According to the Florida Department of Business & Professional Regulation, the rate at which real estate professionals in Florida are seeking licenses has fallen 75 percent in the past five years. Many professionals believe the decrease of license seekers is due to the state’s residential market meltdown, but the fact remains: condominium and cooperative management companies are a dime a dozen in the Sunshine State.
Despite the slow growth in Florida’s real estate market, existing condos and co-ops need smart management more than ever. Management companies continue to vie for business across South Florida, and sorting through all the options can be tricky. But, a proper assessment of your association’s needs, can make all the difference in helping you make an informed decision.
Hiring a Manager or Self-Managed
According to the Community Associations Institute (CAI), a nationwide organization providing information, education, and resources to community associations, there are about 60,000 community association managers nationwide, and there are 10,000 community association management companies. Between 15 and 25 percent of common interest communities—co-ops and condos, respectively—are self-managed and don’t employ an on-site manager or management company.
Therefore, it takes a lot for a management company to stand out in the crowd.
Some attempt to do so by marketing themselves as “boutique” firms, specializing in a certain type of building or level of service. Others go broader, offering everything from day-to-day administration to maintenance services and capital project management. Still, others focus on bigger building complexes, which inevitably need more services than smaller communities.
There are plenty of differences from one management to the next, so before randomly choosing one, there’s a lot you need to know so that you can find the perfect fit.
Is Licensing Required?
Start by finding out if they’re licensed or have some professional accreditation.
The Florida Department of Business & Professional Regulations requires that a management company must have a real estate broker’s license. Key components of property management (renting and leasing) are considered a real estate activity under existing Florida real estate licensing laws. A property manager needs a broker license if he or she is paid a commission, and is handling rentals and leases for others. No license is required for managing personally-owned properties.
So if you have a building where renting is allowed, then you’ll want a management company that has its license. Once they have this, they can also list and negotiate the rental needs of the property. Trade organizations like CAI and the Institute of Real Estate Management (IREM), provide educational instruction and accreditations related to the management field.
Florida also requires a Community Association Manager license if someone receives compensation for providing management services to an association with ten or more units, or one with a budget of $100,000 or greater. For additional information go to www.myfloridalicense.com.
Beyond dealing with rentals, every management company is expected to provide basic services, says Jay Mangel, president of Exclusive Property Management in Fort Lauderdale. “Not everybody does the same thing but usually there are four basic items,” says Mangel. “There’s physical property management—that’s being on-site and physically being at the property. Vendor property management is dealing with individual vendors working about the physical property and their contracts and obligations; administrative property management—the subtitle to that is sales and leasing and dealing with the individual homeowners and members of the community about their issues. And then there is financial property management, which is accounts payable, receiving and producing the actual financials, bank accounts, that type of thing.”
While the basics typically remain the same throughout the years—collect the income, pay the bills, watch the staff and keep excellent records—new technology has made these transactions much faster than in previous years.
Instead of collecting maintenance and common charges via check and the postal service, most management companies pay and get paid electronically by transferring the money through PayPal or a credit card. Many now even handle the application and transfer process for sales and leases electronically.
This means that every large management company should have someone who is up to date with computer technology so they are able to do everything electronically, which saves on postage stamps and time.
“My entire staff and I have actually converted over to iPhones and iPads so we can work in the field and be virtual,” says Mangel. “And most of the property management software has new apps for the new iPhones.”
“We’ve always been ahead of the curve when it comes to technology,” adds Jonathan Louis, LCAM, CMCA, AMS, and the CEO of American Management Group located in Pembroke Pines. “We offer all types of interactive tools. People can book their amenities online and they can track service orders online. Our company is now on the cloud platform. We have all the redundancies built in so we are never down. So if one server goes down it flips to the other, and so on.
“What it really is—is efficiencies. A manager can now take a 30-minute function and do it in 30 seconds. That’s how much time you save and that’s how much service you are able to bring to the table. In the old days, you’d have to drive a stack of checks over to one board member and put it under his doormat. He’d review it, sign it then put it under another board member’s doormat and so on and so on. The whole process could take weeks depending on how accessible the board members were. Now everything is online. If we have invoices that need to be approved now, we scan them to a secure website and send an email to the board members who are involved in the approval process, saying you have invoices in your queue. Now that process will take a couple of hours, max.”
