Navigating the Complexities of Switching Property Management Companies

Working with a new property manager or switching to a new management company is challenging, not only for boards but for management, too.  “These relationships really are partnerships,” says Melissa Cafiero, the director of management at Halstead Management, “and even though it relates to building management, they are a marriage. So when it does not work out, there’s a lot of tears.” From the management side, she continues, “it’s a matchmaking event.”

It Begins With an RFP

Choosing a new management company was a simpler affair 20 years ago. Boards picked up the phone, asked a management company to bid on their building, usually hosted a meeting, maybe checked references and then made their choice. Today, Cafiero says, “we get requests for proposals that range from seven to 50 pages, with in-depth questions. These often give some indication of pain points because the board is very focused on certain questions. I think very few boards in search of new management just sit back and let us present a dog and pony show today. They know the questions they want answered, and the glossy binders are not going to cut it.”

However, Cafiero cautions against relying solely on written proposals. She advocates for direct, candid conversations to assess whether a good working relationship can be established. “It really is about chemistry,” she says. “Successful management partnerships are built on mutual understanding and clear communication.”

The Importance of the Right Match

While boards have a lot of questions for a new manager or management team, the flip side is true also. “We have to ask a lot of questions to see what the board’s priorities and culture are so we can see who in our staff best resembles those goals,” Cafiero says. One of the important questions, she says, is what board members liked the most and the least about their former manager and what could have been improved. “Usually that question prompts something like ‘We loved John, but his writing was not great, and we had to edit a lot of the communication,’” she says. Finding out these types of concerns helps a new management team figure out what strengths the board is looking for.

Transitioning to a Team Approach

Historically, property management relied heavily on a single agent handling all responsibilities for a building. Today’s complex environment calls for a different approach. “It’s not just a one-person job anymore,” Cafiero notes, “because there’s a much greater expectation for expertise.” Many management firms, Cafiero’s included, have switched to a team approach, and while the outlines of this vary across the management industry, Cafiero’s firm is typical of what boards will find today.

“We have five senior managing directors who oversee a team of portfolio managers,” she says. “They are involved on a high level and directly interfacing with the board and the account executive property manager. The account executive property manager is handling all the day-to-day items, and they collaborate with the managing director on legal, financial and other governance issues.” By having this team approach, she says, there is a continuity if something happens to the account executive, and it helps ensure that nothing falls through the cracks. “Four eyes are better than two,” she concludes.

Training and Expertise

One challenge in the property management industry is finding and retaining experienced agents. With a team approach, less experienced team members can get extensive training and mentorship under seasoned managing directors. This training ensures that all team members are well equipped to handle the complexities of property management, from regulatory compliance to financial planning.