Condo Management Fees: The 5 W’s and How
Management fees are generally among the top five highest expenses in a Condominium Corporation’s annual budget. As volunteers on the Board, you each have your own personal experience, but you need the assistance of a professional manager to guide your decisions, brief you on your statutory obligations, and handle the day-to-day tasks of running your property business.
Who set management fees? Like any industry, condominium management is a competitive field. Fees will be set by the management companies (often this is done “per door”), but it is very important to understand what is included in the quoted price and, more importantly, what is not included.
What Do the rates include? Be VERY cautious when investigating this aspect; Unfortunately, you may not get, or worse, sometimes you get exactly what you paid for.
– The first consideration should be not only the company’s experience, but also that of the staff member assigned to your property as Manager. You will often find companies with lower rates because they hire administrative professionals and “train” them to be managers. You want more than you’re paying for in this situation if you care about your investment.
– A second scenario regarding lower rates involves “buying” your business: the first year’s contract will be at the low end of the market, but significant increases will be implemented each year thereafter (although it may seem like a cost reduction measure). costs to do this the first year and then switch to another company, it will cause endless complaints and substantial expenses from constant change of managers).
– The third situation involves a low monthly fee quoted in advance, but significant additional charges incurred after contract signing; often these are not even detailed; you will simply see hundreds of dollars in additional administrative costs on your financial statement each month. As long as you get an explanation of these costs, it’s often a vague response, citing photocopying, title costs, courier charges, etc. While these are legitimate charges, make sure they are itemized, with copies of invoices or details attached. This practice will cost you many thousands of dollars more in the long run than a slightly higher rate from another company with realistic monthly rates and transparent billing.
Where Will we see the benefits of our management fees? You will see the benefits of hiring a reputable and ethical professional in your property values. Maintenance of complete and accurate financial and legislative records; attention to regular maintenance and replacement issues; Statutory compliance and a proper reserve fund will be worth much more to today’s savvy buyers who often hire professionals to review the Corporation’s affairs in detail before purchasing a unit on their property.
When Should we worry about fees? Obviously, the lower rates should set off some red flags; on the contrary, the higher fees must be fully justified. The general rule in any bidding process is to rule out the lowest and the highest; when all factors are equal, this is the simplest method. Just be sure to look very closely when comparing critical services, terms, and practices, as well as qualifications like experience, consistency, and prompt and regular communication.
why Should we investigate a variety of fees? High-end or “good” companies will often offer flexible service contracts; If you have a 12-unit property, you may only need assistance in the form of consulting or perhaps partial management services. At the other end of the scale, a 400-unit high-rise with older bylaws, special appraisals, and multiple insurance claims, may opt for a comprehensive, full-service contract. Carefully review the proposed services for the quoted price and consider your needs – don’t pay for what you don’t need and make sure what you need is included and not charged as an extra – surprises in this regard are never pleasant.
How Do we make sense of the rates? DO ask the questions and make sure you get a satisfactory answer before moving on. It is always careful to get answers in writing and if you are not sure what to ask; Talk to friends, family, colleagues, or check with your local professional organization or industry advocate to get some ideas. Make sure you are comfortable with a) the services offered, b) the apparent knowledge, experience and skill of the person assigned to your property, and of course c) the proposed fee relative to your money’s worth.
Remember that condominium management is not a creative process – there are some critical, well-established tasks that must be performed by each manager. What you need to consider is the depth of knowledge, variety of experiences, availability, commitment, and professionalism that will allow you to feel comfortable trusting the guidance and assistance you will pay for.