What Is 'good Management'?

[samran]

Sounds like a pretty dumb question, but it has been pointed out that apart from location, good condo management is a key criteria. My questons are:

1) What defines good management? and

2) How can you go about quickly discerning a good management team looking for a place to buy?

For 1) I'd expect to see all the usual stuff: prompt at fixing stuff, a good team of handymen etc. But what else are we looking for?

For 2) Who can you trust to speak to about this? Surely not the seller, and probably not the management themselves...

Thanks

Samran

[Heng]

Good management also means... keeping the security guards in line (LH fires the entire crew of security if there is theft of condo owner property and replaces them with another company... some condo management teams don't do a thing and let the guards run wild), keeping the other tenants in line -following the condo regulations and making sure everyone pays their maintainence fees-, continuing to maintain the condo complex well after it's sold out -in my experience: AP and Land and House are tops at this-.

I think there is a forum where folks complain about their condos at pantip.com, although I'm not completely sure and don't read Thai well enough to check it out.

But yeah, ask the neighbors (especially if the condo in question has a public park, common area, gym, pool, etc., where you can approach folks and ask).

[quiksilva]

I used to be in property management in the UK and here with CBRE for two years.

A good property manager's role is to take proactive steps to maintain and enhance asset value.

This involves pro-active maintenance of facilities and utilities, ongoing beautification and improvement programs, listening to co-owner and tenant requests, and above all else maintaining the fiscal health of the project.

This can not be repeated too often, ensuring that there is adequate income from CAM fees is collected provides a manager with the resources they need to run day to day operations and other ongoing programs.

Think of it like software, nearly all software is released with a few bugs, the same is true for new buildings, the Property Manager's role is to patch these up and make things better.

This may (in fact should) also lead hem to look for other sources of revenue (rental of shops for example) accomplish their goals whilst keeping CAM fees as low as possible.

Make sure all the obvious places are clean, polished, and working. Fire extinguishers should have certificates the last time they were checked (every 12 months min), how about cleaning schedules are they posted for all to see? If so, is it being done regularly?

Then sneak a look behind the scenes to see how it is really managed: walk through the car park. How is the signage? Is it laid out logically? Is it sufficient? Are emergency exits clearly marked? Have the road markings been freshly painted? Security presence sufficient (either CCTV or Guards).

But the acid test is the state of the car park toilets. One look tells me all I need to know about the PM standards of a project.

Edited June 15, 2007 by quiksilva

[PeaceBlondie]

We hadn't been in our first condo in Thailand for a month when the manager absconded with funds, and interim management told us we'd lost our deposits (13,000), and to file a complaint against the ex manager down at the police station. We showed our receipts and they agreed he hadn't stolen their money (I kept saying, "When you gave me a receipt for the deposit, it became your responsibility, not mine."). The swimming pool was closed, then the outdoor restaurant, etc. When Nick's place burned down, the black smoke scars on the outside of the building remained for months.

Samran, if you're a fluent native, you know whom to ask, even if Heng wouldn't know. We farang might never know.

[Irene]

Samran,

A good question because most condo buyers tend to forget this important factor. Below is my input in bold type:

Sounds like a pretty dumb question, but it has been pointed out that apart from location, good condo management is a key criteria. My questons are:

1) What defines good management?

Another post, Heng, has well pointed out of LH and AP's style of management based on the basic principle of accountability. If you go wrong, we sack you. Besides accountability, the management should conduct the operation fairly and equitably with no non-sense. There is no exception to the rule. If no pet is allowed, then no pet is allowed for ALL co-owners. Condo's rules impose stiff penalty on the wrongdoer.

In addition, the management should be farsighted in not only maintaining the value of the condo but also adding further value. This can only be done by adequate budget. Therefore maintenance fees and sinking fund should be adequately built up and well invested to cover for future capital expenditure. That day will come when lifts have to be overhauled or changed. Painting the whole building and refurbishing of the common area are basic requirements at interval, just like other five-star hotels.

