community-associationDo your homework today to ensure long-term success.

Our 500-home neighborhood has been self-managed for the last seven years or so, with our property manager on the association’s payroll. We enjoyed the concierge level of service from our own private manager, but early in 2014 the new Board members started questioning some of our established operating practices. After experiencing the manually intensive way we ran the board and community association, we all started wondering whether there was a better alternative.

After an extended review and bidding process, we made the change

The end result was a successful transition from self-managed to a professional property management company. The process is essentially complete, and our community management is now highly automated. Core processes like financial management, assessments and ASC reviews have all been enhanced by technology,  with most data available online (as applicable) to residents and the board.

8 tips for ensuring a smooth decision-making process and transition

It wasn’t all easy. Now that we’re through the process, here are some tips to help you learn from our experience and improve your own decision-making process. Most of these also apply to a change of professional management companies.

  1. Plan ahead. Create a timeline for your decision-making process. From our first discussion through transition, this was an eight-month process. I would allow at least six months.
  2. Do your research. Contact other boards, seek advice from your association law and accounting firms, ask other CAI members (of course), and conduct internet research. Most property management companies should have some level of detail on their websites.
  3. Create basic requirements. We built a 70-point spreadsheet with these categories: neighborhood support, board support, financial management, technology, architectural review, vendor management, and specific service level requirements (respond to requests within 1 day, etc.).
  4. Define the selection process and criteria. We looked at a combination of factors, including capabilities, reputation, property manager background, and cost.
  5. Ask questions. Create a list of questions to ask each potential provider (see some ideas below). Contact references, but also reach out to other neighborhoods listed on the management company website and sales collateral.
  6. Interview your property manager. This is the person with whom you’ll be working for years. You want your manager to have the right experience for your community, but also to have similar goals, attitude and communication style to your board members.
  7. Review the contract. We reviewed with the management company, and also had our association’s law firm review and comment. We made a few changes to better define the services offered and cost of those services.
  8. Communicate! While you know that change can be a good thing, not all neighbors may agree. Plan to have some dissention, so you’ll want to provide as much information as you can about the decision and transition process.

Getting all the facts from prospective management companies

Here are some questions that may help you gather better feedback from your provider interviews.

  • Who are all the team members that will be working with our neighbors and board (administrators, bookkeepers, etc.)?
  • What is your process for responding to neighbor and board requests, regular and emergency?
  • Will we get to keep the late fees collected from residents’ delinquent assessment payments?
  • What are all the potential incremental fees not specifically covered in the contract?
  • How often will the manager be on-site?
  • What is the average employee tenure?
  • Do you work with any specific suppliers, or are we free to make our own vendor decisions?
  • Based on our defined needs, what services won’t you be providing?

Do it right – this is a long-term strategic decision

Transitioning from self-managed to a professional management company is a critical decision for any community association – one that you’ll (hopefully) have to live with for many years. Take the extra time to do your homework and make the right decisions, from initial planning through final transition. Find a property management company that matches your board and community culture, and it will pay off in improved service and potentially lower costs.

Neal Bach, CPA