Condominiums are a very popular lifestyle for those who think they want someone else to take care of maintenance and upkeep of their living quarters. In theory, it does afford an alternative — of sorts. You buy a unit in a multi-dwelling building. You own your unit and all the headaches of building and landscape maintenance and upkeep are handled by paying an assessment. A Board of Directors oversees the work — and generallyl, according to the bylaws, that task is done without compensation to the Board Members.
In larger condominium complexes, assessments tend to be somewhat higher than in smaller ones. They have elevators, spas, swimming pools, workout rooms, atriums, etc. to maintain. A management company typically is hired and paid out of assessments to do the grunt work of scheduling and overseeing building projects and collections.
Smaller complexes may retain the option of having management companies oversee the day to day affairs, under the direction of the Board of Directors – a fee that can result in substantial costs for small complexes. Or, if they're really conscious of expenses, the Association may opt to be "self managed".
For the longest time I thought self-management was an ideal arrangement. Everyone works cooperatively to ensure that the property is well managed and maintained. Today, I'm not so sure.
If you think you'd be interested taking your condominium complex to self-managed status…think first!
- Who on the Board has the expertise and time to stay abreast of the ever changing rules and regulations?
- Who on the Board has the expertise and time required for the accounting (yes QuickBooks does make it much easier – but, it still requires someone to put forth some time, effort and diligence to keep books up to date).
- How are projects to be handled? Yes, you have a maintenance man or janitor. How are plumbing and landscape handled? Day to day maintenance is obvious but what about seasonal tasks and larger projects that arise only from time to time….who can and will oversee the resurfacing of the parking lot, tuckpointing, painting of common areas, re-roofing?
- Who is available to handle crisis situations? Yes, they do arise – and not normally at a convenient time. Someone has to be available to respond at a moment's notice – will that be the Board Members, too?
- Who will keep ahead of local ordinances and community planning…the Village meetings and City Planning Departments that make rules and regulations that will significantly impact the value of your property?
Boards are designated to do most of this work in self-managed condominiums. Do they understand the level of involvement they are called on to undertake? Are they able and willing to donate that level of time and financial cost to the good of all? Do they understand that all their efforts to enhance the property and ensure it's continued value, will be done free gratis? Do the Association members who elect them realize that there's a matter of social justice – and that they, too, should be contributing to the common good….or do they expect that they're entitled to sit back and do nothing while their Board does the work?
A self-managed building requires a very unique blend of owners who are intelligent, responsible and willing to work together for the common good. You may be fortunate enough to have that now, but will that continue, say, 10 or 15 years from now when the units are sold to new owners?
The challenges to watch out for
Condominium owners today consistently say "I bought a condominium so I wouldn't have to take care of it". OK, that's fair. Then either the Association Fees need to be large enough to hire a professional management company or to compensate the Board members who will be expected to shoulder the load. It's just not enough to have assessments that pay the hard costs of materials and a janitor. The human labor needs to be balanced – either with full participation of the ownership or compensation to the Board members. Board Members typically expend as much as 20 to 50 hours a month handling management projects and that time is frequently spent during normal working hours, at a cost of income to those who are tasked with the oversight.
When all is said and done it's the human labor that enhances the value of property. That investment of time needs to be shared among all the unit owners in a self-managed condominium or at least recognized and compensated accordingly when Board members are solely relied on.
The challenge arises when owners are either unwilling or unable to participate in the self-managed process. Elderly, and physically or mentally handicapped owners generally are limited in their ability to fully participate, even assuming that they want to. Young owners, too busy "getting ahead" tend to be far less able and willing to carry their fair load. And, when you have members who have proven themselves unreliable or unethical, self-management can become a nightmare in a hurry. Every one of these will put additional stress on your venture.
Planning ahead? Think first.
Too often the "self-management" falls in the laps of 2-3 dedicated unit owners who carry the weight of the whole – until they're burned out or die trying. Think twice. Is your dream of self-management really do-able? Or are you looking for an idealistic dream that can't possibly exist?