The CIA is an
independent, nonprofit research and educational organization formed in 1973 to
serve as a clearinghouse and research center on community associations. The CIA
does not represent any one profession or interest group; rather, it supports the process of creating and
operating a successful viable
The CIA is an
independent, nonprofit research and educational organization formed in 1973 to
serve as a clearinghouse and research center on community associations. The CIA
does not represent any one profession or interest group; rather, it supports the process of creating and
operating a successful viable community association. Its membership is open to
anyone involved with that process.
Marketing cooperatives and condominiums and PUDs
In general,
cooperatives and condominiums are marketed in manner similar to that used for
prestige apartements and other luxury residences. Most developers used their
own or outside sales agents for the initial sale of such properties, but the
manager should be able to suggest marketing and publicity techniques when
called on to maintain the occupancy level. Most large condominium and cooperative
projects are advertised in newspapers and local magazines because media
publicity can be a cost-effective means of presenting the project to the buying
public. Pigure 12.1 shows the kind of publicity
a good professional property manager can provide.
Some cooperatives
and condominiums are marketed toward a particular segment of the population.
For the military market, for example, communities are established to cater
primarily to retirees of the spesific branch of the armed services; others
target golfers or boaters; whereas still other projects are designed for the
elderly. The property manager involved must be especially current with and
follow fair housing marketing and management practices when catering to a
special group.
Condominium and
cooperative managers must modify the financial reports used by apartement
managers, discussed in chapter 9. They must prepare an annual operating budget,
monthly incomen and expenditure statements, and yearly cash flow reports.
However, the more complex system of ownership and the fact that the residents
are also the owners creates unique budgeting problems for condominiums and
cooperatives. Because there is technically no income in a not-for-profit
association, specialized training, such as the provided through the C.A.I, is
required of association managers.
Need for professional Planning
On the whole, many
condominiums and cooperatives suffer from a lack long-range planning. A
professional property manager can avoid the problems that often arise when a
condominium or cooperative development chooses inadequate service contractors
in a misguided attempt to cut operating costs. Emphasis should be on managing
for value rather than for profit.
Importance of Accurate Budget
Projections.
In budget
projections the manager should make allowances for inflation and increasing
rates, because the cost of all forms of energy continues to rise. Reserve funds
should be budgeted for contingencies and replacement of major items such as
roofs and central heating and air-conditioning equipment. The amount should be
increase as the property ages and more repairs are needed. It is a disservice
to the community as a whole to create inadwquate budgets in response to
pressure from the owner’s association or to base any activity on internal political
considerations.
Income
Condominium income
comes almost entirely from assessments to members (owners of units) and income
is budgeted to meet expenses.
Expenses
Most expenses
relating to or arising from fee simple ownership of a unit are the sole responsibility
of the owner. Some examples are utilities, interior decorating, interior
maintenance, condominium homeowners’ insurance covering occupant improvements,
and appliance or fixture replacement. In some condominium projects, however,
mater supply and utilities for electricity, heating, and air-conditioning may
not be metered separately to units. In that situation, a unit owner will pay a
pro rata share of total condominium expense.
Common elements. The expenses of
common elements of the projects are allocated among the unit owners based on
their percentage ratios. The common elements of a project include not only
structural portions of a building such as foundation, walls, and roof; but
common walkways, parking, and other areas for the use and benefit of all
owners. Swimming pools, recreation and loundry rooms, storage areas, and the
like are considered common elements.
Limited common elements. In
addition to the common elements, some condominium establish limited common
elements. These are areas such as porches, patios, or storage closets
designated for the private use of the unit owner but not owned in fee simple as
part of the unit itself. The unit owner must follow CC&R rules for these
apaces as well.
Calculating pro rata share. An
owner’s pro rata share for each unit is determined by state statute and/or the
ratio the square footage of the unit bears to the total square footage of all
units in the project. It is expressed as a percentage, sunh as 1.034 percent.
This percentage is established in the original condominium declaration (called
unit ownership declaration in many states) and is the basis for allocating
expenses applicable to all units. The mothly pro rata charge is allocated to
each unit for recurring budgeted items, which is based on the percentage set
forth in the declaration, and billed to each occupant as a regular assessment.
Reserves for replacement also should be calculated in and collected as part of
the regular mothly assessment.
Capital expenditures. If the
need for an unbudgeted capital expenditure arises, a special assessment will be
necessary, which must be revied by a vote of either the board of directors of
the association or of the owners themselves, depending on condominium
declaration and bylaws. An experienced association manager will keep such
surprise special assessments to a minimum by proper use of reserves. If reserve
funds are inadequate, special assessments can run into the hundreds or
thousands of dollars for each owner, depending on the total required for the
expenditure. Such an occurrence can creat severe problems for the condominium
owners and for the association itself.
community association. Its membership is open to
anyone involved with that process.
