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How To Hire A Management Company

By Peter Grech

Begin with the beginning:

The board has to consider:

• Major recurring issues?

• The physical building's needs?

• The building residents’ needs?

These questions help narrow down and hone in on where the management company’s specialty should lie. For example, if collections is your biggest and recurring issue, then it would be prudent to hire a management firm that has a reputation for dealing with this major issue. If your major issue is that the physical parts of your building are falling apart, then perhaps your search should be for a firm with a reputation for rebuilding buildings, and has a strong project management component to the firm.

When considering the individual manager from a management company, the board should ask questions that address the management style and traits of your manager, such as, aggressive or passive, proactive or not, do you want him/her to lead or follow.

Ideally the board should have in mind exactly what needs they have and what traits they want in both the management company and the property manager. Only then can they properly proceed.

Of recent years there are a lot of management companies, all competing for your contract. Keep in mind that "you get what you pay" for also can be said that at times you don’t get what you pay for. Don’t make the mistake of choosing the management company based on cost. You should choose the management company based on experience, reputation and your needs.

Licenses and Certifications?

While there are no government laws that require management firms or their agents to be licensed to practice property management, it is wise to seek out firms and managers that are licensed or certified by a reputable organization that adheres to a stringent code of ethics. Like most professions, property management is a lot of on the job training. Do you want to be a building that trains the manager or one that hires a seasoned professional? Thus, it is most important that you have the resume of the property manager who will be assigned to your building.

 

Who is going to head up the search?

Since there are 151 management companies in New York City that I know of, this may lengthen the search. For a list of these companies, with phone numbers and a contact name, just email me (no charge).

First a committee should be formed to do the leg work. The board should set parameters for the committee and how many the full board will want to interview.

The committee should ask other board members; from other buildings that they know, for suggested management firms that they know of, to be added to the list. Keep in mind even a negative comment about one management firm should not discount that management firm. No one is perfect. There may be logical reasons why some boards had a negative experience with one particular management company. You need to find out what it was from both sides.

Now what?

When the committee has narrowed the search down to a predetermined amount, say 4 to 6 firms, these recommendations should be discussed at the full board meeting.

Times, dates etc. can be established on when to interview the committee’s recommendations.

The Interview

The board needs to keep a standard set of questions to ask the candidate firms. That is, ask each firm an identical set of core questions.

Do not digress from the plan. Keep to the agenda.

Keep the questions simple. Let the candidate do all the talking.

Ask the management firm to bring the property manager that will be handling their building to this interview. This way you can see who and what you will be getting. Otherwise you, as in most cases, will only see the “show case” and not the actual product.

Keep in mind that the management firms regard these interviews as a marketing tool and a sales pitch. They will put their best suit on and best foot forward for this presentation. What you will end up with may not be what you see initially.

Questions to consider asking:

• In your mind what constitutes an emergency?

• Do not ask technical questions if you don’t fully understand the subject and know the answer. Chances are they may not know the answer either.

• What is the response time to phone calls by the property manager?

• Ask the firm if it has an operations handbook for its managers. If so, ask to see it. If they don’t have one, this should be a hint that the firm is less professional. The handbook should be divided into three parts: policies, procedures and forms. It’s an insight to the firm’s organization.

• Ask who is/are the exact principle/s of the firm. Note there have been many mergers in the past decade of management firms. Some firms are owner in full or in part by out of state companies. As well as mergers there also have been spin-offs as well.

• Ask how long the entity has been in business as a firm as well as how many years experience the firm’s principles and staff has in property management.

Keep in mind you should not only be looking for the answer to the questions but also tone, what and how the answer is being said.

Screening tools

The use of screening tools such as:

• Ask for a complete list of their portfolio, and not just for references. References will only come from those buildings that love the firm and may not give the board a complete picture.

• Go and see the firm’s office and ask for a tour.

• While you do not want to visit every building in the portfolio, some board members should go and visit some of the firm’s buildings and ask to see and talk with the superintendent.

• Ask for some names and phone numbers of the board at the buildings you have chosen to see.

• Do a BBB report and a Credit report.

Mistakes:

One of the biggest mistakes a board make is not knowing what they want in a management firm or in a property manager.

Another mistake is not being forthright at the interview and hiding certain facts when asked.

Another mistake boards make is hiring someone they are not quite sure of but have the "let's see" approach. You don’t see a candidate that meet your requirements and needs, then don’t hire.  Settling is the worst thing you can do.

A consultant/adviser can also aid the board by screening out unqualified candidates. In most cases the board is not qualified to ask technical questions.

Keep in mind that property managers and managing agents are professionals. But they are NOT specialists.

I trust the past few paragraphs have helped you in some way. If you do have any questions, I would be pleased to answer them. Just email me or call.

Peter Grech

Pgrech4214@aol.com

 

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