The Benefits of Using a Professional Property Management Company

Why use a professional property management company?

Property Management companies assume many roles and balance numerous tasks, simultaneously. They must be firm, yet flexible. A good management company enjoys working with the board of directors, the general public, and the contractor network. The management company is a partner with the Board, working under their direction and following established policies. However, the company is not afraid to take control of a situation and give advice to the Board. Successful companies have a strong background in the laws and principles of property management.

Working with the Board of Directors:

The association elects a board of directors and new officers each year, or it may have an annual election with staggered multiple-year terms to ensure consistency of board decisions. Board meetings are usually held after-hours in one of the residents units, an office or common room on site or public building. Because the board meeting is also a gathering of neighbors, the agenda may yield to tangential discussions.

The board makes management decisions and sets out HOA policy. The decisions and policies are carried out by the management company. This may require the management company to mediate differences of opinion among the board members or among residents.

It is important that the Management Company understand its role in a staff position to the board. The management company may have certain expertise to share with the board based on experience and training. It is the Board however, that has ultimate control and responsibility and thus makes the final decisions.

The Management Company also should provide professional training on how the board can have the greatest impact and do the most good in a reasonable amount of time.

Property Management Skills and Responsibilities:

The Property Management Company works closely with the Board and residents of the property. As a result diplomacy is essential to effectively negotiate delicate matters that may arise among all the parties.

Primary responsibilities include:

  • Meet the goals of the Board of Directors and residents&
  • Develop a management plan to operate the property under the direction of the Board
  • Implementation of the CC&Rs and the management plan
  • Develop and administer maintenance programs
  • Anticipate and respond to the needs of the Board and residents
  • Administer the collection of dues from residents
  • Monitor and pay expenses
  • Prepare a comprehensive budget and cash flow projections
  • Negotiate with contractors for services
  • Communicate with the Board and property owners
  • Assess, minimize, and mitigate risk
  • Develop an emergency procedures plan for the property
  • Conduct regular property inspections

Legal Resources:

There are numerous laws affecting the management of Home Owner Associations and Property Management.  The Property Management Company must develop a working knowledge of these laws.  Knowledge includes areas of discrimination, eviction, accounting and deposits, American with Disability Act, Lead Base Paint Hazard Reduction Act, Megans Law, The USA Patriot Act and Executive Order 1324, and the Terrorism Risk Insurance Act (TRIA).

Insurance: 

As with any business, Home Owner's Associations require various forms of insurance to operate safely.  State and local regulations may have minimum insurance requirements; however, most boards choose the level of insurance coverage based on needs and budget. Having good insurance counseling and options is a service that must be offered by a professional management company.

Organization:

A professional management company is more than just one person managing properties. It is a team of experienced professionals with expertise in the various areas of management.  This includes a Broker with a long term commitment and history of serving HOA's and a separate division to carry out the many tasks of property management.  It also includes property managers properly licensed with the State, multiple accounting personnel, facility management personnel to maintain the property and to supervise contractors, and office or affiliate offices near the location of the property. Without this support team, an individual who tries to manage multiple properties will not be able to serve the needs of all the communities in a reasonable time frame.

Supervision:

One of the main roles of the property management company requires supervision. A professional property management company will supervise the project and make sure that resident are caring for their own properties and the common areas. Supervision of the contractors who work on the property, the accounting systems, collections, disbursements, and general market trends all require diligent supervision. Accountability of these stewardships is required by the Board of Directors.

Accounting, Collection, and Accounts Payable:

A professional property management company will have systems in place to manage the monies of the HOA and to report to the Board on the status and disposition of all funds. This includes computer program specifically designed for property management purposes. Collection of dues from residents should be according to the policies established by the CC&R's and the Board. Collection procedures should be in accordance with applicable Federal and State laws.  

Technology:

The professional management company must use the latest in technology to support the needs of the board and the resident. Each HOA receives the following in technology services:

  • A Website to post the CC&R's, virtual tour of the property to promote the property to new residents, and list minutes, budgets, and upcoming events.
  • A toll free number for use by those who are not comfortable using the Internet. The resident can call to get information found on the internet by phone.
  • The Board has access to Internet meeting services that allows them to be in different places and still hold a meeting.  By dialing into a toll free conference number they can meet on line through the Internet and conduct a meeting even if they are out of town.
  • E-mail is available for communication between the board and the professional management company with e-mail addresses specifically for service, info, and for scheduling of common area facilities.
  • State of the art company telephone system that has conference call capability, voice messages systems that are forwarded to property manager's cell phones, and each manager carries a cell phone for easy access.

Use of technology makes information more readily available to residents and reduces the time and work load of the board in communicating with residents.  It also give residents 24/7 access to contact with the management company.

The Management Plan:

An important element of HOA property management is the specific management plan of real property.  It requires the analysis of the current physical, fiscal, competitive, and operational conditions of the property.  It also may include the feasibility or practicality of plans of the Board for the property.

Components of a Management Plan:

  • Regional Analysis outlines the general economic and demographic conditions as well as geographic features of the area surrounding the property and growth projections for the region.
  • Neighborhood Analysis is an in depth study of the immediate neighborhoods that surround the property, similar to the regional analysis but more narrowly focused.
  • Property Analysis includes the same analytical method of the regional and neighborhood analysis and includes a careful inspection of the structures, common areas, and overall architectural design. It review structure sizes, condition, condition of the common areas, individual resident units, vacancy or turnover ratios, curb appeal, building to land ratios, compliance status, and financial integrity of the property.
  • Market Analysis
  • Analysis of Alternatives
  • Changes in Use
  • Cost-benefit Analysis
  • Conclusion & Recommendations

The Management Agreement:

The Management Agreement outlines the arrangement between the owner of the property and the management company. The management company offers a variety of services not all of which may be needed by the HOA.  As a result the management agreement needs to be flexible to accommodate a limited number of services and large enough to accommodate larger association needs.

Management Agreements include the following elements:

  • Parties to the agreement
  • Description of the property
  • Term of the agreement
  • Responsibilities of the Management Company
  • Financial Management
  • Reports to the Owner
  • General Property Management
  • Obligations of the Owner
  • Insurance
  • Operating and reserve funds
  • Liability
  • Legal and regulatory compliance
  • Compensation for management services
  • Provision for termination

Reports to Owners:

  • Statement of Operations
  • Due Roll
  • Delinquency Report
  • Cash Disbursements
  • Statement of Receipts
  • Reserve Account Transactions
  • Explanation of Budget Variances (narrative summary)
  • Bank Statements (Balanced)
  • Budget
  • Advertising and Promotion Summary
  • Vacancy/Units for Sale Report
  • Rental Unit Summary Report

Contact us to find out more about property management services available in your area or to consult with one of our experienced property managers.


See Also: HOA CommunitiesHOA Management Fees | HOA Board Member Resources
Trista Yost, Principal Broker
Welch Randall Real Estate
Ph: 801-399-5883Fax:801-340-4811
5300 S Adams Ave. Parkway #8
Ogden, UT 84405 US
www.welchagency.com
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