Financial Risks of Choosing an Unproven Management Firm

Consider the financial risks of hiring unproven association management firm

With the recent changes in the U.S. housing market and the rise of online real estate platforms, many less experienced real estate agents and brokers have shifted their business from real estate sales to condominium and homeowners association management. While some smaller, unproven management firms may have a great sales pitch, there are potential risks associated with smaller, less experienced, and less financially secure management firms that could have a major impact on your community association, such as:

Impartial Manager Fiduciary: A small management company will have fewer HOA managers, and they may be overly reliant on one or two managers, who may also be principal owner(s) of the management firm. It is important for the community manager and firm to have an independent relationship for the continuity, transparency, and efficiency of the HOA operations. It can also take time and resources for less experienced managers to learn the specifics of the HOA and establish a reputation and rapport with the board and the homeowners. Does the smaller firm have the experience, financial backing, employee recruiting opportunities, and insurance coverage to survive and guide your association through any financial or disaster situation? If the smaller firm had a financial setback, would your association be impacted? It is important to understand the financial risk you are taking as a board member of your association.

Lack of Communication: An unproven management company may not have enough staff or advanced systems to respond to the HOA’s queries or concerns in a timely manner. This can lead to frustration, misunderstanding, legal issues, and mistrust between the HOA and the management company.

Low-Quality Vendor Services: A less experienced management company will not have a rigorous vendor selection process or a wide network of reliable and reputable insured and licensed vendors. This can result in low-quality or overpriced services for the HOA and a lack of independent financial oversight of the relationship between the management company and the vendor. The ethical issues can also carry over to the Board of Directors and affect the long-term maintenance and financial strength of the community and insurance coverage. All three items can have a detrimental impact on the resale value of homes within the association.

Inadequate Accounting and Reporting: A small management company may not have the expertise or the technology to handle the HOA’s accounting, reporting, and Human Resource needs. This can result in errors, discrepancies, or delays in the HOA’s financial statements, which can affect the transparency and accuracy of the HOA’s financial health.

Risk of Income Loss: A smaller management company may not have the skills or the tools to manage the HOA’s cash flow, collections, and reserve funds. This can result in a decrease in revenues or an increase in expenses, which can affect the HOA’s ability to fund its operations and capital projects.

Risk of Fraud, Theft, or Embezzlement: Last but certainly not least, a smaller, less experienced management company will likely not have the proper safeguards or controls to prevent or detect fraud, theft, or embezzlement of the HOA’s funds, including from online cyber security threats. This can result in a significant loss of money or assets, which can damage the HOA’s reputation and financial stability. We have helped many associations over our history that have had funds stolen from smaller management companies leaving the community in financial shambles. CMA has the experience and resources to help any association recover, but it can take years to fill the hole which will impact the resale values and insurability of the association.

These are just a few of the possible financial risks of an HOA going with an unproven management company. However, not all management companies are the same, and some may provide excellent service and meet the needs of your community. It is important for the board to do its due diligence and research before hiring any management company, regardless of its size. The board should also monitor and evaluate the performance of the management company and its insurance coverage and licensing regularly, and communicate any issues or concerns as soon as possible to reduce the financial impact on the association.

CMA has the expertise and resources to help guide your association through any crisis or loss. As the largest community association property management company in Atlanta, Alpharetta, Augusta, Dunwoody, Peachtree City, Roswell, Birmingham, Fairhope, Nashville, Destin, Santa Rosa Beach, and Naples, we are here to help your community thrive.

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What Does a Community Management Association Company Do

What Does a Community Management Association Company Do?

Ever wondered why your cul-de-sac was so peaceful growing up? No fights, clean lanes, friendly neighbors- your local community association probably had something to do with all this.

Local Community Associations

Neighborhood homeowners play an essential role in maintaining common spaces and improving community welfare.

A community association comprises volunteers, as well as elected and mandatory members. Larger communities often have member fees, while smaller neighborhoods are mostly civic bodies.

When to Hire a Community Management Association Company

With an efficient community association at the helm, people don’t easily notice things like property taxes or association fees and vendor rates. It is when this system breaks that they realize the importance of their roles in their daily lives.

In dire cases, a community management association company is called to help oil the gears of this resident community.

Role of the Community Management Association Company

It offers assistance to the HOA (homeowners association) in administration or finance. This service helps the community association a great deal. More prominent neighborhoods benefit particularly from the budget sessions and vendor billing tips that the company associate provides.

Community management association companies have been around for some time. Businesses like Atlanta’s Community Management Associates have over three decades of experience.

They are usually hired by overworked community presidents or stressed boards of directors. And after signing relevant paperwork, the company starts on its role.

Role of Community Association Company Manager

A community association manager is dispatched to the neighborhood as a representative. The manager also helps the struggling local association in tasks like neighborhood budget planning, professional billing and common area maintenance.

While his roles may include finance and administration, his goal is always to enrich the entire community.

Finance and Administrative Skills

The company manager is skilled in community management while being an expert in negotiations and conflict resolutions. If the board of directors are hesitant about loan applications, they can consult with the community association manager.

The same can be done for advice on tax returns, service contractors and venue management.

All good community management association companies interact with the people of the neighborhood. The residents provide crucial feedback on necessary changes for protection against vandalism or the monthly billings.

