- Money: Which will be most cost effective for the long-term?
- Competency: What is the competency/experience of each individual who will take care of the management, maintenance, accounting and legal requirements?
- Time: Who will devote their time (long-term) to perform needed tasks and who will verify tasks were performed in the best interest of the association? Will each board member volunteer a fair share of their time? (It is illegal to get paid to manage a condo association in Illinois without being licensed.)
- Power/Control: Might someone abuse their position and take inappropriate control of matters and direct who gets awarded jobs?
Sound Reasoning for Self-management
There are two predominant reasons for self-management: Hope of saving money and control of decisions. Many associations were victims of poor professional management and sometimes associations are better off being self-managed than professionally managed. If the four issues listed above can be answered to the satisfaction of the board and owners for self-management, then your association is a very good candidate for self-management. I also would suggest that the building(s) not be too new or too old. Not too new because latent developer defects often require a persistent condo association manager and/or attorney. Not too old because if nobody on the board has experience with building maintenance and contractor negotiation, that is a burden that costs a lot of time and money.
Some other issues to keep in mind with self-managed condo associations:
- What happens if one board member gets upset and calls other board members loafers for not spending as much time helping with the burden of self-management?
- What happens if the volunteer property manager decides to quit or move and not return documents?
- What happens when a pipe bursts on a holiday while family is over? Who all will agonize about getting a vendor in time and paying the double-time fee up front?
Small condo associations have a fair chance to save money with self-management, but one mistake or bad vendor can cost the association more than the association would have saved on management fees for the past five years. Then all the self-management time was wasted because the hoped-for cost savings were not realized.
Sound Reasoning for Professional Management
The only reason condo association boards hire professional managers is to overcome the disadvantages associated with self management. Below are some of the advantages of hiring a professional to manage your association:
- Someone who gets paid to work for the best interest of the association must get the job done or get fired. (It is hard to fire a volunteer unless you are willing to do the work yourself.)
- State law imposes regulations on condo associations that board members are not aware of and can cause them problems. Most of the governments' regulations do not require a lawyer and can be handled less expensively by a licensed property manager.
- If a large problem arises and the association is not managed properly, it is possible for owners, contractors and the government to sue board members personally for mismanagement.
- Most board members do not realize what all is involved with condo association management (we do not know what we do not know). When the energy and enthusiasm to self-manage wears down and required tasks are left unfinished, how will they get done? Most past board members will tell you property management is a thankless job. You can spend half your free time working for free for your neighbors and it will not be enough for many of them (no exaggeration).
- Professional property managers have experience and can solve problems before they arise. And contractors are much more likely to provide lower fees to full-time professional managers than an individual association. This can save the association a significant amount of money (sometimes more than the annual management fee).
- Professional property managers can meet with contractors and create bid specifications and send requests for proposals and read the terms on the proposals and summarize proposals so the board can quickly and confidently make good decisions.
- With professional property management, board members do not need to spend their free time researching and wrestling with every new problem they encounter ... and the problems never stop coming.