LOOKING FOR PROPERTY MANAGEMENT?

If you are in any way responsible in the search for management for your property owner’s association (HOA, POA, COA), the information that follows will surely help you understand your options. This is not particularly light reading and will take a little time to read carefully. The results, however, should greatly facilitate your selection process.

As the owner of a lake area property management firm, I am often asked the questions “Why should we consider outside professional management?” or “What are we getting for your management fee?” Both are excellent and important questions for any group considering hiring a property management firm to manage their association’s affairs.

Normally when U.S. Resort Management, Inc. (USRMI) is hired by an association to manage its business affairs, we spend considerable time with board members discussing the merits of a professional management company versus the association hiring its own employee(s). This aspect, management-employees versus a professional management company, is much more critical than meets the eye. Understanding the difference is essential.

Starting with the basics, it is important to first understand how to compare management options. Do you, as an association, want to be an employer? Are you aware of all the nuances and liabilities that come with being an employer? What number of employees is necessary to perform the services or tasks of the association? What services will you outsource: accounting? tax preparation? reserve studies? maintenance contracts? and/or grounds care?

Still other questions to consider with the board as an employer: What equipment do you want to own? What happens if your general manager misinterprets employment laws or fails to provide for necessary insurance such as workmen’s compensation, liability or even health insurance? A business owner fears the day an employee finds a crack in this carefully constructed wall of protection; or even worse, ramifications of an employee claiming sexual harassment.

Another problem with employee-managers is that there always seems to be one person who becomes “indispensable” because “no one could ever learn or know all he or she does.” We were reviewing a condominium association recently and the board members were concerned about a particular maintenance man. He was the only one who knew where every valve or switch was, etc., etc. This should really never have to occur. With proper written policies and procedures in place, well written job descriptions and files of site plans, maintenance equipment, and schematic drawings, any qualified personnel can address these issues.

Singular managers have very limited purchasing power and their forward planning is much more likely to be reactive than proactive.

All this is not to say there aren’t qualified people out there. If an association is lucky enough to find a knowledgeable, competent person, and then, can be assured this employee will be around for a good, long time, such an association will likely have less expensive costs. But…..

Finding personnel is tough enough, but the bigger risk is the liability issue. This is one area which can really hurt. The financial risk can be enormous. Should one or more employees be hurt, or hurt someone else, the consequences or liability befalling an association could be devastating. We know of a local association now who faces a wrongful death suit – over an employee failing to fix a self-locking pool gate. Employees can unwittingly put an association into jeopardy.

I am not trying to build a bleak picture of running a business – after all, I have, by profession, accepted these risks. But then again, I deal with business operations daily and use a competent staff to administer to all the needs of a business. As a board of directors, do you want this responsibility? coupled with the potential liability? If so, vote yourselves a hefty salary at your next board meeting – you will be earning it!

Self-management, with the association as an employer, is one management option. The alternative, of course, is a professional property management firm. If your decision were ultimately to have your affairs managed contractually, then the question becomes “How do we select the right firm?” At this point, I will add that your due diligence in this selection process is the height and substance of your fiduciary responsibility to your constituents, or association members.

The selection process can be difficult in the lake area. It is often hard to compare property management firms because each company has specific services offered and varying methods of billing. You are not usually comparing “apples to apples.”

U.S. Resort Management is singularly unique in both services offered and billing practice. First, our “menu” of services is extensive and, with very few exceptions, all these services are performed “in-house” by USRMI staff. From maintenance and groundscare, to accounting and financial management, USRMI can provide every aspect of property management through its own staff.

This translates directly to lower costs in most all areas. Details of each of these services are outlined in a separate publication – Profile of Services. This publication points out that our method of start-up with an association includes first establishing precisely what services an association desires. Once the board has established a scope of work (how much and how often, from a full range of services), then USRMI and the board will construct an annual operating budget.

Now, the second (and no less important) consideration has to do with billing: How does the management company earn its profit? Is it a “per door” fee? Does the management company add a fee to outside services obtained from others? Do they do the work with a specific profit built in? These aspects may be difficult to ascertain.

U.S. Resort Management, Inc. makes this process simple – and, we believe, fair. All property management functions from which you select – administration, financial services, landscaping, wastewater management, rental management, housekeeping services, maintenance, oversight of contract services, staffing, newsletters, security, facilities management, even recreational and social programs – are offered to the association on a cost-only basis. There is no profit built in. As mentioned, we construct a mutually acceptable budget with the board and provide all services to the association for the exact amount it costs USRMI. Thereafter, our fee becomes 10% of the association’s expenses. This, we believe, is a very clear and fair way to do business. You don’t have to wonder where “profit” is hidden or how much it is. With USRMI, it is 10% of expenses only. Annual financial statements and audits, as well as monthly bank reconciliations by a board member, will serve as safeguards or checks and balances – to ensure accurate and complete accountability. We encourage the scrutiny and ask board members take the time to understand how we arrive at “our cost”.

USRMI’s method is cut and dry – the association chooses what services on which to spend its money and how much. Thereafter, the management company is paid a small percent of the agreed upon expenses.

