Friday April 25, 2025
What’s one of the biggest considerations when it comes to hiring a property management partner? If you ask most high-rise, condominium, co-op or HOA board members, they’ll likely say it’s the cost.
Can your community afford it? Is it worth it? Most importantly, will it pay off in the long run?There are many aspects to consider when your board is deciding whether to partner with a property management company. While the actual price of the contract should factor into the decision-making process, there are many costs that come with operating as a self-managed community.
Read on to discover six costs to consider when choosing whether to self-manage or partner with a property management firm.
Please keep in mind that each residential community is unique and requires a custom plan with solutions that fit its specific needs. Before deciding on whether to remain a self-managed community or to hire a management company, please consult with your professional advisors or contact FirstService Residential for more information.
Professional property management vs. self-management: 6 things to consider
-
The cost of time: Your time is valuable
While tangible expenses may be the first thing you think about when deciding whether to partner with a management company, there’s a vital cost you may be overlooking: time. One way to think about this is by calculating exactly how many hours your board is spending on community business.
In fact, your time costs significantly more in the long run. Remember that board members are volunteers, and many have full-time jobs and responsibilities. They shouldn’t be working 20 to 40 unpaid hours a week to be able to effectively fulfill their roles. When board members and their manager don’t have support from a management company, many day-to-day tasks end up falling on their lap (e.g., creating communication templates, running meetings and drafting agendas, recruiting staff, etc.) versus their primary responsibility (i.e., strategic planning and decision making). This often results in board or manager burnout and turnover, where the remaining members end up shouldering even more of the responsibility of running the community.
FirstService Residential provides extensive support to ensure that the many admin and day-to-day tasks are completed efficiently outside of the board members’ responsibilities. Board members are given oversight over all tasks and decisions, but do not need to be the point people for either completing the tasks or making sure that tasks are completed.
-
The cost of risk: HR support (and penalties) can be expensive
For many residential communities, HR support is a significant expense. However, there’s more to it than that. Beyond the initial cost of third-party HR services and fees for recruitment, benefits and training, taking on HR responsibilities as an individual entity or community poses a significant risk for self-managed properties.
Whether you live in a high-rise in an urban market like New York City, Chicago, or Toronto, or a highly amenitized active adult community in a suburban area, you need local experts who understand each market’s unique needs and regulations to efficiently staff HOAs or residential buildings.
Without professional guidance, acting as an employer is fraught with potential for lawsuits and fines. For instance, if a residential community inadvertently violates a labor law related to the Family and Medical Leave Act (FMLA), discrimination, or workers’ compensation, they may be subject to hefty fines. Depending on the number of employees you are responsible for and your understanding of federal and state law regarding labor, your community could face significant fines or even lawsuits.
This area of support is often the reason many self-managed communities choose to partner with a property management firm. For instance, a 3,550-unit master-planned community in Bonita Springs, FL determined that they were spending an average of $75,000 to $100,000 a year on legal fees just for HR-related services. After partnering with FirstService Residential, this fee was removed because their associates transitioned from HOA employees to property management employees, eliminating the cost of third-party HR services. The community’s 45 employees also gained access to training and development, extensive benefits and a local support team, helping with talent retention as well.
-
The cost of size: Larger companies can lead to savings
Self-managed communities may be missing out on additional funds and savings that come from partnering with a property management company that has the added benefit of scale. Partnering with a large management company can lead to savings or additional value on major expenses like utilities, insurance and supplies. They can often help negotiate rates because of the size of their company and they can leverage existing relationships honed during their time in the industry.
Think of it this way: When self-managed communities are bidding on utility providers or requesting quotes for elevator contracts, they are representing one community or building. That may pose a greater risk to a provider, given their small scale. On the other hand, a property management company that represents thousands of residents has the added benefit of reputation to help negotiate better rates on behalf of the communities they serve. A vendor may also consider building a reputation with a larger property management company as more lucrative than developing one with an association on their own. This factor alone can result in potential deals or savings.
-
The cost of reputation: A true lifestyle community requires training and support
No matter what type of residential community you serve on, your resident experience is critical when it comes to engaging potential buyers and enhancing your overall community. Maximizing your amenities and curating the right lifestyle programming and mix of events for your community takes significant time and years of expertise in the industry. Even if you have a great general manager or a board member with hospitality experience, they may not have expertise in every area of lifestyle enhancements your community needs.
That’s why it’s important to work with a property management company that not only has lifestyle experience, but access to a support team with specialized expertise working with similar communities. A property management company can also provide lifestyle and customer support training to your staff, ensuring a consistent resident experience.
FirstService Residential’s dedicated team offers lifestyle management services designed to meet a community’s vision and fit resident preferences, solidifying your community’s reputation. These services may include concierge and front desk support, food and beverage expertise, spa/wellness/health programs, resident events (including children and pets!), sports programming, innovative technology offerings and more.
-
The cost of finances: Budget challenges require dedicated accounting support
High-rise, condo, co-op and HOA financials can be complex, and not every board has the expertise or the desire to manage it all themselves. Additionally, spending on financial activities like accounts receivable (AR), accounts payable (AP) and annual budget planning can add up. Partnering with a management firm will absorb those costs and also provide much-needed expertise from a team that specializes in residential community financials. Even if you have a former accountant on your board or employ a general manager who is well-versed in property finances, having a specialized team can make a big difference when it comes to your financials. A management company should have dedicated AR and AP teams on hand along with the financial expertise to help support your board with budget planning, delinquency guidance and accounting-related questions. Even if your financial needs seem simple now, dealing with a surprise maintenance cost or changes to staff wage requirements can negatively affect an otherwise solid budget. Having the backing and support from a team of financial specialists will help you more easily manage these challenges.
-
The cost of missed revenue: Professional expertise can reveal opportunities
Working with a management company can also lead to revenue opportunities that can boost community funds. The best management companies have the lifestyle experience to help you monetize amenities such as restaurants, spas or event spaces. They can also provide guidance with other revenue-generating opportunities like increased interest on deposits, on-site vending machines and more. Perhaps most importantly, they can help your association maximize existing funds. For instance, your property may be missing out on higher returns if you aren’t leveraging your reserve funds in the right way. A property management firm can provide specialized financial services to communities to help, including reserve and lending programs.
FirstService Residential-managed communities have access to dedicated financial services affiliate FirstService Financial, which offers a reserve program, insurance products, and lending services, to name a few. Its Cash Management team helps tailor short- and long-term strategies for each association’s unique needs, with the goal of replacing lower-rate funding accounts (brokerage-based money market accounts, sweeps, etc.), reducing ongoing security and tracking burdens, improving asset liquidity, and maximizing interest revenue.
One community association in Elk Grove, CA decided to partner with FirstService Residential after a financial audit revealed they were earning minimal interest on their reserve funds. After hiring FirstService Residential and getting a full banking analysis through FirstService Financial, they increased their interest to a projected $53,000 per year."Working with our partner banks, we were able to reallocate funds while maintaining full FDIC protection to safely maximize their investments."
Kyle Bacchi, vice president, FirstService Residential