|
There are fixed costs like rent, phones, copier, insurance,
computers and fax…the standard modern office expenses. Then,
there are labor costs, which vary according how many associations
managed and the time needed to handle each account. Then there
is a funny notion called "profit". Total fixed and labor costs
plus profit margin divided by the total number of units managed
yields the company’s average charge "per door". In Oregon,
the average is between $10-15/door. In the Bay Area, the fee
may range from $20-$40/door and up. Small communities will
pay more and larger communities will pay less than this.
Typically,
a management company will assign a Property Manager, a bookkeeper,
a supervisor, a support staff person (usually a receptionist)
and possibly an administrative assistant to the account. All
will handle multiple associations. The manager may handle
7-10 associations, the administrative assistant may be shared
by two managers and may handle 14, the bookkeeper may handle
10-14, the supervisor may have 3-4 managers under them, which
means they may deal with 21-28 associations and the receptionist
gets them all. [back to top]
The
salaries, benefits, taxes and expenses of these people are
allocated to the associations they deal with. Staff costs
are directly related to how many associations the staff manages.
The more associations they can handle, the more cost efficient
and, theoretically, the cheaper for you.
The salary levels of the staff can have a major impact on
the management fees. If an association wants experienced professionals,
there is a price to be paid. A professional association manager
should attend seminars, have professional designations and
focus exclusively on this form of management. This is one
of the most challenging forms of management there is, and
a jack-of-all-trades just won’t do. The association will benefit
from proper training and experience. Expect to pay accordingly.
Managers spend sometimes as much as 80% their time preparing
for and following up on Board Meetings. For a typical Board
meeting, the manager gathers the information and prepares
a management report, reviews the financial statement, attaches
relevant correspondence, puts Board packets together and mails
them to individual directors. That could leave just 20% of
the total schedule for inspections, supervising contractors,
responding to owners, processing collections, reviewing contracts
and other important things a manager is supposed to be doing.
Most Board meetings are held on weekday evenings at the community
so the manager is required to work after hours and travel,
both of which cost the association money. (It’s built into
the contract.) After the meeting, the manager usually has
a laundry list to follow up on that occupies most the following
week. A manager can easily spend from 14 to 20 hours on Board
meeting related business. [back
to top]
What can you
do to reduce management costs?
1.
Limit Board Meetings to 2 hours. Rarely will more time
be needed and if a deadline is known, the agenda will get
done. Less talk, more action.
2.
Hold daytime, weekday meetings to avoid manager overtime
costs.
3.
Move Board Meetings to the management office to save manager
travel time and mileage.
4.
Reduce Number of Meetings. With a good budget and management
plan, the manager should be able to handle most issues with
bi-monthly or quarterly Board meetings, with only occasional
input from the Board.
5.
Let the Manager Manage. Board micromanagement duplicates
effort and inevitably runs up costs. If your management company
is incompetent, get a new one. If qualified, let it do its
job. This may be your single biggest cost saver.
6.
Insurance Claims. Insurance claims can take many hours
of a manager’s time. If the management agreement specifically
states that insurance claim work is an extra cost to the association
(key component), the management company can bill the insurance
company for the time it takes to administrate a claim.
7.
Collection Activity. Management time for collections should
be billed to and recouped from the delinquent owner whenever
possible.
8.
Disclosure Information. Manager time and costs to compile
disclosure information for owner home sales should be charged
to the owners.
These
are but a few ways that management costs can be trimmed. Be
sensitive to your manager’s time and don’t pile on unnecessary
tasks that ultimately will raise the cost. While it’s important
to get what you pay for it’s equally important to pay for
what you get. Sit down with your management company annually
to count the cost and work together to improve your partnership.
Article used with permission by www.regenesis.com
[back
to top]
For
more information e-mail Kevin at: kwiley@citiscapesf.com
We’re
here to help your community.
| 
