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Here’s a provocative notion: Co-op and condo buildings would be better places to live if only they were run more like rentals.
Just in time for New Year’s resolutions, we will expand on this bit of heresy in three posts over the next couple of weeks. Today’s is about forging a new and more perfect union with managing agents.
Our muse is a man named Jerry Kestenbaum, who has become an accidental expert on how high-end rentals are managed versus their co-op/condo peers by virtue of his role as founder and president of BuildingLink, a robust suite of online communication tools used by about 450 of the city’s rental and co-op/condo buildings.
Kestenbaum also toiled for 20 years on the board of his former co-op on the Upper West Side, and sports the battle scars and insights (he has a PhD in clinical psychology) to prove it.
As importantly, he is in possession of a roving engineer’s mind obsessed with identifying and curing inefficiencies wherever he sees them, typically through the application of technology, metrics, or both.
So what to do about the fact that so many co-ops and condos are unhappy with their managing agents, and that most managing agents don’t get paid enough to do all they’d like to do to make their clients happy?
In Kestenbaum’s view, it’s time to realign incentives by taking a cue from rentals.
“Rental buildings function in a competitive market, and the property manager is charged with keeping occupancy high,” notes Kestenbaum. “They’re always looking for ways to make life better for residents. They play an active role in improving the quality of life.”
“Quality of life” improvements could range from putting a paper shredder in the mail room, to organizing social events and demonstrations by local vendors in the community room space, to paying more attention to staff training, to trimming the time it takes to respond to a repair request, and so on.
In co-ops and condos, meanwhile, “managing agents only have to perform well enough not to be fired,” observes Kestenbaum. “They think, ‘I won’t get blamed for having no ideas, but if I put a bad idea out there I might get fired.’” (Similarly, he notes, some boards are only motivated to perform well enough to keep from being voted out.)
Another key difference is customer service. A rental manager is charged with keeping every resident happy in order to minimize turnover of tenants. A co-op or condo managing agent typically views the board as their primary customer, evidenced by the vast number of unreturned phone calls from non-board members.
Kestenbaum’s solution gives something to both sides.
He proposes that managing agents hire an impartial accounting or metrics firm to conduct a survey of a building’s residents, measuring performance in areas like response times, staff training and supervision, cost-cutting efforts, etc.
For their part, the co-op or condo board would agree to pay a bonus if a follow-up survey shows that the managing agent improves results to targeted levels.
“Residents have a lot of money invested in their apartment,” says Kestenbaum. “When they say they can’t afford to pay anything more to the managing agent, they mean they can’t afford anything more without getting something back in return.”
What do you say, co-op and condo owners? Would you be willing to pay more to get more? How much more and what would you expect in return?
And property managers, is this a bargain you’d be willing to strike?