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From an Ask-NCN Discussion on 9/28/2015
Katie Edwards, 9/28
I’ve recently gotten a question that I wanted to pass along. One of our centers has been outsourcing their property management functions since they opened. Now, they’re considering integrating the property management function with their operations and admin team. Their space is quite large, in the 100,000 square foot range. Has anyone gone through this transition recently? What would you recommend? What are the pitfalls that you should be aware of in the transition? What is your rationale for in-house property management? Is it more cost effective for you to do this in-house or to outsource it? Make sure to share how big your center is and how many tenants you have, since these are big influences in how complicated property management can be.
John Powers, Alliance Center, 9/28/15
Consider splitting management functions, bringing all in-house that are manageable and cost effective, and negotiate having a management company deal with those it is best suited to address – 24-hour on-call (tenants with issues relevant to themselves are charged for the services they require, e.g. lost keys, alarms going off), central building services (e.g. elevator inspections and repairs).
Ted Dang, Commonwealth Real Estate 9/28/15
Be careful when considering integrating property management functions in a non profit organization.
In many states like California, property management functions, defined as marketing and/or leasing space and collecting rents, require a real estate license. There are exceptions like if the non profit owns the property, than an officer of the corporation may handle these duties without a license. However, if the ownership of the property is in some entity that includes outside investors, the exception is not available.
Notwithstanding, some property management functions does require some business training in the areas of law, accounting, and real estate. It is not a simple assignment for amateurs.
Dustin Barrington, HNS Life Center, 9/28/15
I would echo both responses thus far…
1. Understand all your costs and make sure that you are making a wise investment.
2. Property Management is considered a profession because it is. There is a lot to keep track of…
Saving money in the short term may cost you more in the long term if you damage something expensive by accident.
That being said, If you have a committed professional, there are benefits to having this function in-house. It is the option we have chosen.
From an Ask-NCN Discussion 11/28/16
Debbie Shoemaker, Community Foundation of Southern Arizona
My organization is setting up a nonprofit center and bought a building. They are not going to manage the property. Because it is nonprofit, they have to send out a RFP for a property manager.
We are looking for a sample RFP for property management firms, if someone was to outsource this work to another entity. For example, I have a nonprofit center, but I don’t have the staff to take care of all the property management in house, what would I be looking for in an RFP?
Brian Doyle, Family Services, Inc.
We are a not for profit and we manage our Center. We explored using a property manager and decided against it.
Doug Vilsack, Posner Center for International Development
We are a non-profit and hired a property manager prior to the opening of our center in 2013. Two years later we got rid of that property manager and hired in-house to cover operations because they just didn’t get the needs of a shared space. I would caution against hiring a property manager that has never manged a shared office facility or co-working space.
Chris Bowyer, Alliance for Sustainable Colorado
After being in Doug’s space just yesterday and meeting his operations manager, I will attest that having in-house property management is essential for a shared space and specifically for non-profits. However, as the operations manager in a non-profit shared office building who also has the assistance of a property management company, I am slightly biased.
In my setting, I have the ability to manage contracts and vendors and get my hands dirty on occasion while also utilizing the assistance of a property management company for some routine maintenance and 24/7 service on off hours when that is required. While the 24/7 service is used to a much lesser degree than maintenance it is incredibly helpful as an alternative to overnight or weekend visits to the building.
Shelby Fox, Knight Nonprofit Center
I have the exact same option and bias. You have to have someone on site but if you just have one person like me it is great to have a PM company also. Ours does all the accounting, keeps up with the tenants and vendors COIs and W9s, pays the bills, and directly deals with tenants that are past due. I approve all the bills and make all the decisions and can call vendors direct but it is great to have someone to keep up with checking the fire extinguishers, and annual certificates and all that routine regular stuff that just needs to get done so I can focus on bigger picture items and it also helps with my relationships with the tenants to not be the one that has to hassle them is rent is late. I really don’t even find out for a couple months so I only step in if there really is a problem. I am not the one have to send the notices and all that which keeps them from avoiding me or anything like that. I know and can talk to them but the PMs are my buffer for items like that. It is also a good checks and balances for the accounting so we don’t end up paying the money for a review or audit. They also prepare all the financial reports for board meetings and cost less than an accounting firm so I feel like I get a great deal. It is not a replacement for an onsite operations manager but it is an asset and you will save your money in the CPA expenses and number of people you need to have on site to manage the building.
Judy Lind, Kukui Children’s Center
I would add another reason to have a professional property manager as we do. I am a social worker. I do not have the background to manage a building. By overseeing the work of the property manager through monthly reports and regular phone contact, I can identify what needs my input and also have someone to delegate to.
It’s the best of both worlds.
I would be interested in the size of you nonprofit. Our building will be about 25,000 square feet and our organization will occupy about 8,000 sq ft. The remainder will have tenants which will include a co-op space for nonprofits with as little as one person in the organization.
Doug Barrington, HNS Life Center
We are a non-profit social service organization. We own a 62,000sqft building with 19 tenants (40,000sqft of which is new construction in the last 3 years).
Our organization occupies about 45% of the building and carries about 15% of the building as common/shared space. We do our own Facility Management as part of an “Operations” Team with 2 staff and a handful of volunteers. The team also does Facility Coordination, Volunteer Coordination, and community animation/collaboration.
