The challenge of managing smaller properties

Real Estate Weekly, August 20, 2008 by David Kuperberg

Most people probably think managing a small building is easier for a property management firm than managing a large condo or co-op. In fact, based on the economics of the industry and the special needs of small buildings, the opposite is true.

With the numerous conversions of smaller commercial and residential properties to condominium and co-op ownership, this issue is getting more attention.

Many smaller buildings, those with 75 units or less, are fine properties with multi-million dollar apartments, yet they often have trouble obtaining high quality professional management. Some management firms are shedding the smaller buildings as they find them a financial drain on the organization, requiring too much work for the fee.

At Cooper Square Realty, we formed a division specializing in smaller buildings. We provide quality service, at a reasonable cost and in a way that is profitable for us.

How do the needs of smaller buildings differ from larger ones and how do we approach this? Two significant differences are the size of the staff and the involvement of the residents.

Many smaller properties share superintendents and porters, so someone is not on the premises at all times. In fact, in some smaller properties a superintendent may be responsible for several buildings. Usually there is no a doorman or someone part-time.

This decreased staffing results in more calls to the managing agent. Thus, the managing agent must be organized to handle this volume of phone calls. With the Cooper Square Hot Line we are set up to respond immediately to inquiries. The properties also benefit from our Resident Alert and email alert systems that immediately contact residents via phone or email about emergencies and reductions in services created by maintenance work.

The second significant difference is resident involvement. The social environment in small buildings is similar to a block in a small town where everyone knows one another and watches out for the other. In smaller buildings, board meetings are often attended by many of the residents and a decision is reached by consensus.

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This close-knit, concerned group also serves as a "volunteer" property manager, vigilant to see if there is a problem or something needs fixing and alerting the board president, superintendent or managing agent. This reduces the need for frequent building inspections by the property manager.

We also found that the property manager is not always needed for board meetings. Boards of many smaller properties do not meet monthly and the issues they deal with are usually discussed among the residentsi

"From our experience managing smaller properties we realized that these properties require certain services, but not others," says Adam Auerhan, director of Cooper Square Select, the division dedicated to smaller properties.

"We analyzed the needs of smaller buildings and found the three most important factors are having a capable superintendent, having the capacity to respond quickly to residents and handling the back office functions. Many of the other tasks of the property manager are not necessary."

With basic web-based communications systems on the market or more advanced systems such as Cooper Square Connect, residents can be informed about building activities.

With Cooper Square Connect we also have access to their individual accounts requiring less property management services. Board members can assume responsibility to track periodic systems maintenance, much like a homeowner, since the smaller buildings normally have less complex systems.

The final part of the equation is cost. Most management firms charge on a per unit basis. In smaller properties, this amount could be exorbitant if the same level of service, that is manpower, is provided as for larger buildings. Thus, smaller properties often get insufficient attention from their property managers or pay too much for services they do not need.

In deciding to establish a division to handle smaller properties, we had to look at two areas.

First, did we have the resources to provide quality services? Secondly, how would we structure the program?

For the first, we realized that Cooper Square Connect was a perfect system for smaller properties and we had the resources of our call center to be able to handle the numerous calls from residents.

Secondly, we structured the program where we offer the basic services needed by all properties, including the extensive resources of a large company when needed and the important back-office capabilities.

Other functions, such as periodic inspections, attendance at board meetings, can be added based on the needs of the property.

By DAVID KUPERBERG, CPM

CEO, COOPER SQUARE REALTY