The Pros and Cons of Self-managing Your Condo
Are you somebody who really enjoys micro-managing things? Do you like biting off more than you can chew? Looking for a full-time job that pays absolutely nothing? Then have we got the gig for you: condo community self-management!
Okay, okay. We’re having a bit of fun up there with our intro, but in reality, condominium self-management is an approach that can definitely have its benefits for some of the smaller, better-organized condo communities out there. Want to learn more? Read on!
Hold On – What Exactly is a Self-Managed Condo?
If you’re not intimately familiar with precisely what “self-management” means in terms of condo communities, don’t worry. When it comes to understanding what a self-managed condo is, the definition’s right there in the name: it’s a condo community that’s decided to forgo the services of a condo management company and handle all the nitty-gritty, day-to-day work of managing the building, property, and community themselves.
If that sounds like it would take a lot of effort, well, you’d be right. It’s not easy! That said, for some smaller condo communities, going the self-managed route brings with it some pretty serious advantages. There’s a cut-off point, though, at which the work and stress of it all starts to outweigh the benefits. In our experience, this line in the sand is drawn at around 10 to 12 units, give or take. Once you bring too many more condos and owners into the mix, things start to go off the rails a bit, and it tends to make more sense to consider the services of a condo management company again. If you find yourself in one of these smaller communities, though, there are certainly some benefits to consider when it comes to going the self-managed route.
The Ups and Downs of Self-Management
So, have we piqued your interest? Wondering if your condo should consider self-management? Just like any other big choice, there are pros and cons to consider:
- Pro: huge cost savings. And we mean HUGE. Just imagine what you could do with all that money you wouldn’t have to pay to your condo management company each and every month. All those projects your building’s been putting off would have funding. You’d be able to top up your reserve funds, no problem, and would certainly have the financial stability to lower those monthly condo fees. All in all, going self-managed is a huge financial boon.
- Con: lots of unpaid work. Going self-managed is hard and it doesn’t necessarily get easier. There’s a reason condo management companies are staffed to the gills with highly-specialized individuals! Plus, there’s no one to keep a second set of eyes on things like finances or legal compliances – your condo community is really, truly all on its own. Managing a condo community properly is not for the faint of heart.
- Pro: the community comes together. Like any job that requires collaboration and hard work, going self-managed means you’ll be spending lots of time with your community of fellow condo owners, which goes a long way towards forging strong communal bonds. Plus, you’ll all have more control over condo community assets, board meetings, and agendas, meaning owners work together to accomplish the things that really matter to everyone.
- Con: it can be a frustrating, thankless experience. While self-management has the potential to bring your community together, it can just as easily create rifts and tear people apart. You’re now in charge of managing ALL dispute resolution, and there’s a LOT of tedious, detail-oriented work involved – much of it completely thankless, all of it entirely volunteer-based – so just be sure everyone is onboard and goes in with their eyes wide open.
Steps to Self-Managed Success
You’ve weighed the pros and cons, chatted with your fellow condo owners, and have decided that self-management is the way to go. Godspeed, you brave little condo community! Of course, we’re not about to let you embark on this sort of a journey without a bit of advice to act as a guiding light forward. Behold: our keys to self-management success.
1. Keep tight financial records.
Once you’ve made the decision to go self-managed, the best thing you can do for yourself and your condo community is to keep THE MOST meticulously-detailed financial records around. Without a third-party keeping watch over your financial records, it’s important that they’re unimpeachably accurate – and the best way to achieve this sort of detail-oriented exactitude is to enlist the skills of a professional accounting firm that’s deeply familiar with HOA and condo-related issues. And on that note…
2. Hire a team of professionals – and make good use of them.
We can already hear your protests: “What? Hire somebody? But isn’t paying professionals against the whole idea of self-management?” Yes, of course, one of the biggest reasons to go self-managed is to save money, but it won’t help if you’re sitting on a stockpile of funds and are forced to spend it all on legal fees or tax penalties.
You still need to file your non-profit taxes every year and make an annual budget. You still need to run a reserve fund study once every five years. You still need to have a process in place for getting quotes and placing work orders for repairs and maintenance. That’s a lot to keep organized all on your own.
If nothing else, at least consider hiring someone to run through the books every once in a while, just to make sure there aren’t any financial disasters brewing. Trust us – spend a few bucks up front on folks who know what they’re doing, and you’ll be saving yourself a lot of trouble down the road.
3. Play the part and play it well.
If you’re wanting to be your own condo management company, be sure to follow through and enforce the same practices that a condo management company would. Hold meetings and take detailed minutes. Create policies and budgets. Draft governing documents and follow them to the letter. As a self-managed condo community, you’ll be collectively dealing with millions of dollars of real estate and property, so be sure to approach the task with the focus and respect it’s due.
The last piece of advice we’ll give you to lay the groundwork for self-managed success is to encourage your condo to sign up for CCI’s Fundamental Management Principles – a great course that goes a long way to build a strong foundation for healthy, organized condo management.
If you have any further questions or run into any sort of self-management issues, you can take a hike – you’re in this alone, remember? JUST KIDDING, of course! As always, don’t hesitate to give us a call at Catalyst Condo Management today, and we’ll do what we can to offer you advice out of whatever sticky situation your condo community might find itself in. Best of luck!