Your observation of having handymen whenever required is only elementary. If the goal of a condo is understood, then those elementary services would come into line. Basically, management should be fair, transparent, responsibly, accountably, value-added and farsighted. Am I idealistic? No, I used to live in a condo that was managed by the no nonsense management with sufficient funds collected from all co-owners for improvement, the place was like a five-star hotel. It is still like that with above-market resale price. At the general meeting for any fee increase, instead of resistance, few co-owners even asked whether the amount was enough. The fees was Baht35/sqm/month. They have seven million baht sinking fund. I still own this condo. This is an exception to the general situation. The worse one is the condo with the rule erroneously interpreted and believed by the management that no fee can be increased. The fee remains static since Day-one more than twenty years ago at the rate of Baht 17/sqm/month. Staff morale is so low that reflects on its quality of the condo.

2) How can you go about quickly discerning a good management team looking for a place to buy?

If it is a freshly built condo, then you need to know the intention of the developers. If they intend to hire CBRichard Ellis or Jones Lang Wootton for the first few years, then you can relax on this factor.

If it is a second hand condo, then look at the lobby, garden, swimming pool, garbage collections, staff morale and efficiency, guards, and experience entry into the place as to the number of entry points, sit at the reception area at different time of the day, and talk to the residents, drivers and maids, you would receive a level of comfort. Do they contract the management to the outside parties? Having outside parties is better to have the condo's staff because there will be lesser infighting and conflicts and the parties tend to be fair and professional. Unfortunately, at the moment, I can comfortably mention only two. Ask to see the memos of the annual general meeting in the last few years to gauge the involvement of the care of the co-owners and also possibly search for any signs of infighting which has never been good for any condo. See the financial statements and find out the amount of unpaid dues from co-owners. You will be surprised that in some condos, there might never have any annual general meeting in the last few years. Then that is bad news. If the committee members are mostly Westerners, then you can take it that there would be serious management in the ideal line that I mentioned earlier. This is not racist but simply farangs have a better understanding of what is right and what is wrong.

For 1) I'd expect to see all the usual stuff: prompt at fixing stuff, a good team of handymen etc. But what else are we looking for?

For 2) Who can you trust to speak to about this? Surely not the seller, and probably not the management themselves...

Thanks

Samran

[Tyke]

Well, I cringe every time security guards in slick white uniforms click their heels and salute me, both when entering and leaving the block (often within seconds of each other, if I've forgotten something - why in hel_l are they trained that way!). I try everything to get by them without being seen. Haven't managed it yet, but if I ever do then I guess the management isn't up to scratch!

[quiksilva]

Samran,

A good question because most condo buyers tend to forget this important factor. Below is my input in bold type:

Sounds like a pretty dumb question, but it has been pointed out that apart from location, good condo management is a key criteria. My questons are:

1) What defines good management?

Another post, Heng, has well pointed out of LH and AP's style of management based on the basic principle of accountability. If you go wrong, we sack you. Besides accountability, the management should conduct the operation fairly and equitably with no non-sense. There is no exception to the rule. If no pet is allowed, then no pet is allowed for ALL co-owners. Condo's rules impose stiff penalty on the wrongdoer.

In addition, the management should be farsighted in not only maintaining the value of the condo but also adding further value. This can only be done by adequate budget. Therefore maintenance fees and sinking fund should be adequately built up and well invested to cover for future capital expenditure. That day will come when lifts have to be overhauled or changed. Painting the whole building and refurbishing of the common area are basic requirements at interval, just like other five-star hotels.

Your observation of having handymen whenever required is only elementary. If the goal of a condo is understood, then those elementary services would come into line. Basically, management should be fair, transparent, responsibly, accountably, value-added and farsighted. Am I idealistic? No, I used to live in a condo that was managed by the no nonsense management with sufficient funds collected from all co-owners for improvement, the place was like a five-star hotel. It is still like that with above-market resale price. At the general meeting for any fee increase, instead of resistance, few co-owners even asked whether the amount was enough. The fees was Baht35/sqm/month. They have seven million baht sinking fund. I still own this condo. This is an exception to the general situation. The worse one is the condo with the rule erroneously interpreted and believed by the management that no fee can be increased. The fee remains static since Day-one more than twenty years ago at the rate of Baht 17/sqm/month. Staff morale is so low that reflects on its quality of the condo.

2) How can you go about quickly discerning a good management team looking for a place to buy?

If it is a freshly built condo, then you need to know the intention of the developers. If they intend to hire CBRichard Ellis or Jones Lang Wootton for the first few years, then you can relax on this factor.

