Breaking Up With Your Property Manager? Here's Your Roadmap to Success

A new board at a 150-unit Westchester co-op was eager to take charge and make changes only to find themselves struggling with their current management company. The board couldn’t get access to the building’s financial records, had a never-ending temporary boiler instead of a completed boiler replacement and mounting tension with their current property manager. The board reached out to Tina Larsson, founder and CEO of the Folson Group, for help. In this interview Larson, acting as a consultant to the board, explains how she helped the board figure out what it was looking for and then move forward with finding new management and negotiating contract terms. Habitat’s Paula Chin conducts the interview.

Thanks for listening. Subscribe to this podcast for more stories on how New York co-ops and condos have solved a myriad of problems. Brought to you by Habitat Magazine, the "bible" that hundreds of board directors turn to every day!

Transcript

Paula Chin: Welcome to Problem Solved, a conversation about challenges facing New York co-op and condo board directors. I'm Paula Chin of Habitat Magazine, and with me today is Tina Larsson, founder and CEO of the Folson Group. If a board is lucky, it won't find itself in the position of having to find a new managing agent.

But when you do have to make the switch, the task isn't for the faint of heart. You've gotta research firms, you've gotta review bids, you've gotta hammer out the contract. And boards would do well to get a little help. Tina, you recently worked with a co-op in Westchester and helped them navigate the process.

Can you share what happened? First of all, tell us what the co-op, where it was and what the issues they were facing. 

Tina Larsson: Sure. Thank you so much, Paula, for having me. So this was a new board. It was of a 150 unit co-op in Westchester. Because they were a new board, they were eager to make changes and take charge of their building only to find themself knee deep in chaos.

They couldn't get their financial records. They had a stalled boiler replacement project, and they actually had one temporary boiler, and they didn't feel that the project was moving forward and the tension was escalated between the new board and the property manager. It was a situation where they felt that they had to do something.

They had to get a new property manager. 

Paula Chin: So they were very unhappy with their existing management company and needed to make the switch. Now, when a board contacts ,you the Folson Group, what do you guys do? What's your first step to help them? 

Tina Larsson: Okay, so the first step to help them is to make a determination.

Do they really need to change or do they not need to change? In this case, they had lost all trust in the current situation. So they were determined with us or without us, they were gonna change. So the first step that we do is that we have a session with them over Zoom where we talk about what is it that they hate about their current situation and what are they must haves in a new situation.

So in a new property manager, what do they really need? 

Paula Chin: And in this case, what was it? 

Tina Larsson: In this case, they needed two days on site. They felt that they had so many projects and they needed to get so much done, so they needed two days on site. They also needed a dedicated assistant to their property manager, and they needed more handholding and more proactive management from their new property management.

Paula Chin: When you say two days, I presume they, they previously had just one day. 

Tina Larsson: Yes. If even.

Paula Chin: Okay, and why was an assistant part of the request? 

Tina Larsson: That was our recommendation only because, so a lot of property managers, they have assistants, but very often they share those assistants with other property managers.

So it's one assistant to many property managers. So they really wanted a lot of handholding and to be able to get a lot of projects done in a very short period of time. So this was very important to them and we helped them develop that this would be something that would be good for them. 

Paula Chin: How difficult is that with a management company to say, we want an agent and we want that person to have an assistant and we want that assistant not to be working with too many other agents.

And in this case, what kind of assistant did you get? Are you able, for example, to say no more than X number of buildings that the assistant is working with, or X number of other managing agents? 

Tina Larsson: Absolutely. One of the key issues with working with us in this process is that we can help boards get that confidence in what is it that they don't know?

So they don't know can we demand this? Of course, you can demand it-- what the price is, what the price tag is, and what firms we can, because different property management firms work differently. So how we can incorporate your wishes and needs into a matching property management firm. That is where we have the leverage because we work with so many of them.

So we know in many cases what can be included. 

Paula Chin: Okay. So once you have that conversation and you've nailed down, what are the essential things that the new management should offer, what's the next step? 

Tina Larsson: We use that to create a customized RFP for that particular building. And then we go through internally on our end with what are the property management firms that we know would meet this within the budget that they have. And then we send that out for bid to those property managers that we think might be a good selection.

And then we collect all the bids. We do the pre-interview with all the candidates and we check the references. And then we select the top three candidates, and then we presented those top three candidates in a Zoom interview.

Again, we want them to do three, back to back interviews, 30 minutes each. To be very consistent and so that they remember the last candidate in their head so that it's easy for them to make a decision. 

Paula Chin: So there is an interview. Once you decide on the three candidates, you set up a meeting between the board and that specific candidate, this 30 minute interview, is that what it is?

Tina Larsson: Yeah. Yes, that's correct. 

