It takes a village. Managing a 200-owner association is not a one-person job. It takes monthly accounting, accounts payable, accounts receivable and a dedicat - ed Community Manager. You need to stay on top of collections and handle escrow demands. With a few larger associations, you may need to add staff. It will detract from residential man- agement. It is extremely difficult to garner positive reviews in this seg - ment. One decision by five board members, such as increasing the monthly dues, may negatively impact the lives of 200 owners. Sending out copious fines and vio - lations may hurt your reputation. I suggest start association manage - ment through a separate company with a different name. It is difficult to get that first associa- tion. You have no track record, no experience, and the Board prefers not to go from one unpleasant management situation to the next. We hired a consultant to help us. We networked with other residen - tial management companies that had no interest in associations and they attested to our service. We had our happy owners provide testimonials. Once you have two or three associations and a handful of satisfied board members, securing additional associations is easier. Personally, the pros have out - weighed the cons. We have the staff, infrastructure, and a few industry organizations to help us learn this business. In residential management, we spend ample money and time trying to convince
these credits add up quickly. And unlike residential properties that are sold or re-occupied by owners, an association will never sell and if you service the account well, they may be a client for many years. So, what are the cons? I believe we as an industry resist this channel for the following reasons: It is a different business. Although residential and association share the word “management”, it re - quires you to understand different laws and lingo. Different state or national management companies govern the field of association management, which requires you, and perhaps your company, to exit their comfort zone. It has lower profit margins . Depend- ing on the fee you charge and state limits on transfer and late fees, one residential door is worth about six HOA doors. But since the ac - quisition costs for associations is very low, and a fee can be charged for the transition, it ends up being closer to two or three HOA doors to every residential door under management. It takes too long. Unlike residential property management, where a lead can become a contract in a few hours, and a property can come under management in a few days, it usually takes months for an association to become a client. Boards only meet once a month, and from the point they decide to seek new management, to the point of monthly management, it can take 3 to 6 months.
self-managing property owners that we can do it better than them. In association management, we need to convince them, and then actually show them, that we care about their community. They al - ready need management services, and they don’t necessarily want a bigger management company, just a better one. We can do this with performance guarantees, fewer owners per Community Manager, and provide the same high level of service we do with our residential owners. No one should sugar coat this: you will work to add associations. You will feel uncomfortable. It will take additional resources. But if you can add another income stream and solve the real pain problems of as - sociations, this may be a deep, blue ocean for your residential manage - ment company. •
Scott P. Brady is owner of Progressive Property Management, Inc., Progressive Association Management, Partners Real Estate Group and Sierra Maintenance
Services. He has spoken at numerous NARPM conferences. In just 7 years, he has grown his business organically to 1,000 residential doors and 500 association owners. He also owns the Brady Consulting Group and offers programs and services to help owners build more profitable property management businesses at www.AddMoreDoors. com and www.AddMoreHOAs.com. He can be reached at scottbrady1963@gmail.com
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