Importance of Community Management Association Company

A neighborly bond is a valuable thing, but it can be a con in some instances. Community volunteers and the board of directors are often reluctant to broach the topic of finance with their fellow residents.

Hiring the service of a management company like Community Management Associates can easily solve this problem. A third party will have no problem talking bills, fees and finance with the neighborhood residents.

Even tricky conversations regarding complaints and fines can be presided over by the community management association company. The manager relieves an enormous load off the community president/board’s back. As a result, they can focus on more important work like budgets and community safety.

Hiring a community management association company is the answer if you want your neighborhood to work like well-oiled clockwork.

Keeping the Peace Difficult Conversations with Neighbors

Keeping the Peace: Difficult Conversations with Neighbors

In community residences, good fences do make good neighbors.

But with some pressing issues when you have no choice but to be vocal about your problems.

Community boards and homeowner associations often hire third-party services like Community Management Associates to have these difficult conversations.

These people are professionals who assist homeowners’ associations (HOA) in improving the community.

Advice from a Community Management Company

The associate manager is their primary point of contact. Aside from accounting and management experience, they must also have well-developed communication skills. This particular skill set is necessary to maintain a professional relationship with the residents.

Here’s how managers keep things cordial while still being stern.

Never Be on the Offensive

It is crucial to be open to resolution when raising an issue with your neighbors. Make sure your priority is solving the problem. Never use it to vent at your neighbor.

Blindly reacting in the heat of the moment does more harm than good. You want a dialogue, not an argument.

Do Not Add Past Grievances to the Issue at Hand

This piling up of old complaints is the worst thing you could do. An allegation immediately puts your neighbor on the defensive.

Your conversation should only center around the issue at hand. People often make the mistake of pulling other residents into the mix. Instead of strengthening your argument, this only makes your neighbor feel attacked.

They are more likely to lash out in anger, turning your issue into a full-blown fight.

Try to See Things from Their Perspective

For example, water from your upstairs neighbor may be trickling into your terrace daily. Instead of stomping there to argue, investigate a bit. They may be simply be watering plants, unaware of any issues downstairs. You can now calmly approach them after being adequately informed of the situation.

Sometimes conflicts may be unavoidable. A neighbor’s damaged car may block your gate.

In such cases be as accommodating as possible. Chances are they’ll do the same for you when the time comes.

Build a Healthy Relationship

Say hello when you run into them, help them carry luggage upstairs when possible. This practice helps build healthy rapport.

So, when the time comes, they are more likely to be amenable to your grievances.

Keep Track in Case of Repeated Offenses

Some neighbors don’t seem to get the memo. If they are not open to resolving things peacefully, make it a point to note down details.

Since the culprit has chosen to ignore your repeated requests, you can inform the associate housing manager about the issue. Since it solidifies your argument, your log is sure to come in handy during this time.

File a Complaint with the Board Only as a Last Resort

Inform the board only if the issue with your neighbor persists despite your repeated requests. Filing a complaint can damage relationships and should be done only as a last resort.

After deliberations, the community members and the board to discuss your issue may introduce new penalties and fines preventing such violations in the future.

This decision affects the entire community rather than just you and the offender. So, it is essential to make communication and resolution the primary weapons in your arsenal.

What Is The Difference Between A Condo And An Apartment?

Condos and apartments are two of the best assets for building management firms. Whether you’re renting or selling, demand for both has always been high.

According to Stayfi’s 2020 compilation of vacation rental statistics, the majority of Gen-Z travelers prefer condos for rental. Last year was also a milestone for apartment demand, according to The Real Deal.

You can find countless articles about living in them. That’s why our focus for today is the building management side of things.

How are condos and apartments different for a property manager?

Building management differences

In terms of attributes, they’re actually very similar. The main difference actually comes from ownership.

Building management for apartments usually goes for the entire building instead of per apartment. Everyone looking to rent or buy an apartment has to speak to the same entity. It’s why apartment management is a lot more centralized than condo management.

Speaking of condo management, condos are more “individualistic” than apartments. Homeowner Associations typically manage condos. This management centers around common area maintenance instead of the entire space.

In other words, building management often includes complete ownership of the apartment buildings. For condos, building management is mostly that: management instead of ownership.

Renting

For condos, rent is quite different from apartments. The HoA manages common amenities, like concierges and general security. Homeowners and tenants pay fees every month for these benefits. However, utilities are mostly every tenant’s responsibility.

For apartments, building management companies are responsible for all bills and maintenance. Therefore, the company will charge for security, cleaning, and most utilities. That’s because the same public services go into the entire building instead of every apartment individually.

Maintaining

Maintenance for condos is the responsibility of every owner. If the owner fails to pay his utility bills, they can lose the corresponding service. However, all other condos won’t face any consequence for their own utilities. HoAs fees are solely for amenities benefiting all owners.

On the other hand, building management for apartments is more involved with maintenance. That’s because everything outside every apartment space is basically “common areas.”

Regulations

The condo’s HoA is in charge of creating community rules for everyone. That’s often a communal agreement on what’s acceptable within the areas. That said, individual owners can create their own rules within the condo.

Apartment rules begin and end with the owning building management firm. The building’s owner can decide what’s allowed and what isn’t, even within the apartments.