Professional management of apartment buildings is becoming more and more important - Ühistuabi

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Managing your apartment association is like playing the lottery, the success does not depend on the manager of the apartment association but mostly on human relationships in its broadest sense.

There are today approximately 8000 housing and apartment associations in Estonia according to the Estonian Union of Co-operative Housing Associations. Some of them have been active for 8-10 years and many newcomers have now become real experts who could give advice to others in managing of apartment associations. 350 apartment association chairmen have participated in the 160 hour long training program for chairmen of apartment associations organised by the Estonian Union of Co-operative Housing Associations.

A trained chairman makes good decisions

The chairman of the Estonian Union of Co-operative Housing Associations Marit Otsing admits that successful management of an apartment building depends partially on the chairman of the apartment association. “Constant communication, competent administrative work and distribution of information to residents already ensures that there are less problems in the apartment association,” says Otsing.
According to Otsing, disputes regarding the building administration and also more broadly within the apartment association are usually caused by simple misunderstandings and confusing administrative activity. This is what complicates resolving critical issues that require a quick solution such as replacing the plumbing of the apartment building or renovating the roof.
The development manager of the insulation company Eurodom Grupp OÜ Valeria Kuusk believes that the chairman of an apartment association should have a higher education and feel more or less comfortable in the domains of construction and economics.
“We think that the chairmen of apartment associations are incompetent. For example, they often ask us for price offers for insulating endwalls, but afterwards we do not hear from them at all. People are also afraid to discuss the price,” Kuusk states.
Kuusk does not agree that management of apartments should be done by a management firm. “If the apartment association has an active manager, he knows where to find necessary contacts and professionals. Management firms require payment for their work and they use sub-contractors who in turn have their own charges,” says Kuusk.

BREM marketing manager Ülle Liimets partially supports the harsh statement by Kuusk.

„The chairmen of apartment associations are generally people whose main line of work is not real estate management nor organising construction or other related activities. Apartment associations are often managed in addition to working a full-time job or by retirees who may have free time, but lack the skills and experience,” says Liimets.
BREM Property Maintenance has also encountered several examples of apartment associations announcing tenders without any understanding of the actual substance of the works.
As a result, the cheapest offer is selected, which will backfire when extra work is required and all in all the whole undertaking will end up costing the apartment association a lot more than expected.
At the same time Ülle Liimets admits that if the chairman of the apartment association has taken their training seriously and has the competence necessary for inspecting elevators and maintaining the heat node, it is sufficient to purchase only emergency services from the maintenance company.

Hiring a management service provider does not steal money

Apartment associations are increasingly starting to consider buying in the complete management service.

The example of BREM Property Maintenance shows that the most commonly purchased services are maintenance (including the emergency service), cleaning, accounting and invoicing.

„When a building’s administration and management has been handed over to us, it has come to light that the manager of the apartment association doesn’t even imagine what providing an administration and maintenance service means,” says Liimets. If that’s the case, we must explain terms like “damage localisation”, “support services” and “emergency repairs”.

When cooperating with a maintenance service provider, a good connection and trusting relationship between the apartment association’s contact point and the real estate manager is of utmost importance.
It’s often feared that using a manager is a heavy burden on the apartment association’s thin wallet.

„From experience and from what is shown in the media, even the most simple apartment association should understand that you can only get free cheese from a mouse trap. Our experience shows that generally in 90% of cases professional service is more cost efficient.

As an example, there was a case where the management board of the apartment association hired a company for electric works, only to have the firm disappear after receiving the pre-payment. The works that had been performed did not comply with any standards or good construction practices,” Liimets states.
When choosing a management firm, people tend to trust word of mouth, meaning the cooperation experience of one or the other apartment association manager with the specific management company is becoming more and more important. Information about management firms is spread at field trips and summer days of the Union of Co-operative Housing Associations and at round table discussions held at district administrations in Tallinn.

You can also buy specific services

The CEO of Ühistuabi OÜ Urmas Pikner thinks that the more passive apartment associations have chosen to buy in the administration and all other services.
“When people are ambitious and they’ve already cared enough to have an apartment association, they also want to continue managing their building,” Pikner believes.

In their company, which offers three services – administration, accounting and construction management (including owner supervision) – there have been many occasions where they have directly recommended dropping the idea of hiring a management firm.
“When we see an apartment association that we consider to be fulfilling its tasks well and the residents are satisfied, then let it stay that way,” says Pikner.

In his opinion, problems within apartment associations arise in those fields which require special expertise, such as accounting and construction and renovation works. “In these areas the apartment association managers shouldn’t “do it yourself”, but should hire professionals for the job. Obviously there are also managers of apartment associations who are active in the accounting or construction sector, but that is rather an exception than the rule”, says Pikner.

The managers of the apartment associations are often incompetent

Their company has also seen occasions where the apartment association has come to them as a last resort when their accounting is already a big mess. “If construction is something done voluntarily, accounting, on the other hand, is a responsibility of the apartment association that is prescribed by law, and that the association often tries to fulfil as inexpensively as possible,” Pikner explains.

When giving a general opinion regarding chairmen of apartment associations, Pikner is tactful and gives the honest response that their competency in organising management activities varies from one extreme to the other.
„There are really efficient people, who hold this relatively responsible position in addition to their day job and then there are people, who hold the position due to certain circumstances. However, I do think there is one aspect every apartment association’s manager is competent in – they know the people living in the building and they have gained their trust, also a valuable trait,” Pikner adds optimistically.

Small apartment building has no manager

Toomas Sepp, the manager of the apartment association Liiva 2 in Salme village on Saaremaa island commented that the management of a 12 apartment house could always be better.

“When ERA Bank offered loans to apartment associations seven years ago we decided to use the money to insulate the house. Now we need to renovate the roof and basement and replace the heating system,” Sepp highlights critical work that must be done.

Financial problems are the the main reason that issues concerning the building are not solved very quickly.

“People with different financial situations live in the house and problems are caused by people with debts are growing day by day. In that case every new expense from the apartment association’s wallet is a source for disagreements,” Sepp adds.

For this reason, an apartment building with three sections is waiting for the replacement of its front doors for already two years.
Price offers have been collected, but until the general meeting supports making a rather large expense, the plan will remain on paper.

Until now the apartment association has been managing the house built in year 1985 without any problems. “It is already common in Kuressaare that apartment associations use management firms to help them out, but for our relatively small house, it is not profitable,” Sepp shared his thoughts.

The apartment association plans to join the Estonian Union of Co-operative Housing Associations because the union has been very helpful giving advice and useful information. Source: Ärielu, Merike Mikk

Allikas: Ärielu, Merike Mikk