Condo Association Financial Planning by a D.C. Property Management Company

At Chatel Real Estate, we manage many condo associations in the area, and we’ve been doing it for decades. There is quite a bit of financial planning that condo associations must do to protect the long term interests of the association.

It’s important for an association to have accurate and complete financial records. You are dealing with a lot of individuals within your association, and to keep all the accounts accurate, you want to take care of them on a monthly basis as well as an annual basis. You also need to file taxes every year. Condo associations are considered nonprofit organizations, and if the financial accounts are not tied out well, it can be an issue from a legal perspective.

Set up a realistic budget for your condo association. You will need to budget for general, ordinary expenses that are easy to project and you must also budget for any special expenses that may involve longer term maintenance repairs or larger projects. In addition to budgeting for expenses, you want to put at least 10 percent of your annual budget into a reserve fund. That reserve account should slowly build up in relation to an overall reserve study that is conducted for your association. Reserves will pay for things like a new roof to the building or a new elevator or any of those major projects that come along very rarely. When you have a reserve study done every few years, you’ll get a sense of how old those items are, and how much it will cost to repair or replace them. Once you have that information, your reserve account should match what you’ll need. When your reserves are strong, you don’t have to hit up your association for a special assessment for a new roof or some desperately needed repair.

That reserve account should build from long term contributions, but if you’re prudent and smart, you can also use the power of compound interest to reduce those long term costs. Contributions can be reduced when you invest them wisely.

There are many additional issues that condo associations must face when dealing with their financial planning. If you would like to talk more in depth about how we help condo associations keep themselves organized and efficient, please contact us at Chatel Real Estate, and we would be happy to talk to you.

HOA Advice: Pros and Cons of Self-Managing Your Condo in Northern Virginia

Property owners who have investments in condo associations often struggle with the decision of whether they should self-manage the building or hire a professional property manager to do it. Before you make that decision, you really need to consider the pros and cons of both options.

Costs
Managing can certainly seem like an opportunity to save some money. You won’t have to pay a management fee every month to a third party. However, that’s sometimes deceptive and it can actually cost more to try and manage the property on your own. We often find the money people save in the management fee is lost with a lot of expenses you wouldn’t run into if you had a professional manager. There can be a lack of quality financial oversight, and if you don’t have strict financial controls in place, it’s easy to lose money. Deferred maintenance can also get backed up when you self-manage, which means routine expenses and repair work is ignored so long that the problem eventually becomes bigger and more expensive to fix. Most of the clean-up efforts we are involved in are in properties where an owner self-managed for a number of years, and all of the things that needed to be taken care of were not addressed.

Physical Presence
Another thing people mention is that when they live in the condo complex, they can be present for any repair work that needs to be done. You might think that you’ll be available to meet the vendors who come to do work at the property. That can be true, but you have to remember that vendors typically work normal business hours. Unless it’s an emergency, they will schedule appointments between the hours of 9-5, on weekdays. If taking care of this condo association is your full time job, that will work out fine. If not, you’ll have to miss work or reschedule things going on in your own life just to meet a vendor. That can be problematic.

Work Load
Unfortunately, the work that needs to be done to manage a condo association isn’t always fairly divided. Typically, a couple of board members end up shouldering most of the work and they usually aren’t paid for that work. That results in an unfair division of labor to take care of this building. Bringing in a professional property manager from the outside can fairly shift the load. Sometimes, when you decide to self-manage your condo association, the work just doesn’t get done. People are very busy, especially here in Washington, D.C. and Northern Virginia. That means the operations of the condo association just won’t be where they need to be. Financial oversights can occur and maintenance items get missed. You can also run into problems when members of the condo association are behind on their dues. That’s not the conversation you want to have with your neighbor on an evening or a Saturday morning when you both happen to be home.

Increasingly, we are noticing that lenders and buyers are wary of self-managed condo associations. They ask if the property is self-managed, and when we say that it is not, they are happy to hear it.

You may have additional questions on this topic, so if you’d like more information on managing a condo association, please contact us at Chatel Real Estate.

