Phone: 
612-990-9009
email:
Steven@StevenHong.com
Menu

Home Buying 101: Professional Management vs Self Managed

There are pros and cons to Professional Management as well as pros and cons of Self Managed.

Professional Management

There are significant advantages to professional management with the trade-off being cost. Professional management costs money.

Pros

No headaches with dealing with the property

Easy to have things done, one stop shop

They have professional contractors on hand

Ability to perform a reserve study easily

History of managing other properties

Cons

It costs some money for professional management

Sometimes slower to evaluate new contractors

Depending on the association, they can be slower to respond to requests

Sometimes you don't get to know staff since they usually are not on-site.

 

Self Managed

The main reason for self-managed associations is that it generally costs less. If you have a small association, this is usually fine as there isn't as much work to do anyway. On larger association properties, there is much more to managing the association that being self-managed usually doesn't work.

Pros

Having the ability to move very quickly

Having more control over evaluation of sub-contractors

Knowing the people that managing the property

Keeping costs down.

Cons

Getting overloaded with paper work or busy work related to the property

Not having people volunteer to run portions of the association

Forming subcommittees

Keeping track of funds (accounting)

Dealing with non-payments

Foreclosures

Dealing with law enforcement

Having to evaluate sub-contractors

Having to do repairs on the property

Relying on others in on the board that don't know anything about maintaining a property

Having to issue HOA paperwork for purchase agreements

One big difference

Professionally managed associations will have professionals making suggestions as to how to run the association. It is still up to the board and the association members as to how things happen but having these professional suggestions helps immensely. The biggest issue I have seen is reserve funds. Many times in self managed associations, the members of the association (the owners in the complex) will always vote to not increase dues, and to not build up the reserve funds. This is often because they don't know the implications of not building up reserve funds, and how that may impact the financing of maintenance and upkeep, such as a roof replacement. Oftentimes they will assume that they can just assess each unit owner and have special assessments on each unit. That may or may not be the best idea. Sometimes it may be difficult to get financing, or sometimes it may require bonding, which may or may not be able to be paid off at closing. If the assessment cannot be paid off at closing, then the sale price will be affected.

Steven Hong - RE/MAX Results 
REALTOR, e-PRO, GREEN, Old Home Certified 
7700 France Ave S #230, Edina, MN, 55435 
612-990-9009 (cell) 
952-915-2252 (office)
Licensed in Minnesota. Disclaimer: Each office independently owned and operated. Privacy Policy
linkedin-squaretwitterfacebookgoogle-plus