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Should you hire a property management company or can you manage your condo as a corporation?
Looking for ways to cut corners in condo management can help your condo corporation remain ahead of the game financially. However, being wise in where you choose to slash costs is very important if you don’t want to increase your risks.
One of the ways some condo Boards try to save money is by choosing self-management over hiring a professional property management company. Although this might sound ideal, there are a lot of things that can go wrong when you choose this route. Here’s a look at some of the common issues you can face when trying to self-manage your condo.
WEARING TOO MANY HATS AT ONCE
Ask yourself if your Board has experience in all aspects of property management, including:
- Hiring and managing contractors and trades for repairs and maintenance
- Fulfilling administrative duties including timely response to owners, updating owner registration, legal aspects of management and more
- Maintaining and providing proper documentation for all property decisions and all owner correspondence
- Managing requests and conflicts in a timely manner
- Financial management and reporting, including budgeting
- Proper insurance coverage
- 24-hour emergency response
A property management company will have a team with the knowledge and experience to address all aspects of property management. They will also have a list of trusted professionals to address repairs and maintenance.
Self-managed condos can also lead to Board burnout. When the same people are forced to perform the demanding duties of condo management, it can lead to internal issues. Finding a fair way to manage time for each member can prove challenging.
Some Board members might be selfless while others with more commitments might not be as available. Not only does it lead to conflict, but it can also be damaging to effective property management.
If you have Board members leaving, it can be hard to find replacements. This leaves the management team short-handed, which again will affect the effectiveness of their ability to manage.
It’s important to remember there are many people with a vested interest in the condo. There is an expectation that the Board will provide effective property management at all times. A professional management company will be able to manage condo owner expectations with a full team specializing in owner/tenant communication.
The Board can concentrate on the decision-making aspects of property management while the management company provides a buffer between owners and the Board. A management company can help avoid conflict between owners/tenants and the Board helping to preserve stronger neighbour relations.
MAINTAIN AND INCREASE PROPERTY VALUES
Although the Board will have the best interests of the property at heart, they might not have the experience to make the right decisions to help maintain and increase property values. Instead, a professional management company will offer much-needed guidance for the Board, so they understand the impact of their decisions.
The property management company understands all aspects of value including:
Management companies have proven track records in managing condo properties of varying types and sizes. They have built strong relationships with service providers as well as professionals such as lawyers and engineers, so they have multiple resources at their disposal.
They don’t face challenges alone and instead depend on their relationships to effectively resolve issues regardless of the situation.
Through their longevity, they are also better positioned to negotiate preferred rates. Self-managed properties simply cannot build these relationships quickly enough for the condo to benefit.
When it comes to individual unit value, buyers will have access to condominium documents, which must be impeccably managed. Buyers will put preference over condos with healthy reserve funds as well as accurate financial reporting. These are important details that provide buyers with insight into the corporation’s financial health. Self-managed condos can be regarded with suspicion by buyers as there is less confidence in the management skills of the Board.
OPERATING IN ACCORDANCE WITH THE BY-LAWS
Every condo is managed based on a list of rules and regulations including:
A self-managed property requires all Board members to understand the rules, by-laws and legislation that apply to their management. Understanding the rules can be difficult when they are coming from many different sources. A property management company will have experts who understand all aspects of regulations, so they do not put the condo in a risky situation with owners, tenants and the government.
It’s easy to misinterpret rules which can lead to some dicey situations. It’s the job of the management to ensure risk and liability are minimized for the condo. This can prove an impossible task for a self-managed condo with little or no experience in making decisions that align with all of the underlying rules and regulations.
THE BOARD OF DIRECTORS MAINTAIN CONTROL
One of the common misconceptions about hiring a property management company is that once the company is hired, they take control of everything. It is quite the opposite. The property management company provides a service for the elected Board of directors. The Board remains fully responsible for running the affairs of the corporation, including setting by-laws and the condo corporation policies.
The condo management company is an agent that advises and helps the Board. This can include advice on making policy decisions, however, the final decisions still fall on the Board. The management company will then ensure the policies are carried out, while also taking care of the time-consuming day-to-day operation of the property.
The Board will work with the company to ensure all aspects of property management are fulfilled from accounting to administration and maintenance and repairs to owner/tenant communications.
While the Board focuses on representing the best interest of the community, the property management services company offers support while performing the required tasks.
Self-management is a large job that often proves impossible. When the Board of Directors is accountable to all the other owners, they need to weigh their options and ensure they can effectively provide the support, services and property maintenance expected. A property management company offers your corporation the support of experienced property managers who will work with you to keep your community happy while ensuring property values remain intact.
At CPO Management Inc. we provide professional, strategic, financially-sound, responsible and forward-looking value 24 hours a day, 7 days a week. We perform our work flawlessly ensuring your condo community has the service they need through all aspects of property management. For more information, or to request a proposal click here.