26 Jan Pros and Cons of Self-Managing Your Association, and Why Making the Switch to Professional Management Can Help Your Community Flourish
Each homeowner’s association is different – some have more unique needs than others. This often depends on the property size, team member count, resident count, property age, location, and of course, the type of property (luxury high rise, standard mid-rise, low rise, or single-family). Although self-managing your association might sound appealing, hiring a professional management company can assist you with finances, day-to-day operations, personnel management, and vendor management. This decision can make a big difference in your management team’s efficacy and your residents’ living experience. There are pros and cons to each and figuring out which one is right for you can positively impact your community in the long run.
Self-managed associations have tighter control of their association assets since they do not rely on a third party to manage their finances. Typically, a Treasurer within the Board of Directors for that association becomes the bookkeeper and is tasked with keeping records of income and expenses and managing the association’s reserve funds. This responsibility, however, can bring a greater risk of misuse and requires an excessive amount of time from a resident volunteer. Allowing a professional management company to manage assets as an unbiased third party can result in a happier and healthier community, especially since they have your best interests in mind and their own. When your association is successful, they are, too.
A greater sense of community is often a selling point of homes within self-managed associations. Since some associations require that residents maintain certain common areas or take out the trash, many residents report feeling more connected to their neighbors since they work with them more often. With a professional management company, such as Worth Ross Management (WRMC), you’ll have direct access to a lifestyle coordinator to carry the burden of planning and organizing events.
Problems with the law can arise, and often, self-managed communities are not even aware they are breaking the law. Being fully aware of laws revolving around homeowner’s associations is both time and effort-consuming, which board members do not have to spare. A professional management company will keep you aware of legislative changes and ensure you’re in compliance.
Not having a second set of eyes on finances can result in certain things being overlooked and end up causing more hardship on self-managed communities. Having a professional management company supervise your finances, develop budgets, and manage expenses can better protect the association. Having the Board Treasurer solely manage the books leaves room for error and can get your association into trouble if you aren’t careful.
Self-managed associations are often more expensive for residents since you do not have a professional management company’s buying power or resources. Hiring personnel, managing benefits, ensuring vendor compliance, and monthly bookkeeping costs are just some of the expenses incurred directly by the association, included as part of the management agreement with a professional company. Like Worth Ross Management Company, property management companies often offer individualized services to meet your association’s exact needs.
Increased deferred maintenance and poor service standards around the community can bring values down and drive assessments up. Board members often have full-time jobs in addition to their Board duties. As a result, property inspections and contract reviews are often overlooked leading to increased deferred maintenance and sub-par performance by third-party vendors. A professional management company employs a team of experts responsible for assessing risk, routine inspections to capture preventative and ongoing maintenance within the community and will regularly measure third-party vendors’ performance to ensure your assets are protected.
In the case of one formerly self-managed association, the growing pains experienced were enough to call in the professionals at Worth Ross Management Company. Initially, one of the associations we are now proud to partner with in Colorado had a long history of being self-managed. They relied on their Board to make the best decisions for the property regarding finances, maintenance, and assets but had contracted a third-party management company for accounting services – it had been this way since the community was remodeled in 1970. The towers first housed a historic hotel, and in 1970, the three 20-story high rises became home to nearly 200 urban residences.
While much of the towers’ infrastructure was replaced upon its revival to residential homes in 1970, they began to show their age after 50 years of use. The buildings’ exterior showed signs of deterioration, contained tripping hazards, safety concerns, and was in desperate need of repair and revitalization. Internal inspection showed inadequate piping, generators, and multiple fire code violations.
In November 2020, the association decided to partner with Worth Ross Management Company for a 90-day consultative period to evaluate operations from top to bottom and perform a thorough review of building mechanicals and finances. Worth Ross Management Company provided multiple resources to support the Board and on-site team during the 90-day period and showcased the importance of a professional management company. We provided them with a detailed report outlining hundreds of action items, along with corresponding photos, sorted by urgency. This reporting provided the Board with the necessary guidance in addressing the most critical items while planning for the future.
Halfway through the consultive period, however, the Board decided to move forward with Worth Ross Management Company and hire them as their full-service third-party management company. This decision allowed WRMC the opportunity to completely refresh the community and restore it to its former glory. Since then, the WRMC team has been working through the extensive report and improving the community daily.
In this association’s case, switching from being a self-managed association to allowing a professional management company to come in has proved to be a successful and smart move. Having the guidance and assistance from Worth Ross Management Company will give the community the chance to reach its highest potential. Since it needed so many improvements, WRMC could tailor its services to the association and put the best efforts where it truly needs it the most.
According to CAI Community Manager magazine, about 25% of the U.S. population – about 73.9 million people – live in a property with a homeowner’s association. More and more people are making the switch to live in a professionally managed community. More associations are opting for professional management due to its proven benefits and high satisfaction rate among both residents and Boards. Professional management companies such as WRMC can help streamline processes and assist with violation enforcement, vendor coordination, and perform several inspections throughout the year to ensure each association remains compliant with the state’s rules and regulations. Allowing a professional management company to assist with your association also gives Board members more time to focus on more important issues regarding the community, resulting in quicker turnaround times for maintenance and community appearance. Lastly, the people working for companies like WRMC are highly skilled experts in their field, ensuring the best possible outcome for your association and its residents.
If your association is looking to make the switch to a professional management company, contact Worth Ross Management Company today to see how they can help you, too.
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