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Not easy finding a property manager

Friday May 12 2023

Why is it so complicated to find a manager?

We must admit that it is becoming more and more difficult to find an external manager. Even more so when it comes to small co-ownerships. But why?

OUR FINDINGS

In recent years, there has been a turnover of managers in the industry, both in employees and management companies. Employees sometimes choose other professions that have less public contact or other areas of real estate management (e.g., real estate development, rental management, commercial management, etc.). As for management companies, their ability to grow is limited by this employee turnover, and the even sometimes choose to leave the industry.

In fact, managing the administration, finances and the building is quite easy to learn for those who put in the effort.

On the other hand, managing human relations is sometimes more difficult. As the manager is often the bearer of bad news (e.g., increase in condo fees, special assessment for the self-insurance fund, new obligations to be implemented that impose additional costs, etc.) and the conductor of a building’s operations, they are often criticized. This is a job where you have to learn to vulgarize concepts, convince and coordinate effectively, put situations into perspective and resolve conflicts quickly, because otherwise it is a job that can be stressful and psychologically exhausting.

OVERVIEW OF THE CONTEXT

Co-ownership buildings continue to increase in number, size, and complexity.

Syndicates are bombarded by a lot of new laws and obligations and administrators are told that they are accountable and incur civil liability (which is not false) for their duties as administrators. They therefore want to do things right and put pressure on the manager to meet their obligations. When they try to pass everything to the manager, while cutting costs and wanting everything done quickly, that’s when relations become strained, and the relationship deteriorates.

Given the fees on the market, inflation in recent years and labour shortage, it is difficult for management companies to provide software tools, reasonable workloads, and training necessary to do all the work expected by clients. Let’s just say that operating a Co-ownership management company has been challenging in recent years.

The industry is therefore undergoing a major transformation.

This change forces companies who want to take care of Co-ownerships to find operational performance gains and work methods that allow them to prioritize files with their clients, to maintain positive relationships and thus alleviate some of the irritant’s experienced by management firm employees, so as to interest them in a longer-term career in this industry.

It goes without saying that management companies must review the compensation of Co-ownership managers to stay competitive in an oversubscribed job market.

This will certainly have an upward impact on management fees and the famous “price per door”, which will be much closer to those seen in Ontario ($50-60++/door), a province in which management has been professionalized a few years ago, and where management services are often vertically integrated (with a broader range of services such as leasing, buy-sell brokers, technical management, etc.) given the larger size of management companies. These fees, although higher than today, should not shock anyone since they will be close to what is practised in the rental market, even though the management of a Co-ownership is quite more complex from a legal point of view.

THE VALUE OF CONTINUITY IN REAL ESTATE

Both for the Board and management companies’ employees, there is great value in having people who know the history of a building. It certainly saves time and operational costs. However, it causes a real challenge in the current context of staff turnover in the Co-ownership sector.

I outlined some of the solutions on How to Motivate your Manager? in February 2022. I confirm that they are still relevant and must be taken seriously if we want to help the Co-ownership industry shine. It is a team effort between management firms and their clients as Co-ownership management would not work well otherwise.

FORGET UTOPIA IN CO-OWNERSHIPS

You have certainly already seen the graph below, but it is particularly useful in Co-ownerships since it gives some hints on the areas where compromises will have to be made to maintain a positive relationship between managers and Syndicates.

Without finding the balance between fees, quality of service and timeliness, tremendous pressure is put on property managers, who eventually develop a sense of incompetence and question their relevance in this industry. Are they really incompetent or have they simply not been given the parameters to succeed? For my part, I repeat to all managers at SolutionCondo that we must get our clients to prioritize property management and I deeply believe in this. It is the only constructive way to maintain positive relationships in a field where the volume of work will always exceed the time available (and this is even more true today given the volume of work resulting from the new laws).

Sometimes, some administrators or co-owners feel justified (wrongly) to put so much pressure on the manager that it could be considered as harassment. It is true that a service contract exists between the manager and their clients, but this does not mean that all behaviours are permitted and that everything is due right away, at all times and at all hours of day and night. A healthy relationship requires communication, respect, compromises, mutual understanding of issues and contingencies, prioritization, etc.

According to the “commission des normes du travail” (CNESST), the employer as the obligation to prevent harassment in their company and take appropriate measures to stop it when a situation is brought to their attention. Actually, the only way for an employee to defend themselves when the harassment goes too far (and a reasonable compromise cannot be found) is to resign or for their employers to use the clause allowing them to break their management contract. Admittedly, this is not too good for continuity!

Obviously, most management firms will intervene to try and find a balance in the relationship with the Board of Directors with whom relations are difficult. The idea is not to throw in the towel at the first bump in the road, but sometimes it is simply impossible to find a balance.

For this reason, some Syndicates of Co-ownership will change managers more frequently, either within the same firm (due to employee turnover) or by changing from one management company to another. When this happens, it is a big red flag that should go up!

 

THE CHALLENGES ARE EVEN BIGGER FOR SMALL CO-OWNERSHIPS

Small Co-ownerships are victims of their size, because the previously discussed search for balance is more difficult. Unfortunately, the new laws do not distinguish between Syndicates. Thus, small buildings are subject to the same rules as large ones and all the new laws (Bill 16, 141, 41, 25, etc.) apply to them, regardless of their size.

For many tasks, time of realization is not proportional to the size of the building and small buildings are clearly disadvantaged (ex.: annual declaration to the “Registraire des entreprises” , notice of infractions, annual meetings, etc.). This is why so many small Co-ownership manages themselves.

With the new laws, many small Syndicates are looking for an external manager, but they will often be disappointed, as the level of service offered is often not “complete management” like the administrators would like. They must continue to be actively involved, must make decisions, and carry out certain tasks since not everything is included in a management contract, even for “complete management”.

The use of self-management software, such as UpperBee Condo, can save a lot of time and make the job easier if you can’t find an external manager.

CONCLUSION

The industry is experiencing a shortage of Co-ownership managers. This is a very real fact!

At this point, either the situation gets worse because we don’t give importance to the parameters we control (ex.: attitude, patience, understanding, mutual aid), or we realize that it is a team effort, and we are all working in the same direction and with the common goal of good property management.

Whether we are administrators, managers, or co-owners, we must all do compromises and work towards the success of building under management.

Feel free to share your ideas for solutions by commenting on this blog to fuel the discussion!

Elise Beauchesne, CPA, Adm.A
President
SolutionCondo

 

 

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