Self-managed condo buildings have their drawbacks, but there are positives. Whether buying or selling a self-managed condo, knowledge is power. Smaller buildings can cost owners less over time since fees tend to be so much lower — but it might cost you personally in time and effort. If that’s OK with you, you’ll still want to do your due diligence and make sure you’re not signing up for future headaches and stress in the place you call home.
Right to Cancel
Once you’re under contract, you have a negotiable period of time to review the association documents and find out what you need to know about the building and the association. If there’s something you can’t live with or that can’t be rectified to your satisfaction (or for any reason at all), you have full right to cancel the contract and get your deposit back. Here’s what you should look for.
Your Due Diligence for a Self-Managed Condo Building
First, take a look at the building itself. Are common areas clean and tidy? Is the mail center organized? How’s the exterior? If you can, check out the roof and any other common areas – gym, laundry room, etc, and see how they look. This is good practice if you’re looking for a condo in any building, but particularly those that are small and self-managed.
Secondly, how does the association behave? Do they get the documents to you in a timely fashion? Is the information complete, and do they seem organized? Does the budget look OK, and do they have money in their reserve account? Do the expenses seem reasonable? Did they provide a history of board activity, such as meeting minutes?
Talk to someone on the board. Find out if they’ve done a reserve study, or have plans of doing so. (A reserve study takes place when an association hires a specialized engineer to walk the building, examine common elements such as stairwells, roof, etc, and identify short- and long-term maintenance and repairs that will be needed, and provide a corresponding timeline so they can be factored into the budget).
A young association may not have had a reserve study done yet, but they should be open to the prospect of doing one soon in order to keep a realistic budget in place and avoid costly one-time assessments in the future.
Common Space Maintenance. Ask your board contact how things work – do they hire out landscaping help or do residents do it themselves? Ask yourself if you want to help out in that kind of way.
Of course, part of it is instinctual — what’s your “feel” for the building? As always, it’s helpful to work with an experienced Realtor to provide perspective and a second set of eyes on any questionable elements.
Advantages of owning in a self-managed building
- Owners have greater individual contact and control over the issues of the day.
- Easier to keep a close eye over association accounts and budget
- Owners lead from within and determine board meeting agendas and association priorities.
- Cost savings – professional management fees can run about $400/month (give or take) for a 4-unit building condo building in — that’s $100 per owner.
- Get to know your neighbors, form bonds from common goals and interests.
Drawbacks to owning in a self-managed condo building
- Fewer owners means greater risk per owner (in the case of special assessments, or if someone decides to stop paying their dues).
- Time Allocation – owners take on more active roles in community management.
- Inexperienced Members – may not have experience or training in community management.
- Politics – professional management gives objective viewpoint, can be a buffer for personality conflicts.
- Legal Compliance – an inattentive board may let things fall by the wayside — required business licenses may expire, for example.
Bottom Line: Do Your Research and Be Real with Yourself If you just want to pay your dues and be done with it, a self-managed building may not be right for you. But if you’re an organizer or like being active and involved with your neighbors, a self-managed condo association can be a nice way to foster community and keep costs down.