Why Choose Full Time Property Management in Alexandria

Self-management can be a huge temptation when you own a rental property. However, there is a lot of value in having someone who is a professional manager take care of your property. The market expertise of a good property manager is unbeatable. Our staff conducts dozens of real estate transactions on a  monthly basis, so we get a good sense of what the pricing is, both for rentals and for sales. We also get a good sense of what kind of value an investor can get for a specific property.

If you have ever been woken up in the middle of the night because there’s a problem at your property, or you’ve had a tenant call you with an emergency while you’re on vacation, you can appreciate how valuable it is to have a team in place to handle any potential emergency. When you work with a professional property manager, you get expertise and experience, and you also get your own time back. A good property manager will have someone on call 24 hours a day, seven days a week to respond to any situation. I once took care of a leaking pipe during a Super Bowl game. A vendor we work with on a regular basis was willing to respond to the leak at the property, and the problem was fixed immediately. I’m not sure a property owner managing his own rental would have been able to get the same results with a vendor he didn’t work with on a daily basis.

In real estate, there is more financial paperwork than a lot of people realize. It is important to keep accurate and complete financial records. Document the investment you have as well as all the income and expenses associated with that investment. A full time property manager will work with accountants to ensure all of your financial paperwork is in order and to make sure you get all the potential tax deductions on your property. Your property manager will get you set up correctly, keep you in compliance and provide a complete and accurate financial profile of your property.

Your professional property manager will also be able to analyze your property and get a sense of the benchmarks you should be reaching. This type of expertise only comes with managing a large number of properties. We’ll be able to tell you if you’re spending too much on electricity or other utilities, or if you’re overpaying for repairs. We can help you ensure your property is operating at its optimum level.

Access to reliable vendors who provide high quality work is another good reason to work with a property manager. We have worked with the same vendors for a long time, so they are always responsive and they give us the best prices. You don’t have to worry about being stuck with someone who doesn’t do great work – that’s a hard mistake to recover from.

If you have any questions about property management in general, or the types of services we can provide, please contact us at Chatel Real Estate.

Foreign Investment in D.C. Rental Properties: What Should a Property Manager Handle?

The Washington D.C. market is a tremendous opportunity for foreign investors. It has been stable and growing with an underlying economic strength that is due to solid fundamentals. Washington, D.C. has the federal government and a highly educated workforce. This market is one of the best performing areas not only in the country, but worldwide. A number of investors have turned to us as a partner to help them take advantage of the opportunities available here.

The first thing you need to know as a foreign investor is that the market here is very local. There are different submarkets in the area and they vary neighborhood by neighborhood. Individual streets can even be different from the next street over. It is essential to work with a property manager who understands that. Every neighborhood is different; you’ll have different tenants, different rents and different expectations from place to place.

Anytime you are going to own real estate, you want to have someone local who can handle emergencies as well as the physical maintenance of the building. That’s especially important in the Washington, D.C. market. Things come up, and you need someone who can respond, get to the property and take care of those issues right away before they become real catastrophes. There could be broken pipes in an older building, or break-ins to take care of. Things like that don’t happen very often, but when they do, you don’t want someone several time zones away to be in charge of the situation. You want someone in the neighborhood who can take care of the problem immediately.

Having a local property manager who knows the area will also help you with the leasing of your property. You know you’ll have someone available who can physically show up at the property and show a potential tenant around. You’ll get good tenants and you’ll have a local expert be available to answer questions about the area and the neighborhood. A local property manager can also check out the property once in a while and make sure everything looks good.

The Washington D.C. market is transparent, and there are a lot of local laws that property managers have to be aware of and work within. You want to make sure you are following all those rules and filing the necessary paperwork when you become a landlord. If you aren’t working in this market on a regular basis, you may not realize what all those legal regulations are, and you run the risk of falling out of compliance.

There are lots of specifics to cover when it comes to helping foreign investors in Washington, D.C. Please contact us at Chatel Real Estate, and we can discuss any new opportunities you might be interested in, or current properties that you own in the area.