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Changing management: nightmare to dream team.

Selecting a managing agent is very much like trying to find a doctor in Manhattan. There are plenty of names out there, but very little information to help you make the right choice.

An excellent doctor will recommend everything possible to prevent illness and protect your health. An excellent managing agent makes recommendations to protect the health of your asset.

In either case, if you make the mistake of selecting someone who is inexperienced or negligent, the result can be disastrous.

Important Differences

To owners who think that all agents do the same things and therefore it doesn't make much difference who you hire, (the cheaper the better), let the nightmare begin.

While the majority of property management professionals have embraced and exceeded high industry standards, there are some firms offering attractive fees, but less than quality performance.

For a residential or commercial property, worst case scenarios can include hiring an agent who is not only inexperienced, but operating without the appropriate licenses, certifications and insurance. Low fees may look good during a presentation, but they don't reflect the price you're sure to pay over time if the property is mismanaged.

A proven track record of management success is important, and can be verified. Ask about and research the outcome of previous ventures or companies owned by the agent, as well as situations in which the agent acted as a principal.

In this tough market, you may encounter agents who have left behind them a trail of dissatisfied clients and vendors, and have reappeared on the scene with the same promises of efficient, cost-effective management. It's always a good idea to check a company's current Dun & Bradstreet rating.

Roles And Responsibilities

The agent and property management staff advise the owner and make key recommendations concerning preventive maintenance, vendor selection, renovations and equipment replacement.

A seasoned team of professionals can discover ways to lower operating costs, reduce insurance premiums, improve energy efficiency, renegotiate vendor contracts, services and consumable goods, and set long range goals to stabilize finances, make improvements, and build up the reserve.

Board Training

We offer training seminars for boards which define the roles and responsibilities of each member, the managing agent, and others operating under the board's direction. These educational forums are designed to teach members how to act responsibly as a group and achieve maximum productivity. Certain seminars provide information about how to select a "dream team" that will work with you in a joint effort to run your building in the best interests of all concerned.

As in any other corporate enterprise, the board is at the top of the command pyramid. Board members are star performers, often bringing to their office impressive legal, accounting or management backgrounds. The training provides valuable information empowering these professionals to contribute their expertise and act as a winning team.

Saparn Realty has developed comprehensive training manuals and offers on-site seminars covering all aspects of residential and commercial real estate management.

Smooth Transitions

A "dream team" will be able to effect a smooth transition in approximately one month depending on the condition and accuracy of the records and reports provided. Top managers will thoroughly research the property, performing tax and violation searches, evaluating insurance coverage, reviewing staff assignments and productivity, and appraising vendors.

In situation where the previous management has been a "nightmare," Saparn managers have found uncompleted J-51's, unfinished certiorari proceedings, the duplication of frontage bills costing the client thousands of dollars, improper regulatory compliance, and insurance coverage deficiencies.

A "dream team" views the transition period as the time to correct problems and institute of cost-effective measures. The agent may recommend changing the insurance coverage. Saparn's insurance division has accomplished an estimated average savings of $2,000 to $5,000 on annual insurance premiums for every client. A managing agent with extensive knowledge of insurance is an asset to the owner. Here again, the lowest premium rate may not reflect the best plan for the health of the asset.

Some aggregate policies have unlimited clients and high deductibles. If a building is very small and has a flood causing damage valued at $5,000 to $10,000, a plan with a high deductible of $25,000 is useless. An experienced manager will consider the building size, the kinds of damage that may occur, and coverage required to protect the reserve fund.

Management companies with insurance divisions are able to recommend coverage for the building, as well as appropriate officers and directors insurance. Board members may find lower bids, but an astute managing agent can identify gaps and coverage deficiencies worth considering before committing to a policy.

The Bottom Line

There is no reason to suffer the costly mismanagement of your asset. Making the transition to a qualified, experienced agent willing to provide references, as well as inform the owner, is a relatively simple procedure. You may need to spend some time researching and interviewing the firms under consideration, but finding the "dream team" can help you maintain the value of your asset, and establish fiscal health now, and in the future.

Anita Sapirman, President Saparn Realty, Inc.
COPYRIGHT 1992 Hagedorn Publication
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1992, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

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Title Annotation:advice for selection of property management agent
Author:Sapirman, Anita
Publication:Real Estate Weekly
Date:Sep 30, 1992
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