprise.
Review Insurance coverage. HOA insurance is a complicated business which is why there are agents and companies that specifically deal with multi-family, condo, townhome, high-rise and or planned communities. Insurances range from building, general liability, directors & officers, workers compensation, crime, flood, umbrella and even terrorism. Each community is unique, and it is important that your PM company works with reputable agents securing the right policies and deductibles for you. Each year insurance policies renew, and it is your PM company that ensures your coverage, building valuation and premium increases are in line with the industry. Supply closing documents and coordinate moves. For every sale and move there is a plethora of paperwork and phone communication.
Your PM company handles collecting move in/move out fees as well as coordinating elevator padding and collecting certificates of insurance from all moving companies and new homeowners. As for closings, title companies and real estate agents require both building statistics, insurance, fees and homeowner information. Collection Services & Property Liens Unfortunately not all homeowners are diligent about paying their monthly maintenance fees. A budget is based on everyone paying their share. If a homeowner is delinquent, everyone suffers as bills may not be paid, reserve accounts aren’t properly funded, etc. It is important that your PM company takes an active approach on collections including late letters, phone calls, emails and eventually engaging attorneys for property liens, bank levies, wage garnishments, and even evictions or foreclosures. Monthly status updates on all collection issues should be provided to your Board. Customer & Emergency Service Lastly a customer service department responds to the needs of your homeowners. Not all residents are tech-savvy and can communicate via email or a website. It is important that PM companies have a live customer support department. Of course, most emergencies seem to happen after hours, so your PM Company should also have an emergency 24/7 number. The answering service should locate any PM on duty and have him respond immediately to your emergency.
Cutting edge technology helps homeowners keep informed, educated and paid up. As you have read, there are many functions of a professional property management company. Technology, whether it is in-house accounting systems, lock boxes payment sites, or providing community websites, help keep homeowners informed, involved and paid up. It also helps PM Companies run efficiently and as a result, pass that cost savings down to you, their client. It is important to remember that the monthly maintenance fee you pay each month does not go to the PM Company. This fee covers all the services and amenities you are afforded in your community including insurance, landscaping, community website, building maintenance, utilities, inspections and capital improvements. A PM company generally collects between 5-15% of your monthly bill for the other many tasks described in this article. We hope you would agree that is money well spent to protect your most valuable asset!