Perfecting a lasting formula - advice for residential property management

Real Estate Weekly, Oct 21, 1992 by Therese Fitzgerald

While the business has become more standardized, the elements of good residential management haven't changed much in the past three decades, say the partners of Darwood Management.

"Thirty years later we're doing the same thing a little better and in a more refined matter," said Allan Rosenberg, who along with Sidney B. Surrey, Warren Regent and Ira Meister, is a principal of Manhattan-based Darwood.

A pro-active approach to maintenance and finances, good communication with owners, boards and shareholders, and hands-on contact with the buildings and residents are among the tenets that the firm continues to follow.

One area in which the firm has perfected its management practices is with Darwood's "Strategic Management Program." A formal version of what they have been doing all along, the Strategic Management Program identifies a building's past failures, prioritizes the new goals that the board or owner wants to achieve and outlines a system for achieving those objectives. Via regular and frequent meetings between Darwood and the board or owner, the success of the program is monitored and the goals are modified if necessary.

"Through these meetings, a careful management plan is effected," he said.

The plans include such things as long-and short-term financial targets and schedules for capital improvements, preventive maintenance and the compliance with city regulations. Often the goal is to reduce the building's operating budget and improve the level of services.

While insurance is seen as a fixed cost, the partners say, premiums can be reduced and the quality of coverage improved when insurance is placed in the master plan. Darwood helped 118 East 60th Street save approximately $40,000 per year, with significantly improved coverage.

At 135 East 54th Street, the partners report, the goal was improved security. Darwood helped the co-op building write new house rules and incorporate them into the building's daily operations.

Darwood was founded by Rosenberg, Surrey and Regent in the early 60's to provide residential management services to the many new residential buildings that were being built. They began supervising rental buildings from a two-room dentist's space above Johnny Jay's Bar in Queens. Later they expanded into co-ops and condos, Mitchell Lama buildings and other residential properties. Today, joined by Meister, Darwood is based on Manhattan's Upper East Side and counts in its diverse portfolio 96 buildings and adjoining commercial spaces in Manhattan, lower Westchester and Northern New Jersey. The three partners are now four and their staff includes 50 management and support professionals. They still manage many of the buildings they began with.

The partners agree that a key reason for the success is their own active participation in the business.

"The reason the partners are involved is to make sure everything is done properly," said Regent.

Surrey is president of Darwood and supervises all back office financial operations. Regent and Rosenberg supervise and assist the account executives who are responsible for the design and implementation of the Strategic Management Program for each building. Meister is director of operations at Darwood. He coordinates code enforcement, compliance, inspections and reports with government and regulatory agencies.

All Darwood's principals are licensed real estate brokers and Registered Apartment Managers and one is a Certified Property Manager (CPM). One has earned the designation of certified real estate appraiser.

The firm's personal approach is ensured, Regent said, because its 19 account executives, supervised by a principal, are only responsible for five or six buildings each.

"This is probably key," he said. "Too many companies give account executives 10 or 15 buildings to manage."

In addition, the company's account executives, he said, are skilled in both the "paper" end of the business and the systems.

"Our account executives are comfortable in the boiler room and the board room," he said.

Above all, Surrey said, good communication essential. Among other efforts, the company publishes a newsletter that they distribute among the buildings in their portfolio.

"The worst problem arises when a shareholder feels out of control and no one is telling him anything," he said.