With busy lives and what seems like an ever-dwindling number of hours in the  day, why would a community association choose to take on the extra work of self-managing  their property? Convenience and saving money are just a couple of compelling  reasons—but outside managing firms and association managers are hired and employed for good reason. The job requires collecting monthly association fees, hiring and managing  staff, responding to residents’ issues, among other expected and unexpected tasks.  

Before a board chooses to self manage, there are many factors to consider. “Self-managed properties oversee the finances, administration and physical  working of their property without engaging with a professional management  company,” explains Joe Colella of YES Property Management Group LLC in Nutley, New Jersey. “Typically, board members and volunteers perform the greater part of the required  work.”  

Pros & Cons

The primary advantages of self-management are a significant expense savings for  the association though industry experts caution that this may be a tainted viewpoint. “One perceived advantage could be saving the cost of management fees,” says Brian Weaver, director of business development with Wilkin Management  Group in Mahwah, New Jersey. However, Weaver goes on to say that an experienced management  company can often save a community more money thanks to the company's  experience and vendor contacts than the community would have saved in  management fees alone through self-managing.  

 Another benefit of self-management is the ability to take control over the  direction and operations of the building. Often, management companies have  their own set protocol for dealing with delinquencies or hiring contractors  that may conflict with the needs and preferences of a particular board.  

 A self-managed board may be more involved with its residents, since they are  neighbors who are in charge, but having an emotional involvement can be tricky.  With self-managed communities, the board and residents often become a  close-knit group, which can make it difficult for board members to crack down  on delinquencies or rule violations. “Sometimes, it stops being run like a professional business,”says Bonnie Bertan, president of Association Advisors in Freehold, New Jersey.   

On the flip side, self-managing a building can be very challenging, especially  to a board who does not have extensive experience or the precious  commodity-time. “One or more board members will be doing what we professional association managers  get paid to do. Association management requires a lot of time and energy. Unless a  board member has unlimited time and energy, they often end up devoting more of  it than they signed up to,” says Weaver.   

 “The time commitment to properly managing a community association should also not  be underestimated by a board, from inspecting the property on a regular basis,  maintaining the property in proper condition, and responding to homeowner  complaints and repair orders, to dealing with vendors, handling collections,  and the like,” explains Eric Frizzell of the law firm of Buckalew Frizzell & Crevina LLP in Glen Rock, New Jersey.  

 Related to a lack of time, Weaver adds that the brunt of the work often ends up  falling on one or two board members. Not only is this unfair, it can evoke  problems in the future. If either of those board members leaves (moves, quits,  etc), the rest of the board could be left picking up the pieces, he says.  

 Without a management company, there is no buffer between the board and  residents, meaning the board is on call at all times. “Self-managed properties will be interconnected with the unit owners, but often  too connected that [unit owners] will call at all hours of the day and night if  they have an issue. Association managers add an extra layer of supervision and  function as a cushion between the board and unit owner.”  

 Working with vendors and contractors can also be a gray area for board members. “A professional management company also has more extensive experience with all  kinds of contractors, professionals, and other service providers and therefore  should be in a better position to recommend appropriate contractors to clients  and advise the board on appropriate pricing and to steer clear of others,” explains Frizzell.  

 Additional disadvantages include failure to follow (or be aware of) laws and regulations. “Our business constantly changes, laws change, how things are done change, etc.  We keep with these changes through staying connected with our industry and  having our pulse on the business. Logistically, this is much harder for a board  to do on their own. They can find themselves stuck doing business 'the way that  it has always been done' which may pose additional legal, financial and  insurance risks,” explains Weaver.  

 “You see a lot of decisions that were made by self-managed board members,” adds Bertan. “that were in the best interest, but they conflict with the bylaws or New Jersey  laws or standard accounting practices because there are no checks and balances,  board members just weren't aware of them. They were acting to the best of their  ability based on logic, but no one was really paying attention to the by-laws,  state laws or policies.”  

 Another challenge for self-managed boards is effective leadership transition,  Bertan says. “You may have one board member doing the accounting but if he or she moves away,  now you have to fill that void. Who's going to take on that additional  responsibility and do it properly?”  

 Industry insiders suggest that as associations determine the viability of  self-managing that they seek education through mediums such as the CAI  (Community Associations Institute) or other comparable organizations. Experts  advise current and prospective self-managing boards to keep current on  information and any changes to Nevada rules and regulations by attending  expos, events and seminars targeted to association managers as a way to update 

 Self-Managing Factors to Consider

 Often a confusing topic for an association considering self-management is  determining whether or not the size of the community should be an issue. In  some cases, for very large buildings or high-rises, hiring a management company  or even a part-time manager doesn't cost much more and results in a smaller  headache for the board. “The more units that a property has, the more revenue they have coming in, which  means more resources to be able to put into management,” says Bertan.  

 Frizzell adds that the larger the building, the larger the scope of mechanical  repair and maintenance issues. For instance, high-rise mechanical and plumbing  systems are much more complicated than townhomes and restoring a five story  parking deck is a much more involved project than planting perennials at the  entrances to the units of a small garden apartment complex.  

 After considering the size of the property or association, the next set of  variables to be studied is special circumstances unique to a respective  association. Many experts advise that approaching self-management as a team  situation is the best idea.  

 Often self-managed communities do not hire a full-on association management  company, but pick and choose services “a la carte.” This can be a good option for boards that have a tight budget but would still  like professional assistance with upkeep and finances. “Some smaller self-managed associations, with the right expertise on the board,  could manage everyday situations, but when they get into those unusual  situations, special assessment or recent storm damage or a large scale project,  they can go to a management company and get a quote from them to take over  those responsibilities,” explains Bertan.  

Colella adds, “Self-managed associations should contact professionals for legal, accounting,  engineering and project management work.”  

Self-Managing Applications

Aside from burnout and the possibilities of self-managed entitlement that leads  to laziness or oversights, poor record keeping is often a problem as each  successive board has specific approach to management and bookkeeping. Many  self-managed buildings will hire an outside bookkeeper to take care of the  records and finances.  

This approach to association management is not a new practice and occurs all  over the nation—so much so that there are companies that cater to this niche segment of the industry. Buildium, for example, has developed software that is used to manage  more than 500,000 residential units in 31 countries worldwide. The Boston-based  company has software for both association managers and associations. The latter  software program, which can be tested on a 15-day free trial basis, handles  properties from a few units to 1,000-plus units.  

Whether a board elects to use a vendor for a contained software solution, as a  self-managed association they will have to deal directly with contractors which  can be cumbersome.“Contractors and vendors can misguide or deceive the board without the assistance of a property  management company, which can lead to higher operating costs and increased  budgets for the community,”says Colella.  

Boards are advised to get multiple bids with vendors as well as do extensive  research online, through references and by asking other properties what vendors  they use.  

Self-managing a community association certainly has its challenges but could be a  viable option for well-organized and knowledgeable boards looking to save  money. It is important to consider the skills and circumstances of your  building community to determine if self-management is right for you.