If it is a second hand condo, then look at the lobby, garden, swimming pool, garbage collections, staff morale and efficiency, guards, and experience entry into the place as to the number of entry points, sit at the reception area at different time of the day, and talk to the residents, drivers and maids, you would receive a level of comfort. Do they contract the management to the outside parties? Having outside parties is better to have the condo's staff because there will be lesser infighting and conflicts and the parties tend to be fair and professional. Unfortunately, at the moment, I can comfortably mention only two. Ask to see the memos of the annual general meeting in the last few years to gauge the involvement of the care of the co-owners and also possibly search for any signs of infighting which has never been good for any condo. See the financial statements and find out the amount of unpaid dues from co-owners. You will be surprised that in some condos, there might never have any annual general meeting in the last few years. Then that is bad news. If the committee members are mostly Westerners, then you can take it that there would be serious management in the ideal line that I mentioned earlier. This is not racist but simply farangs have a better understanding of what is right and what is wrong.

For 1) I'd expect to see all the usual stuff: prompt at fixing stuff, a good team of handymen etc. But what else are we looking for?

For 2) Who can you trust to speak to about this? Surely not the seller, and probably not the management themselves...

Thanks

Samran

Excellent post.

[samran]

great post Irene.

I am slowly testing the market. Looking for a place to live. Not sure if I want to go house or condo yet. Pro's and cons to both.

[sukanyacondo]

Im at an Lpn development so far they are pretty good replacing broken tiles on an outside walkway and they plan to re paint the whole exterior in 3-4 years if it starts to look bad or 5 years if its still ok.

Ive got 30m2 and the charge is 20bahtm2 which will go up soon I believe.

[think_too_mut]

Sounds like a pretty dumb question, but it has been pointed out that apart from location, good condo management is a key criteria. My questons are:

1) What defines good management? and

2) How can you go about quickly discerning a good management team looking for a place to buy?

For 1) I'd expect to see all the usual stuff: prompt at fixing stuff, a good team of handymen etc. But what else are we looking for?

For 2) Who can you trust to speak to about this? Surely not the seller, and probably not the management themselves...

Thanks

Samran

Discarding "good posts" I can say only one thing - good building management comes from within, not from without.

In Sydney, Potts Point, I was a treasurer in a 186 apartments block (with a 1.2 mil dollars budget). We changed building management many times (in one exceptional year 3 times) but the control had never left our team and interest of the owners has always been a paramount.

Try to replicate it in Thai - with some luck you might. Try to do it at View Thalay in Pattaya - nothing.

[Irene]

great post Irene.

I am slowly testing the market. Looking for a place to live. Not sure if I want to go house or condo yet. Pro's and cons to both.

Samran,

The choice of either a condo unit or a house is dependent on each person’s preference. Perhaps you can bear with me with my own experiences.

The disadvantages of a condo are lack of substantial land ownership, obligations of having to pay management fees even when not occupied, relatively smaller area of privacy, earthquake, high- rise, sharing of common area usage, far from nature, not much storing space and lesser rise in resale value.

The advantages of a condo are safer, no fear of flood, quieter and surprisingly less contacts with neighbours, less transportation-most condos are near to town centres and other conveniences, more common facilities like fitness centre, swimming pool, garden, availability of handymen, lovely to have shower with strong water flow, no water pump required, more privacy, away from the crowd once in your own condo, less dusty and noise from the land (however noise can be piercing from the ground if your unit is in the right angle), no mosquito, cockroaches, rats, and pests, more functional and easy to manage since the design of a condo has to be functional with limited space.

The pros for a house are on the ground and nearer to nature, your sense of complete ownership with no sharing concept, more property-care activities with your small garden, no lift taking especially after shopping, and believed to have a better resale value.

The cons are less safe because you are more isolated, more risk of burglary, more risk of the property being flooded by rainfall, nearer to pests, daily mosquito biting, less privacy since closer to your neighbours, harder to find people to mend things, necessity of having to use water pump, lesser pressure of water flow and sometimes problems with drainage. Some of the disadvantages of home-buying can be eliminated with purchases in a housing development area, though not as good as in a condo.

