6 key factors to consider when hiring a property management company in California

When deciding whether to hire a California property management company, most association boards focus on one key factor: cost. But while the price of the contract matters, there are other hidden costs associated with self-managing an association.
 

What to consider when hiring a property management company in California

Here are six crucial factors to consider when weighing your options.

1. Time: The hidden cost

   One of the biggest expenses when self-managing an association is time. Board members are volunteers, often juggling full-time jobs, and spending 20-40 unpaid hours per week serving their association. A professional management company can handle routine tasks like meeting coordination, communication, and staff recruitment, saving valuable time for strategic decision-making.
    

2. Risk: HR costs and legal pitfalls

   Managing HR responsibilities without professional support can expose associations to significant risks, including costly legal penalties. For example, violations of labor laws or discrimination regulations can result in hefty fines. Hiring a California property management company can remove this risk by handling HR services, offering training, and ensuring legal compliance. FirstService Residential saved one community $75,000 to $100,000 annually in legal fees for HR-related services eliminating the cost of third-party HR services.
    

3. Size: Leveraging economies of scale

   Larger property management companies can offer cost savings due to their scale. By negotiating better rates for utilities, insurance, and supplies, they can pass savings on to the association. Self-managed associations often miss out on these opportunities, as their smaller scale doesn’t carry the same bargaining power as a larger firm with extensive industry relationships.
    

4. Reputation: Enhancing resident experience

   Hiring a property management company in California can elevate the community’s reputation by providing specialized lifestyle programs and professional customer service training. From concierge support to wellness programs, these services improve resident satisfaction, which is crucial for attracting potential buyers and maintaining property values.
    

5. Finances: Dedicated accounting support

   Handling financials, such as budgeting, accounts payable/receivable, and reserve planning, can be complex and time-consuming. A property management company can take over these tasks, offering expertise in association finances, helping with budget forecasting, and managing delinquent accounts. This frees up board members to focus on bigger-picture decisions.
    

6. Missed revenue: Identifying opportunities

   A California property management company can also uncover opportunities for additional revenue streams. From monetizing amenities like event spaces to improving interest rates on reserve funds, a property management partner can help maximize your association’s financial potential.
   
   FirstService Residential-managed associations have access to dedicated financial services affiliate FirstService Financial, which offers a reserve program, insurance products, and lending services, to name a few. Its cash management team helps tailor short- and long-term strategies for each association’s unique needs, with the goal of replacing lower-rate funding accounts (brokerage-based money market accounts, sweeps, etc.), reducing ongoing security and tracking burdens, improving asset liquidity, and maximizing interest revenue.
   
   For instance, one master-planned association decided to partner with FirstService Residential after a financial audit revealed they were earning minimal interest on their reserve funds ($1,000 in annual interest from $1.5 million in reserves). After hiring FirstService Residential and getting a full banking analysis through FirstService Financial, they increased their interest to a projected $75,000 per year.

Final thoughts

Choosing between self-management and hiring a property management company in California involves careful consideration of both visible and hidden costs. A property management company can offer significant value by handling HR, finances, risk management, and day-to-day tasks, ultimately saving time, reducing costs, and maximizing revenue. Contact FirstService Residential to learn how we can support your association's long-term success.