Do-It-Yourself Management Is it Right for Your Building?

To self manage or not to self manage? It’s akin, in some respects, to the half-century old question of manual versus automatic transmission. Sure, the automatic is easier to drive, but the manual provides more control. And sometimes a co-op or condo board–just like a sports car driver–wants a little more control.

In the Driver’s Seat

The co-op and condo community can be divided into two types of properties: The vast majority that engage a professional management firm and those that choose to go it alone. All properties need the services that good full-service management provides, from ongoing maintenance of the physical property, to staff supervision, financial oversight, assistance with contract negotiations and timely response to resident inquiries and concerns. The difference is that in self-managed properties all these responsibilities fall to the shareholders or unit owners who have volunteered to accept them.

Although conventional wisdom suggests that smaller properties are easier to self-manage, that’s not always the case. Large co-ops such as Penn South, a 2,820-unit co-op in Chelsea. Some suggest that if anything it’s easier for a building of this size to be self-managed because everything is right there under the supervision of an in-house manager.

Whether your building is large or small, the challenges of self-management are not for the faint of heart. What it takes is identifying and encouraging a core group of dedicated residents willing to invest the time and energy required to effectively manage the property. Grooming successors to this core group is a common problem, but many professionally managed properties have the same problem when it comes to getting residents to volunteer their time to serve on the board or join a committee.

Why do it? "With self-management, boards are able to get a better feel for their expenses and gain a better understanding of how their building works," says Steve Dym of Weorth Lawrence, a combination back-office and full-service management company with offices in Queens and Manhattan.

One long-time board member of a 600-unit building in Manhattan agrees that the hands-on approach can mean a tighter rein over dollars and policy. "We have more control over the purchasing and more control over other systems," he says.

Nick Biasi, president of the six-building, 396-unit Northridge co-op in Queens, agrees. "We control our money. We can work directly with contractors, knowing that we’ve chosen them because we want them, not because they’re involved with a management company."

Anything You Can Do, I Can Do Better

With the additional control inherent in self-management comes a substantial increase in board member responsibility. "The amount of time and effort needed to manage a building is enormous," Dym says. "The requirements made by the city are so cumbersome" that resident managers are almost certain to require assistance from outside sources. From lead paint notices to tax laws, residents need to know a huge amount of information in order to efficiently run their building and keep up with the myriad additions entered into the rule book each year. "The process of self-management is a lot more involved than it used to be," Dym says. "It’s become a complex business."

Biasi’s co-op, which has been almost continuously self-managed since its inception in the 1950s, benefits from a significant number of dedicated residents, many of whom are retired and able to dedicate a substantial block of time to running the complex. "We have a very active board," he says. "We have capable people and guys who are willing to put in the time. Everyday, at least four or five people put in time in the office."

While many self-managed buildings employee on-site building managers, Northridge does everything via its volunteers. One person serves as treasurer while another is assigned the task of overseeing maintenance and so on, with each task of building management taken on by a member of the board.

Biasi considers himself fortunate to be working with such a dedicated group of volunteers. The situation at Northridge is rare; often, it’s extremely difficult to entice residents to assist in the running of the building. "So many people are working two jobs these days," Dym says. "An extra hour or so a week becomes a burden."

Laying a solid foundation and creating a detailed set of policies and procedures can help overcome a board labor shortage. If a building can install some basic principles, then the job won’t be as intense and time-consuming, says the Manhattan board member. "Our job is to manage the managers. Often in self management, people tend to micro manage. Boards should be working on large issues. The board’s role needs to be very well-defined and the board needs to set goals and objectives and work toward them."

To the Rescue

Even the Northridge management team, which runs most of the co-op on their own, requires the expertise of a professional now and then. Firms like The Back Office, Inc. in Manhattan and Weorth-Lawrence provide back-office assistance to the complex, assisting with the day-to-day issues that can eat away at a board’s time, distracting members from the larger issues. For Northridge, Weorth-Lawrence takes care of tasks such as invoicing and paying bills.

The Back Office provides financial services to self-managed properties throughout the metropolitan area. "We found that smaller properties didn’t always need all the services of a full-service company, says vice president Steven A. Schneider. Our firm collects payments, receives and pays bills and provides financial reporting for our self-managed clients.

"We also supply vendor information, and we give advice whenever our clients ask. And when we see that the daily maintenance of a property is more than a board is willing or able to handle, we may advise them to look into full-service management again. But if they’ve got two or three people who are ready, willing, and able, there’s no reason not to self-manage," says Schneider.

Services provided by Weorth Lawrence include financial and bookkeeping assistance, credit checks, closing support and more. They’ll even attend board meetings, ensuring that they hear first-hand from the building’s super or others what problems need solving.

Back office firms allow boards to choose the extent of the company’s involvement with their building. It’s a way to maintain control while making sure that the financial minutiae is maintained by trained professionals. The company provides a la carte services, which cover the spectrum of building management needs. "If they need us to get prices, supervise building staff, field phone calls, handle resale or credit checks, we can do it," Dym says. "We’ll do as much or as little as they’re willing to give us."

Often, what starts out as a minimalist relationship blossoms into a long-term commitment, with buildings hiring companies like Weorth-Lawrence as their full-time management company. "Most self-managed buildings are reluctant to go full service," Dym says. But often, "people will give us more and more to do as they get used to us." Sometimes this slow approach can renew confidence eroded by bad experiences.

More Like a Community than Just a Place to Live

Although fewer buildings are self-managing these days, those that do seem to find satisfaction in their independence. And for many, it comes from the sense that they are caring for their homes. "I really enjoy where I live," says the Manhattan board member. "And I feel I have something to contribute."

Self-managed buildings also seem to create a closer knit living environment. "We’re able to give a little more full-time care to the residents," Biasi says, noting that many of Northridge’s residents are older. Because neighbors are relying on each other, "it’s more of a community than a housing development," he says.

Sometimes this neighborliness can lead to difficulties. Sometimes a board can have trouble making decisions because they’re influenced by their neighbors, the Manhattan board member says. As a result, rules are made, but not always enforced. "That’s really one of the most difficult aspects of self-management," he says.

Biasi has had residents come to his door with questions, crises or complaints. "I have to tell them, ‘You’re my neighbor and I love you very much, but I can’t talk to you right now," he says. "You have to make rules."

Weighing the Pros and Cons

Any building considering self-management needs to carefully consider all the pros and cons involved. Certainly there is more involvement in the day-to-day issues and perhaps more of a sense of community, but self-management is often a time-consuming proposition, one that requires an enormous amount of dedication and commitment on the part of the volunteers who are going to shoulder the responsibility–the exception to the rule but perhaps an alternative to consider.

Ms. Lent is a freelance writer living in Bloomfield Hills, Michigan.

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