Supervision and Training
According to experts, staff supervision has also changed. Increased racial and sexual harassment training is now standard, and documentation is absolutely essential to avoid being caught up in unnecessary litigation. Regulatory requirements and energy deregulation have also driven an expansion of services.
Some management companies hire architects, engineers and green energy specialists as consultants to help them through the maze of tariffs, exclusions, degree days and peak loads, while other firms have added in-house services such as mechanical engineers, certified public accountants and attorneys so they don’t have to continually hire outside help in order to stay competitive.
As a result of the competition and the growing needs of modern buildings, community association managers need to be capable of a larger range of duties than in the past.
“Because of the economy there are a wide range of people in Florida today who have gone into the property management business,” says Louis. “You’ll find construction workers and people who were in the hospitality industry. You’ve got a wide range of people going into property management, and for the most part these people have degrees or a lot of business experience.”
“In our company, we prefer someone to have an associate’s or bachelor’s degree but it’s not absolutely necessary,” adds Erik Levin, LCAM, the chief operating officer of American Management Group. “But you are required to have several years of experience. You are required to be licensed, so the license itself shows that you have the technical skills to be able to handle and understand Florida law, but it doesn’t tell anyone that you have management skills.”
Managers also need to have the unique ability to deal with board members, who, in South Florida, may be some of the most successful people in the world. They also have to work with unionized staff, lawyers, accountants, engineers, tradespeople and contractors. And of course, they are managing your home, and possibly your largest single investment.
“To stay current we have monthly manager meetings where we give updates on any statutes or laws that may have changed, not only the legislative but the practical,” says Levin. “We also have experts in different fields like law or accounting to discuss new things in their field with our managers that will keep them up to date.”
In recent years, the buildings have added more amenities to attract buyers and renters. Pools, large fitness facilities, movie rooms, online chat and message boards set up specifically for the building, fully furnished green roofs, outdoor movie theaters and running tracks are just a few of the amenities offered in high-end co-ops and condos in South Florida.
With each of those amenities, the role of the management team changes. By adding an online presence for the building, they may need to hire a full-time social media person who can update Facebook and Twitter feeds, as well as to monitor the message boards and continually maintain the website.
Adding a pool or any outdoor amenity means additional insurance and landscaping jobs for the management team.
That’s why board members need to do their due diligence. Before selecting a management agency, make sure to visit other buildings it manages to see if yours is similar. If the management company specializes in large high-rises and you have a 10-unit building, then it may not be worth it to pay the higher fees for this agency.
Do you want a management company that only does management--or would you prefer to have a larger company that manages buildings, but also does real estate development and other real estate transactions? Some boards decide to have the larger company so that they have more people to help for every situation. Or, they may want the real estate brokers so they can possibly cut a deal whenever a new unit is for sale.
But others prefer to just have a management company solely focus on management so they know there will be limited conflicts of interest and more focus on simply running the association’s buildings.
Regardless of your choice of comprehensive or combined management companies, you’ll still need to do more research before your make your final decision.
Make sure to interview the board members in the management agency’s current properties to see if they’ve had any issues. Sometimes, the management firm may appear qualified, but if they rack up late fees or are slow to move on vacancies or broken equipment, it’s a good bet that it probably won’t work out.
Finally, ask for the management firm to give you a detailed breakdown of their costs and fee analysis. If there is an energy saving incentive available that the management company arranges for the community, for example, are they going to take a cut of the savings? Will you have to pay extra any time they fill a vacancy or is it a set fee annually?
Professional residential management is a service industry, and it’s no secret that some service providers perform better than others. To evaluate how your property's management measures up, it's necessary to assess both how the company functions as a whole and also how your individual manager is performing.
“Word of mouth is the best marketing tool a property management company can have,” says Mangel. “If Mr. Jones says to Mr. Smith you should really use this property management company, ‘we use them and they are on the ball,’ that’s the best marketing you can hope for.”
Danielle Braff is a freelance writer and a frequent contributor to The South Florida Cooperator. Staff Writer Christy Smith-Sloman contributed to this article.