Let me share with you on our experiences. We returned to Thailand forty years ago and at first lived in a house of 50 square wah after having lived in a flat in England for more than ten years. Burglary, mosquitoes and cockroaches, flood from rainfall, and long traveling time (even in those days), prompted us to move upward and to inner city. We had many edges over others in term of travelling time and conveniences. We were in a condo for more than thirty years. Now we are back on the ground when we find it unnecessary to live in the inner city and our fear of earthquake. (The day of tsunami hitting Phuket, we were shaken at 8 am and rushed to the ground one hour before the sad tragedy hit Phuket and Khao Lak). Since that day, on the urging of our son, we searched for our ground abode and reached our consensus (which I thought we would never reach) on the current house. In my inner thought at that time, I was hoping that we would never agree on any house. We now find other disadvantages in living in a house as bearable but still feel annoying. But when sitting in the garden with no rush and hearing birds chirping, then you say to yourself that that is life. Contrary to the general belief, the resale value of a house is not greater than our condos. Our 40-year house with the land right in the fringe of the Bangkok centre has a rise of 3% per year when our condo units are with 6% to 12% per annum at least.

Cheers!

[samran]

Irene,

I appriciate you taking the time! Your advice is invaluable.

As I said, I am not sure yet. I've lived in both her in Thailand (though on a nice moo ban out in Ramkhamheng with a house). We are just going to spend the next 6 months at least looking about. Not rushing to be honest as we have an extremely good deal with the current rental aparment we have...do we'll just be patient until the right thing come up.

[Heng]

There's also the inheritance consideration. At some point in the future, true... it might be 50-100+ years from now, the condo structure will likely have to be brought down and rebuilt. It's basically a gamble that the original developers will still be in business to rebuild it for you. True, it's the same for the house... but in that case, at least you know who owns the dirt.

Another slight annoyance at the back of my mind when I'm staying at one of my condos is the increased fire risk. Every household has a set fire risk: cooking, kids playing with matches, etc.... with a condo, you're multiplying it times 10-15-100 households and then stacking everyone on top of each other, then multiplying it by the life of the building/structure.

[samran]

There's also the inheritance consideration. At some point in the future, true... it might be 50-100+ years from now, the condo structure will likely have to be brought down and rebuilt. It's basically a gamble that the original developers will still be in business to rebuild it for you. True, it's the same for the house... but in that case, at least you know who owns the dirt.

Another slight annoyance at the back of my mind when I'm staying at one of my condos is the increased fire risk. Every household has a set fire risk: cooking, kids playing with matches, etc.... with a condo, you're multiplying it times 10-15-100 households and then stacking everyone on top of each other, then multiplying it by the life of the building/structure.

Frankly, the land ownership uncertainty is a thing that concerns me with condo's. With a house, yes, the dirt is mine. I can pass it on to the children, and given that is seems do-able, I might my wife Thai nationaily over the next few years so that she has an element of certainty too.

[Sunderland]

There's also the inheritance consideration. At some point in the future, true... it might be 50-100+ years from now, the condo structure will likely have to be brought down and rebuilt. It's basically a gamble that the original developers will still be in business to rebuild it for you. True, it's the same for the house... but in that case, at least you know who owns the dirt.

Another slight annoyance at the back of my mind when I'm staying at one of my condos is the increased fire risk. Every household has a set fire risk: cooking, kids playing with matches, etc.... with a condo, you're multiplying it times 10-15-100 households and then stacking everyone on top of each other, then multiplying it by the life of the building/structure.

Frankly, the land ownership uncertainty is a thing that concerns me with condo's. With a house, yes, the dirt is mine. I can pass it on to the children, and given that is seems do-able, I might my wife Thai nationaily over the next few years so that she has an element of certainty too.

The state of some condos makes me wonder if they will be standing in 20-30 years, let along 50-100 years. So is the developer obliged to build a new tower when the existing one begins to crumble from beneath? If no developer, then what happens? Are all the owners entitled to an equal share of the land that the condo building stood on? Perhaps ownership of fresh air is the best we can hope for ...

[elkangorito]

Like quicksilva, I too was a Facilities Manager in Australia for about 8 years.

At the end of the day, if the building & its facilities are falling down around you, the only thing of any value is the 'dirt' it's built upon. Thus the primary priority is maintenance (engineering), closely followed by admin (including accounts). The maintenance issue requires 'procativeness' & not a 'fix it when it's broken' attitude.