So, let’s go back to one of the original questions: What exactly are you getting for this 10% fee? The answer is: professionalism. Perhaps the term is over-used and overworked – likely it is. But, in this case I am referring to competency – being knowledgeable and experienced in all aspects of the association’s affairs. This would include an association’s formative efforts to establish a sound base from which to operate (a comprehensive budget covering all aspects, including reserves), to the association’s daily efforts toward operating the community efficiently.

Take a moment to look at some additional strengths of USRMI. Our professional affiliations with such nationally respected organizations as the American Resort Development Association (ARDA) and Community Association Institute (CAI), enable us to keep abreast of important changes – changes that are regulatory (and if overlooked are very costly) and changes that affect the dynamic and safe growth of any community or association. We experience these changes more regularly than one might imagine. The same is true with legal issues. Prior knowledge and understanding can prevent future legal entanglements.

So, in effect, when you are speaking of professional property management, you are not talking about one person but rather a unification of people, each committed to an individual area of expertise – this is a “company.” Let us take a more in-depth look at the USRMI’s components.

The first component is quality managers overseeing all association’s major management functions. The foremost of these is financial management. In order to handle all of an association’s financial affairs – from accurate financial report preparation, to record maintenance and tax reporting, the association gets an accountant doing this work. Actually, in our case, you get an accounting staff with the luxury of a review by a chief financial officer. Truly, I cannot stress enough the aspect of sound financial management and reporting. In several associations, which we have “taken over” from other managers, we have found the biggest problem (and biggest concern by board members) is sloppy and inadequate accounting and financial record keeping.

The same managerial oversight holds true for all other functions. I again refer you to USRMI’s Profile of Services which demonstrates that each of our major property management discipline has a senior manager overseeing and accountable for all work performed.

With a substantial repair, maintenance, and groundscare department, for example, we are able to offer retail services to individual home or condominium owners. Employer boards can be at the mercy of employee-generated expenses and work expansion. When a board acts as an employer, payroll costs, in particular, often "get away" from a board. Unless a board has near "hands-on" oversight, it is impossible to control such costs, no less ensure that the association is being fairly billed. This is one of the primary reasons the trend today in association management is toward larger experienced, professional property management companies like USRMI.

The idea of quality-oriented, responsible managers translates to more services at a lower cost. It provides the ability to purchase supplies in bulk, eliminate an association’s need to own equipment; it means having expertise as a first-line of reference. Major problems don’t happen often, but when they do, you can take comfort in having a broad range of experience on the staff of USRMI.

Referenced in our Profile of Services is a newer function of USRMI. We will assign a manager specifically to your property. This property coordinator will provide routine on-site service and the continuity of our philosophy of assuring high quality customer service. This manager has full administrative and operational support from a corporate level. Many, many years of corporate-level experience can provide needed and timely counsel. A property coordinator, having this resource for help, with such questions as the “legal” or prescribed way to handle situations, can relieve manager stress, as well as release the manager to handle job-specific customer service.

Another component of a top firm is its effectiveness at elevating a property or association's positive image. A professional management company can add an air of quality, by polishing the community’s image, reducing owner delinquencies and by expanding owner services and opportunities. An example of this might be quality newsletters, if desired, or upgrading signage and “curb appeal”. Good communications and physical representation of the community will add to raising the positive image. Such perceived value will transfer to better resale opportunities and greater owner and guest enjoyment.

Other increased opportunities through USRMI include our purchasing power. Landscape supplies and pool chemicals are obvious, but consider a ten thousand-dollar savings in insurance (often with improved coverage). Our goal is not to lower your fees, but to increase the value of dollars expended.

Preparing for and directing owner’s meetings; keeping accurate records; preparing budgets; providing professionally-produced financial statements; overseeing outside contracts; providing purchasing power through economy of scale; monitoring insurance and investment opportunities; keeping current with industry trends; and being open and accountable to the board of directors – are all components which constitute the advantages of professional management through U.S. Resort Management, Inc.

From USRMI’s standpoint, we have an even loftier goal of wanting to perform beyond the expectations of those we serve. Our intent will be to prove our worth over and over again. We have a good history. As the owner of U.S. Resort Management, Inc., I stand behind every point made above. People with substantial investments require such investments to be well-maintained, to be protected, and to grow. Property values are directly proportional to the quality of management. As a company, we see a great opportunity to grow with the lake area’s top associations and we intend to earn the respect and praises of property owners – over the short and long-term.

With professional management, owners and board members can find relief from personal involvement. Rather, they review reports, set the standards by which we operate and provide the oversight necessary for a well-functioning association.

We want to immediately know if we are not meeting your expectations. We will satisfactorily resolve any concerns or shortcomings and meet any challenge. We will ask for fair consideration from you, the board, and will give 100% thereafter.

I look forward to discussing the aspects outlined above with board or community members. Such verbal commitments are a good start. References from board members of associations we now manage should count for more. Best yet will be letting us prove we can take your association to the next level.

Paul J. Kleiber

President/Owner

Cliffside Center, Suite 101, 2140 Bagnell Dam Blvd.

Lake Ozark, MO 65049

573-365-6628 FAX: 573-365-6186

Website: www.usresort.com

E-mail: propmgmt@usresort.com

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