Marketing cooperatives and condominiums and PUDs
In general,
cooperatives and condominiums are marketed in manner similar to that used for
prestige apartements and other luxury residences. Most developers used their
own or outside sales agents for the initial sale of such properties, but the
manager should be able to suggest marketing and publicity techniques when
called on to maintain the occupancy level. Most large condominium and cooperative
projects are advertised in newspapers and local magazines because media
publicity can be a cost-effective means of presenting the project to the buying
public. Pigure 12.1 shows the kind of publicity
a good professional property manager can provide.
Some cooperatives
and condominiums are marketed toward a particular segment of the population.
For the military market, for example, communities are established to cater
primarily to retirees of the spesific branch of the armed services; others
target golfers or boaters; whereas still other projects are designed for the
elderly. The property manager involved must be especially current with and
follow fair housing marketing and management practices when catering to a
special group.
Condominium and
cooperative managers must modify the financial reports used by apartement
managers, discussed in chapter 9. They must prepare an annual operating budget,
monthly incomen and expenditure statements, and yearly cash flow reports.
However, the more complex system of ownership and the fact that the residents
are also the owners creates unique budgeting problems for condominiums and
cooperatives. Because there is technically no income in a not-for-profit
association, specialized training, such as the provided through the C.A.I, is
required of association managers.
Need for professional Planning
On the whole, many
condominiums and cooperatives suffer from a lack long-range planning. A
professional property manager can avoid the problems that often arise when a
condominium or cooperative development chooses inadequate service contractors
in a misguided attempt to cut operating costs. Emphasis should be on managing
for value rather than for profit.
Importance of Accurate Budget
Projections.
In budget
projections the manager should make allowances for inflation and increasing
rates, because the cost of all forms of energy continues to rise. Reserve funds
should be budgeted for contingencies and replacement of major items such as
roofs and central heating and air-conditioning equipment. The amount should be
increase as the property ages and more repairs are needed. It is a disservice
to the community as a whole to create inadwquate budgets in response to
pressure from the owner’s association or to base any activity on internal political
considerations.
Income
Condominium income
comes almost entirely from assessments to members (owners of units) and income
is budgeted to meet expenses.
Expenses
Most expenses
relating to or arising from fee simple ownership of a unit are the sole responsibility
of the owner. Some examples are utilities, interior decorating, interior
maintenance, condominium homeowners’ insurance covering occupant improvements,
and appliance or fixture replacement. In some condominium projects, however,
mater supply and utilities for electricity, heating, and air-conditioning may
not be metered separately to units. In that situation, a unit owner will pay a
pro rata share of total condominium expense.
Common elements. The expenses of
common elements of the projects are allocated among the unit owners based on
their percentage ratios. The common elements of a project include not only
structural portions of a building such as foundation, walls, and roof; but
common walkways, parking, and other areas for the use and benefit of all
owners. Swimming pools, recreation and loundry rooms, storage areas, and the
like are considered common elements.
Limited common elements. In
addition to the common elements, some condominium establish limited common
elements. These are areas such as porches, patios, or storage closets
designated for the private use of the unit owner but not owned in fee simple as
part of the unit itself. The unit owner must follow CC&R rules for these
apaces as well.
Calculating pro rata share. An
owner’s pro rata share for each unit is determined by state statute and/or the
ratio the square footage of the unit bears to the total square footage of all
units in the project. It is expressed as a percentage, sunh as 1.034 percent.
This percentage is established in the original condominium declaration (called
unit ownership declaration in many states) and is the basis for allocating
expenses applicable to all units. The mothly pro rata charge is allocated to
each unit for recurring budgeted items, which is based on the percentage set
forth in the declaration, and billed to each occupant as a regular assessment.
Reserves for replacement also should be calculated in and collected as part of
the regular mothly assessment.
Capital expenditures. If the
need for an unbudgeted capital expenditure arises, a special assessment will be
necessary, which must be revied by a vote of either the board of directors of
the association or of the owners themselves, depending on condominium
declaration and bylaws. An experienced association manager will keep such
surprise special assessments to a minimum by proper use of reserves. If reserve
funds are inadequate, special assessments can run into the hundreds or
thousands of dollars for each owner, depending on the total required for the
expenditure. Such an occurrence can creat severe problems for the condominium
owners and for the association itself.
