Changing the management approach

Starting in 2023, Lakes of Bent Tree will change its management model and contractor. The old way of doing things didn't serve us well and we are changing it.

Our community is just 82 homes, using a large bureaucratic management company where we are one of the smallest and least important of their 240 clients. The motivation and economics to provide "full service" are not there. We pay $30,000 a year in fees, of which $15,000 goes toward accounting and general processing. This leaves 3-4 hours a week for property manager to select and oversee contractors, interface with owners, and troubleshoot problems. The most experienced manager with knowledge of the property could not make informed and prudent decisions in that time frame. In our case, LoBT had four managers in 2 years, two of which had no prior property management experience. 

What will be different in 2023?
  • LoBT is going with a much smaller management company. Small companies have served us much better in the last two years.
  • LoBT is reducing the management company's role and focusing on doing less with greater proficiency rather than over-promising and failing to deliver (as has been the case in recent years).
  • There will be increasingly greater focus and priority on the most critical and significant cost factors facing the community: examples include things like having adequate resources to rebuild after a major weather event (i.e., tornado) or the ability to deal with a breach of the lake retaining wall, or re-erecting a fallen section of the brick wall, as well as  providing shorter periods between exterior painting, and roofing.
What does this mean to each of us as owners?
  • We must adjust our practices and learn to fit with a more practical management model. For example, it makes a lot more sense to manage our service requests online (just as it is more efficient to text our family and friends).
  • It is much more economical, and we can provide greater project oversight when services are batched a few times a year, such as tree trimming, carpentry - almost everything except true emergencies.
  • We need to have realistic expectations of what can be done with our resources and the priority rankings of projects.
Where does that transition stand now?
  • January is a transition month. Moving systems from CMA has proven to be more difficult than anticipated. Fund transfers are still in process. CMA is debating what functional information they are obligated to transfer to LoBT (such as ACR records and a gate control software).
  • The board is collecting assessments in January. Starting in February, the Association will collect funds via Alliance Association Bank (AAB), one of the largest HOA banks in the country. AAB has numerous services not previously available at LoBT. Additionally, all reserve funds will be placed in brokerage accounts (Fidelity, Vanguard). As of January 1, LoBT has a fund manager (NorthCoast Asset Management) investing the reserves.
  • All major projects are on hold until basic operations are fully functional.
Who is the new management company?
  • SNL Associates Inc. is onboard and setting up shop. To keep the focus on systems set up, please direct any HOA business to the board during the months of January and February 2023. Please direct your inquiries to the board email, not individual board members.
  • SNL is a 30-year-old, family-owned HOA management company located less than five miles from the LoBT front gate. SNL operates 30, primarily small properties like LoBT. A significant portion of their portfolio is located along the Dallas North Tollway. It is a father-and-son business. SNL was the finalist in a 4 four months long search that began on September 5, 2022. SNL was selected over the two other finalists, and the 11 companies screened for their construction capabilities, reputation with people we know in the industry, and employee stability.
  • SNL Associates, in the board's opinion, is a no-frills, nut-and-bolts operation. They possess far greater capabilities than CMA for managing major projects (e.g., paint, roofing, and building repairs). They have a portfolio of service providers that are reasonably priced. We had them bid on several projects before we made the final decision. SNL has field personnel with construction experience to oversee the subcontractor's work. In the board's opinion, this was CMA's (and LoBT's) greatest weakness.
  • Final Selection Process. SNL Associates was selected over the second finalist, who had a robust customer service capability. The second finalist is staffed with people from the hospitality industry. Based on a survey of residents, they were rated #1 in resident satisfaction by the CAI Dallas Fort Worth Chapter. The second finalist was also a small operation located less than five miles from LoBT and with good employee stability. The second finalist, however, has limited construction skill and contractor oversight.
The final trade-off choice was functional skill vs. communication skill, and the board opted for the former. We anticipate that it will be easier for the community and volunteers to learn a different communication platform/style than to learn how to supervise a roofing project or rebuild a retaining wall.

Your thoughts are appreciated in the comment section below. Please identify yourself for context. Thanks.

Comments

  1. Thanks - our HOA contracted with CMA for much too long. This is a major step in the right direction. One of the major problems I had was being directed by the board to go through CMA, and then having no response. I hope our change will give us a better chain of communication.

    Brent Parrott 5124 Westgrove Dr

    ReplyDelete
  2. In regards to this information [Additionally, all reserve funds will be placed in brokerage accounts (Fidelity, Vanguard). As of January 1, LoBT has a fund manager (NorthCoast Asset Management) investing the reserves.] we know that funds can lose money just as quickly as it can earn money. what is the expectation of the residents if we lose money? How much liquidity do we have?

    ReplyDelete
    Replies
    1. Question: How much liquidity do we have?

      Answer: We have roughly $600,000 in reserve. Currently, our investment profile is very conservative with the stock market volatility and the increased rates/returns on CD and money market accounts; 88% of our reserves are in money market or CD accounts, and 12% are in equities. If we don't invest, there will be over $40,000 lost value due to inflation. If the 12% we have invested in the market crashed to half its value, that would be a $36,000 loss. However, our asset manager would most likely sell the stock before it dropped that low. But even if the value dropped so quickly that an exit was not made in time, since the 12% represents funds for capital repairs for 2025 and beyond, we could hold the stock and ride out a market recovery.

      Question: What is the expectation of the residents if we lose money?

      Answer: Owners share in the gains and losses. Gains would result in less money collected each year for the reserves. Losses would result in more money collected for reserves. A loss would result in an assessment increase (not a special assessment, as the operating accounts are not affected by the investments).

      The asset manager is a sophisticated organization that uses a computer program to monitor the market for potential crashes and can issue sell orders.

      Bottom line: Yes, losses are possible, and owners would have to pay additional assessments to cover the loss. Good question. Thanks for asking it.

      Delete
    2. Very concerned if ALL of our money is not liquid.

      Delete
  3. Outstanding job Team!!!’

    ReplyDelete

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