It should be a booming time for the community association management business. Condo, townhouse and single-family associations are cropping up all over the country. The management industry, however, has not been able to keep pace.
Just look at the figures cited by the Community Associations Institute, a trade group based in Alexandria, Va.:
– The number of community associations has grown to 250,000 since their inception in the 1960s;
– 6,000 to 8,000 new associations are formed each year;
– As many as four out of five new homes have been built within association-governed communities in the last several years;
– Between 85 percent and 90 percent of associations hire full- or part-time managers. The rest are self-managed, with owners volunteering to perform management duties.
And, the U.S. Department of Labor’s Bureau of Labor Statistics predicts the demand for all real estate managers, including apartment and commercial managers, will grow 21 percent to 35 percent between 2000 and 2010.
Many community associations, however, are having a tough time getting help these days.
The Oaks Improvement Association in Streamwood, one of the oldest in the Chicago area, has hired many managers in the last 38 years. None worked out for long. Among the association’s complaints: Managers were rarely on the property; they didn’t follow through with tasks they had been assigned or communicate the ones they had accomplished.
After the last one was dismissed from the 326-unit town home association five years ago, board president Scott Millard pitched in for a while. Then the board asked him to take the job as a full-time paid position — and he did.
“We had come off some bad experiences, and the general consensus of the board was that the association needed full-time attention,” he said. “When property managers are handling several properties, they spread themselves a little thin.”
“As a group, we are concerned,” said Paul D. Grucza, president-elect of the Community Associations Institute (CAI) and chief financial officer for Consolidated Community Management in Tamarac, Fla. “Everywhere in the country it is difficult to find qualified people.”
One reason for the dearth is that association management is a young industry, said Don Kekstadt, vice president of property management for Lieberman Management Services in Buffalo Grove.
Association living “hasn’t been hot for that many years,” he said. “We don’t have generations of condominium property managers yet.”
But, the job doesn’t draw crowds.
Depending upon the position, an association manager might serve a single large property or several smaller ones. Regardless, the hours are long and the demands are many. Association managers are responsible for budgets, investments, building maintenance, insurance and rules enforcement. They are on call 24 hours a day. They attend meeting after meeting, often at night, and make sure their clients comply with myriad legal requirements.
“You’ve got to be a jack of all trades,” said association manager Carol Metzen of American Property Management of Illinois in Schaumburg.
Metzen, who has a degree in management, fell into the business 12 years ago when the board of the association where she lived asked her to be its manager. She did and took on other associations as well. Eventually, she decided to work for a management company. At one point she was attending 8 to 12 night meetings a month.
Association managers also take abuse from disgruntled boards and homeowners. On occasion they have been insulted, threatened and physically attacked.
“Property managers get to deal with unit owners usually in a time of need and often in time of crisis,” said association attorney David Sugar of Michael Best & Friedrich in Chicago. “That’s not when people are always at their best.”
Then, there’s the pay. A 2000 salary survey by CAI showed the median annual salary for association managers was $42,000, meaning half made more than $42,000 and half less. They can increase their income by taking on more or larger properties or by working up to supervisory positions. In the Chicago area, association managers tend to make more money in the city than in the suburbs.
“Much of what you deal with in this business is negative and that impacts a manager’s psyche over time,” said Ed Boudreau, past president of the Institute of Real Estate Management in Chicago and president of Capital Consultants Management Corp. in Dallas. “This is not perceived as a quality career path. What we see is a lot of effort to lock down the superstars. If you’re really, really good, there’s a bidding war for you.”
“You’re either going to love and embrace and enjoy the job or find out relatively quickly it’s not made for you,” said Grucza.
In their defense, the managers say part of the problem lies with the associations. Expectations are too high and pocketbooks are too shallow.
“There is no such thing as maintenance-free, whether you live in an association or a single-family home or an apartment,” Grucza said. “Owners have to understand the limitations of what an association will do for them.”
“They’ll complain about a typographical error in a letter but won’t say anything when you save them thousands of dollars by locking in a utility rate,” said Kekstadt of Lieberman Management.
Management companies typically charge a flat monthly fee, a custom that industry insiders say encourages underbidding for clients and low salaries for managers.
“The rates that management companies receive for their services are not conducive to bringing new people into the industry and for them to stay,” said attorney Sugar. “I fully understand that condominium and homeowner associations don’t want to pay any more than absolutely necessary, but they may have to, to get very good management.”
To help relieve the stress, associations and management companies are implementing some innovative strategies:
Recruiting from the outside
The 453-unit Tahoe Village Condominium Association in Wheeling is another association that found a manager within its ranks. Five years ago when the board chose not to renew its management contract, it asked Frank Przespolewski, a resident with management and business turnaround experience, to fill in for a couple of weeks. He’s still there.
Residents and board members can be a good choice to become association managers because “they may care more and are probably more familiar with the association,” he said.
The downside, he said, is that “you never get to go home from work.”
Millard was once attending a high school concert when a resident handed him an assessment check during intermission.
“It comes with the territory,” he said. “You sort of have to laugh at it.”
Steven Levy, president of Sudler in Chicago, said that some of his best managers have come from industries outside the traditional real estate professions such as hospitality and sales.
“The problem with this is that often the board of directors wants to see a resume,” he said. “They want to see not only condo experience but if it’s a vintage building, chances are the board will request the manager have experience in vintage buildings. They don’t always recognize other attributes that good candidates bring to the table.”
Sudler also trains entry-level personnel for higher positions.
Tiered fee structures
Consolidated Community Management offers a menu of three service levels from which associations can choose. In addition, the Florida company charges a percentage of the cost of a major project, such as reconstruction after a disaster.
Other companies require associations to hire consultants to oversee major capital replacements so the manager is not bearing the brunt of the work and the responsibility.
“There are clients who need to be fired,” said Capital Consultant Management’s Boudreau. “If we don’t, we lose talent. If we lose talent, we lose clients.”
Credentialing
A few states, including Florida and Georgia, require licensing or certification for association managers. Nevada has an education requirement. Illinois requires apartment managers, but not association managers, to be licensed.
The Institute of Real Estate Management and CAI offer certification programs. CAI’s 2000 salary survey showed that managers with its highest designation, the Professional Community Association Manager, earned an average of $22,000 more than those without.
“Licensing would be a good thing,” Sudler’s Levy said. “It will eliminate anybody just hanging a sign on the door saying they’re a management company.”
Fewer meetings
Lieberman Management offers its associations a financial incentive if they agree to end meetings at an earlier hour, say, 6 p.m.
“I don’t care what time they start,” Kekstadt said. “Maybe everyone has to get off work early one day every other month or every quarter. If you’re meeting at night after everyone has had a tough day and you’re making hundreds of thousands of dollars’ worth of contract approvals, how good are you?”
“As part of our contract, we say that meetings start at X and end no later than X,” said Grucza.
Other steps suggested and sometimes taken to attract and retain employees include management teams, anti-harassment policies, in-house training programs and vocational and college courses. But major improvements are slow in coming, Boudreau said.
“If management companies don’t change the current business model, they will continue to be the abused instrument,” he said. “There is talk throughout the industry about various changes but I don’t know that a lot of managers are benefiting from that yet.”
