Not All Property Management Companies Are Alike
Choosing the best property management company for your HOA can be a tricky process.
- Do all management companies offer the same services?
- What qualities should you look for?
- How can you compare the cost to the value you’ll receive?
Not all property management companies are alike, and not all are a great fit for your association. Here’s a quick reference guide that explains the differences in management companies and which is best for your community.
National property management companies have a wide reach. These organizations are usually built around a central corporate office with satellite branch offices in or near your city. The service model of large management companies involves systematize functions and service while achieving economies of scale. This means that your association gains access to high level accounting, communication and management services from experienced professionals with proven track records.
Large companies do come with some drawbacks. As you share a pool of resources, if you encounter a problem, you might have to wade through several levels of customer service before reaching the department you need. With such a large network of staff, you’ll be further separated from decision makers. Changes to your accounting or communications processes might take longer to implement as your management team navigates their own internal bureaucracy. Additionally, many of these companies have service agreements with local contractors, like landscapers, pool maintenance companies and builders. While they might advertise this as a cost-saving benefit, at a minimum, it limits your options. At worst, it could present a conflict of interest.
National companies are a good solution for developers who build properties throughout the nation and want to rely on their property management company for a predictable service model.
Boutique companies are often small, sole proprietorships that were started by managers who come from a larger property management company background. Because of their small size, these firms are generally able to offer a more affordable fee structure. With a small client list, boutique shops must provide highly responsive customer service in order to remain competitive.
However, these firms can become quickly overwhelmed, both of staff and processes. Small, “mom-and-pop” management companies often lack sufficient manpower to take on large-scale improvement projects. As a cost-saving measure, software systems might not be updated until absolutely necessary. Sole proprietorships also have little reason to continue to innovate or apply emerging best practices. For these types of companies, it’s easiest to do business the way it’s always been done.
Boutique firms do have advantages for certain communities. If yours is a very small association (think 2-4 unit condos or limited infill projects) without notable amenities, these firms can provide an affordable yet basic fundamental level of service such as collecting dues, cutting checks, preparing and distributing annual documents and making sure vendors arrive on schedule.
A boutique firm provides the necessary expertise and administrative support to ensure the association remains compliant with state and local laws. For small-scale associations, this level of service for a reasonable price is the ideal value.
Full-service local management companies
For medium to large communities, full-service local management companies can offer you the best of both worlds: proven reputation, experience and processes, along with fast response and a personalized relationship with HOA boards and membership. Companies of this scale usually possess deep expertise in a particular region, and their corporate office might be within minutes of the properties they manage. As such, managers and other departmental support staff are able to keep pace with changes in the region. They can physically visit properties they oversee, thus keeping their finger on the pulse of your community.
These companies have the scale and resources to offer a complete scope of community management needs, including accounting, project management, and education and training for membership and board members. They also feature robust communications systems, like community website maintenance, online bill-pay, social media outreach strategies, and other helpful online resources. Finally, since these companies operate at a larger scale than boutique firms, they must maintain industry best practices in order to ensure that they can compete with other companies their size.
For all their benefits, full-service local property management companies are not ideal for very small associations that need to keep costs in check. Usually their required minimum service fees are higher than boutique firms, so micro- communities without significant amenities or an involved membership might not achieve the best value for the cost. However, for associations that range from approximately 50 houses/condos to sprawling master planned communities, full-service local management companies offer the best value in terms of personalized, dependable service in exchange for dollars spent.