Of course, this all costs money & it take yet another 'smart cookie' to control the flow of money.

Facilities Management is a complicated issue & SHOULD NOT come down to an accountant or a Real Estate agent calling the shots because in my experience, they haven't got a clue.

[BlackJack]

Its a funny thing

you will never really know until you move in

then you will see things

If its a condo then try and rent

listen to stories

buy later

Whats on paper and in the accounts aren't necessarily whats happening. Some use the building as a cash cow and suck it dry. They then move on.

However if you have a good building and it has potential then you need to get on the committee, brush up on Thai Law and the Condo By laws.

Its not easy but we have made significant changes in our block within the last 6 months. All up hill however now mostly working together.

But its organic and subject to change with different players steering the Committee - therefore keep pointing their nose to the By Laws.

Hard to change as you need 75% of the vote. Hard to get

One last thing - check the building insurance - our building was only insured for 1/3rd of its value

errr someone forgot to index the policy

good luck

[Tammi]

Following is a reply I got from "Sattahip" on 2006-09-03. Folks commented at the time that it should have been pinned.

Start quote "I am sorry to be brutally frank but most of the replies above are of no real value.

You can establish the quality of condo management ;

1. Ask to see the most recent audited accounts of the condominium juristic person. That is the association in Thai law which owns the structure. These accounts should be audited, though with accounting standards such as they are in Thailand, this is no absolute guarantee of accuracy. In any building catering well to expatriate owners there will be an English language copy. Use your common sense to review income and outgo, accumulated net worth, presence of reserve funds etc. Ask to see a list detailing maintenance arrears. Be careful if the developer is the major creditor or arrears are substantial/chronic.

2. Ask for a copy of the minutes of the most recent Annual General Meeting. As with the accounts, any well managed building will have these in English translation. Review this to see if key issues like financial viability, management quality, maintenance planning and the like are discussed. See also how election of board is conducted, if it is!. Many condominiums here are autocratically run by the developers as a cash cow with no real ownership input/control.

3. Ask for a copy of the insurance policy covering the building. This will likely be in Thai but check with your lawyer what is covered,who is the beneficiary, for how much and with whom. Often insurance is completely inadequate, covers only fire and is with a company even for major buildings no-one has ever heard of. Strangely such companies often pay brokerage of some substance to the "manager" which should not be done for obvious reasons re independent assessment. Thailand has many reputable brokers in Bangkok who can arrange the right policy with the financially capable insurers plus advise on coverage amount which will increase over time to cover replacement costs. Check there is 3rd party insurance also though this will be rare. Good insurance companies will also offer staff fire training.

4 See a utility bill for a condo and check the unit costs of electricity and water against those an independent householder would pay. These items should not be a "profit centre" for management.

5. Ask for a copy of the association,s land deed which of course should be in its name (e.g. "name of condo" Juristic Association). In many cases the association will own only the footprint of the building and you can have a fun park or shophouses next year on what you thought were your clubhouse grounds or gardens. This is common. One building mentioned above as an exemplar has allocated only 2.5 rai(about an acre) for its new 33 storey twin tower. Now tell me that makes sense!

6. Walk down the fire stairs as you leave. A sign of good management is that these will be completely clear, properly emergency lit etc. Check the maintenance plate in the elevators. Is the manufacturer the maintaining coy? Shoddy lift maintenance is a time bomb. Again commonsense viewing will give you an idea of overall tidiness and housekeeping quality.

All this is a bit long but based on experience. I am the Treasurer of my condominium which is, I believe, capably run by the owners. We employ our own manager and security and cleaning staff and have had most of them with us since opening 12 years ago.

We are about, with a consulting engineers assistance, to commence a full refurbishment programme which will run to millions of baht. We can face this because our owners take a real interest in the building (75%+ attended the last two AGMs) and are willing to fund transparent running and extraordinary expenses.

So any questions or brickbats- I'm ready." End quote.

I myself bitch all the time at the condo I am in about safety (lighting in emergency stairs); health (garbage chute and garbage room); security (guards are never around - always 'at toilet' or 'walking around', or are found sleeping, or entertaining friends; co-owners are not allowed to see accounts - all the office staff can but not the co-owners; lack of audited accounts; Condo law and/or Regulations not adhered to; meetings not held. And most of the Committee Members are farangs!!!! Go figure.