Paula Chin: Now then of course the board has to make a decision, and how does that usually go? Does it go smoothly? Do boards run into problems? 

Tina Larsson: That's a great question. That's a case by case basis. After the interviews with the three candidates, we stay on the call and we help the board.

Sometimes it's easy for them and they just off the bat, they say, this is what we want. In this case for this Westchester co-op, this was not the case. We were able to eliminate the candidates that they didn't want, but they were up to two candidates that they were choosing between. So they couldn't decide right then and there.

They had special meetings within the board because some board members, approximately half of them, wanted one candidate, and approximately half of them wanted a different candidate. 

Paula Chin: And once they finally do decide what happens next? I imagine then you go to that company and negotiate the contract. How does that work? 

Tina Larsson: Absolutely. And we're not attorneys, but because we read so many of these agreements, we know, based on their needs. Because this is turnkey from start to finish, we know what they want so we can incorporate that. Do they wanna renegotiate the price of the contract?

Do they want to have certain items in the contract? . We help them make suggestions that they typically send to their attorney to review, but we can help them so that we can actually keep their legal costs down. 

Paula Chin: So they make a decision and the transition happens. Do you stay on after that to make sure things are going as planned? 

Tina Larsson: We absolutely do. We stay on for the entire transition. In this case, the transition went very smoothly, so we're just CC'd on the emails and all the correspondence between the property management transition team and the board.

But in some cases, we have to step in and say, listen, we need this now. But in this case, the transition went really smoothly. 

Paula Chin: What time period are we talking about? How long does Folson stay involved with a particular board? 

Tina Larsson: So the whole search service we guarantee that if they make decisions, of course, that we will have a new property manager in place in 60 days.

In this case, for the Westchester co-op, we were actually able to start 54 days after they initially hired us. But then the 60 day transition period, we stay on for that entire transition period and to make sure that everything goes according to plan and that they're fully up and running with their new property management firm.

Paula Chin: How are things going at this co-op? 

Tina Larsson: It's going very well. They're very pleased. 

Paula Chin: And has management helped them solve their problems? And can you provide a few specifics about that? 

Tina Larsson: Yes. So they used to not have access to their financial statements. And the new property management firm is providing that, property managers providing that on time as promised middle of the month, they get their financials every month with reconciliations and stuff.

So that was one. The boiler project is up and running and they are obviously now it's heating season, but they are moving along. In the fall it should be completed and they're very happy with that. And then the fact that the property manager is on site twice a week, that was as they promised.

Paula Chin: Lemme backtrack here a little bit, Tina. Obviously the price is a big deal in a board's decision. And I presume since they were getting two days a week instead of one, that this new management costs more. Can you talk about that a little bit? 

Tina Larsson: Yes. In the initial discovery call, we talk with the board and we asked them what their budget is. And that typically start at what they're paying right now. And then we compare it to how much in our experience, because we have a database with lots of data, so we know how much they should be paying. And we also know what different property management firms typically charge.

And then we create the range. And for this building, 'cause of the two days it came in at the top end of their budget. Then the second day came in at an additional fee, but the board decided it was so important to them, so they were willing to pay that extra fee. So in all, they paid more than they had initially expected, but they thought that it was worth it.

Paula Chin: Tina what's the takeaway here? What's the lesson for other boards? I. 

Tina Larsson: The lesson is that you don't have to do it alone. That's the only time that boards can't call their property manager and get their assistance in finding a new vendor. 'Cause for obvious reasons, you can't call your property manager and tell them to find a new property manager, right?

So this is the one time that they need outside help. And uh, takeaway is that we can help them. They don't have to do it alone. 

Paula Chin: And I would imagine the other point is that they need to know to narrow down what it is they need to get, that they weren't getting. Is that right? 

Tina Larsson: That's correct.

And we will help them. We often say that we're like a therapist, that we help them pull it out. What is it? So we help them discover what that is if they don't already know. 

Paula Chin: I think you've mentioned before in the past, and I thought it was a great way to put it, you've helped them identify their pain points.

Tina Larsson: Yes, exactly. 

Paula Chin: Let's say you discuss with them and you say, what are your pain points?

What are the issues they want resolved? And let's say they have a long list. What do you advise them from there? 

Tina Larsson: Yeah. So the pain points , it is very often a long list, but we just have to narrow down what is the most important one. And we do that by talking and listening to their pain points and saying, okay, so would you say that not getting your financial statements is more important than not having good communication, or is it not having good communication? Is that the most important to you or is it to get your project done? So we help them discover that. 

Paula Chin: And I would imagine help them understand that, say if you have a long list, you might not get everything, but you wanna get the most important things.

Tina Larsson: Absolutely. Absolutely. 

Paula Chin: Tina, this has been a great and very informative interview. Thank you so much for joining us. 

Tina Larsson: Thank you very much for having me.