As anybody who’s ever been to an “all you can eat” sushi buffet can tell you, bigger isn’t always better, and if “more” is mediocre, sometimes you’d rather have less. The same applies when it comes to property management companies. Management firms come in all shapes and sizes, and offer different items on their service menus. When negotiating (or renegotiating) your building’s management contract, determining the type of company that is the best fit for your particular community is an important decision, and one that deserves a great deal of careful consideration and critical thinking.
Big or Small?
There are certain universal needs that all buildings and homeowner associations have, but individual communities are different, and want different things from their management companies—so there’s really no right or wrong answer when discussing what kind of company is best for your building.
There are pluses and minuses for both large and boutique management firms. A large firm may offer more services, but be slower to give client communities much hands-on, face-to-face attention from individual agents. A small management company might have the personal touch, but get stretched too thin if it takes on more clients than it can handle. Although most management companies would like to think they can offer their clients the best of both, it’s still up to boards to figure out what size company works best for them and then explore the best management company for their needs.
“The most important thing for a board of directors is to decide what they want and what they need. While both large and small firms offer the same and some unique services, most important are who the firm’s principal players are,” says Robin Habacht, president of Monticello Management, Inc., which operates in both New York and New Jersey. “Much like any potential employee to be hired, a company should be reviewed like a resume for the skill-sets it offers in terms of its personnel—not just the amount of personnel it has.”
As president of Wentworth Management Group, which handles over 250,000 units in 12 states (including New York and New Jersey), Michael Mendillo is in a position to explain the pros of using one of the big guys to manage your building or association.
“A larger company can bring more depth and resources to the table for a client,” he says. “Also, if you’re [working with] a company that’s run properly, with a culture that reinvests in recruiting better-skilled people and training, it can be a big advantage.”
Brian Rafferty, director of operations for Manhattan-based Century Management Services, Inc., which handles 78 properties, considers his firm to be more mid-sized, but says they have the resources that people generally associate with a larger firm.
“One of the biggest advantages in services [a larger company] can provide over a smaller firm is depth of management,” Rafferty says. “Our managers are supported by an entire team which includes their own assistant manager who is assigned only to them and provides administrative support. It is that depth of management that allows a managing agent to focus the majority of their efforts on managing a property on a day-to-day basis and properly address the needs of the client. That type of manager support might be difficult for a boutique firm.”
While larger companies are quick to extol their breadth of services and multiple ranks of administrative backup, smaller companies tout their personal touch.
“A small company knows all of the owners, tenants and building issues. They do not have to open a file to get an answer,” says Scott Lerman, vice president of Manhattan-based Rialto Management Corp., which handles 30 properties. “Small companies usually have a better relationship with the tenants. They are more accessible and more hands-on.”
Plus, there’s a sense that with a smaller, more tight-knit management company, clients don’t feel like they are ever lost in the shuffle.
Having grown to 2,000 units in 26 buildings, Vintage Real Estate Services, Ltd. in Manhattan, is a larger small firm, but company president Jeff Friedman still believes in a boutique-style approach.
“We’re very hands-on because we all do a lot of the work around here. You deal with a principal or long-standing person,” Friedman says. “Even if I don’t personally handle a property, I am fairly familiar with it. I am part of an e-mail list and know what’s going on. I know who the people are, I’m involved in the intake of the property to the building and I go to the first couple of board meetings so I get a flavor of what’s going on.”
He doesn’t turn down new clients, but he doesn’t want to turn into a large firm that might not have the same personal touch.
“One of my associates and I are involved with most of the properties that we run. We do a lot of the work so we are very knowledgeable about various aspects and that would be lost if we became a much bigger,” he says. “It’s not something I am really looking for.”
While Monticello Management is not one of the largest firms in the industry, they consider themselves a bigger player in their niche, which is one that caters to a clientele seeking a personal and attentive approach.
“While I cannot say that our size is what gives us an edge, I would say that our corporate structure and culture have made the difference for our clientele,” Habacht says. “For example, we are structured to offer a much smaller manager-to-association ratio than the industry average, as well as offer 24-hour live assistance to our homeowners.”
Things to Ponder
When looking at what’s best for a building or HOA, the board should make a list of all its needs and expectations and see what sort of management company will best serve those needs and meet those expectations. They should take into account their own size and resident demographics and get a general feeling about what the residents are looking for.
They should also make a list of questions that they will need to ask the management company to see who is right for them.
“Meet your potential property manager, and make sure the chemistry is there,” Habacht advises. “Don’t be afraid to ask for that meeting and ask that person questions, such as what they would do under certain circumstances.”
Habacht also recommends asking who your building’s liaison will actually be and whether you ever see your service salesperson again.
Another aspect of choosing between a large and small firm is their ability to provide your building an on-site manager versus offering a manager who just visits the property periodically. On- versus off-site depends not just on your building’s needs, but on its resources.
“If you have someone on-site, someone who can act as your general manager, community manager or executive director, and is there Monday through Friday from 9-to-5, [that person] is likely going to be more of a pro,” says Mendillo. “But a con is that not all communities are able to afford an arrangement like that, or it isn’t cost effective for them.”
For the portfolio manager who manages four or five communities and balances them with monthly inspections, dealing with larger projects and so forth, there can still be some pluses. The resources and service may be greater and the jobs may get done quicker and cheaper, since they deal with contractors on a regular basis.
“We have some communities where the culture of the board wants site presence because they want the TLC and [the residents] are willing to pay the extra cost among themselves to provide that better quality in the community,” Mendillo says. “Other [communities] don’t need to spend that much, so they dedicate the money to day-to-day costs.”
For those considering moving from a large to small management company, Lerman thinks it’s important to really balance the two.
“An [association] should consider how important personal service is to them. If they are looking for a ‘hands-on’ company, it may benefit them to go with a small company,” he says. “They should meet with the agent and make sure they can work with him or her. They should meet with the staff and look around the office to see the type of operation it is, and if they are comfortable with it.”
Rafferty suggests looking at different companies and not eliminating any based on size until you have done enough research to form your own opinion.
“Some co-ops just have limited resources which may restrict them to a smaller firm — and that is certainly understandable,” he says. “But I don’t think price should always be the determining factor. Compare the level of service that is being offered. Ask the companies how their management style can control or reduce expenses. A smaller company or even a larger company may offer a reduced fee, but at what cost? Are you getting a manager with limited experience who is managing a portfolio of 10 or more properties?”
Friedman warns that when people make change, there are always some challenges that need to be addressed. “After a transition I try to make myself familiar so they know I am not just a name at the bottom of a letter,” he says.
Depending on a given manager’s own professional style, there may be advantages for him or her in working for either a large or boutique company.
“A big firm is great for recruiting people,” says Mendillo. “It’s better for people who want to make this a long-term career and want an opportunity to grow in an organization that provides benefits. In a small firm, there may be less room to grow.”
Size can also come into play with a management firm’s corporate atmosphere, which can impact how its managers do their jobs and interact with client communities.
“The culture of any company impacts its employees from the receptionist to the regional manager,” says Habacht. “Support of our managers both from the office and in the field is paramount. They need to know that we are ready to provide them with any data or any contractor contact needed to fulfill their association’s needs.”
Whether your building is a six-story walkup condo or a sprawling co-op development, finding the management company that works best for you ultimately hinges on identifying a firm whose values, work ethic, and service menu squares up with your community’s needs and expectations. Once you’ve done that, you may find that both large and small can be just right.
Keith Loria is a freelance writer and a frequent contributor toThe Cooperator.