My 2 cents: Managing a facility is a professional role of its own. You can certainly do it (and save money) if you’re willing to learn but it isn’t something that just “takes care of itself.” If you’d like to have more practical input, please feel free to give me a call.
Nancy Zallek, Mankato Area Foundation
Interesting question. We had a unique situation. We started with one property manager because they were a donor to the building AND discounted their services – considerably. However, it did not work out very well – for a variety of reasons. Primarily, we were so different from the properties they typically managed, we wound up doing much of it ourselves anyway.
After 6 months of that frustration, we switched to a different property manager. They also discounted their rate for us ($150 per month – $35 per call) to manage the property. Our accountant took on the financial responsibilities because she just kept re-doing it anyway. That has worked quite well for us.
Our primary want/need for a property manager was to try and remove us from the role of “landlord.” We own the building we’re in with 6 other nonprofits and it was too easy for them to come to us for the lightbulbs that needed replacing. I’m not saying we’ve totally negated that situation, but it is much better. If you have additional questions, I’d be happy to talk with you.
Faisal Abid, Third Sector New England
I’ve been involved with management of the NonProfit Center of Boston, a project of Third Sector New England, for around 5 and a half years now. When I started here, I worked for a property management company that was contracted out to manage this building. We have 8 and a half floors and about 113,000 rentable square feet broken up in to three shared spaces and many private suites. As of October 2015, my colleague and I have been direct employees of TSNE as managers of the building.
Having experienced both of these situations, I can say that I’ve found working directly for TSNE has been a much smoother process. It streamlines a lot of processes especially on the decision making and accounting end of things. And one of the biggest intangible benefits has been the direct connection to our tenant community, not as a contracted employee of a for-profit organization but a fellow employee of a nonprofit working towards social change.
This transition has also allowed us to add value to TSNE as an organization by overseeing internal administrative and office management duties (as well as internal fit outs, space planning, etc.) that our background in property and facilities management has prepared us well for.
Bill Davidson, Langs
I have attached an RFP for a property manager. We tried having a hybrid model with a property manager doing some of the work and our organization fulfilling some of the functions of a property manager. There were benefits to this approach but we did not sustain it. We ended up hiring our own staff to help manage the property. Regardless you may find the RFP we used helpful.
From an Ask-NCN Discussion 1/21/14
Randi Taylor, MNP LLP, 1/21/14
We are assisting the Jerry Forbes Centre in planning for operations, including the development of a Property Management Plan. I have found examples of Property Management Agreements but have been unable to locate Property Management Plans for shared spaces. Does anyone have a Plan they would be willing to share with us or even a table of contents that outlines what is generally included in a Property Management Plan for a shared space? We appreciate any advice you are able to share.
Lara Jakubowski, Nonprofit Centers Network, 1/28/14
In answer to your question, we found an example from Children and Family Services in Charlotte in our Online Resource Center. Here’s the link. I hope this helps everyone else who inquired about property management plans as well.
As a reminder to everyone, if you have a great sample document that you would be willing to share, we’d love to add it to our Resource Center! Either email it to Katie Edwards at firstname.lastname@example.org or you can post it by logging in to the NCN Online Resource Center.
Please note that all resources are moderated and won’t appear right away.
Keep the questions coming!
From an Ask-NCN Discussion, 2/25/15
Saul Ettlin, Tides
Tides will be putting out an RFP this year for property management services and we wanted to hear from our colleagues in the field on what models people are using (full property management, hybrid, self managed) and what people feel are the advantages of a given model (cost, service level, expertise, something else).
Also, it would be great to hear any recommendations of firms that you feel really understand the ins and outs of nonprofit centers – especially the community building aspects.
Looking forward to hearing your insights. Thanks!
Dustin Barrington, HNS Life Center
Here at the Life Center we self manage.
The primary benefit that we derive from this approach is full control and more community engagement. We are more free to determine how we allocate our resources and we are able to save money by directly engaging volunteers in a lot of projects that we would otherwise be charged for by a service provider. We choose to contract out specialized functions (trades that require licensing, landscaping and snow removal, etc) and supplement with volunteer labor as skills, needs and availability line up.
This is a bit more complicated to manage, of course, but it is more economical, it creates a “high touch” feel that make people feel valued, it extends our reach into our local community and it creates a closer connection with more potential partners.
The primary challenge is keeping track of all the moving parts. Unless you have a person or team that is able to perform effectively in property management AND bridge to volunteer engagement, it is hard to keep the chaos at bay. Thick skin, a sense of adventure, a positive perspective and the ability to prioritize/balance urgency vs. importance are all important. A good sense of humor doesn’t hurt either.
As long as you feel like you can justify the expense and it helps you to fulfill your mission I think that outsourcing is a great option.
We get a lot of almost intangible benefits from self managing because it keeps us close to the ground and connected to our local community. Thoughts?
Judy Lind, Kukui Children’s Foundation
The best decision we ever made was to turn the responsibility of dealing with the financial and physical aspects of our center to a professional management company. They have the experience and contacts. That being said I have learned the following:
1. It’s not only the company, it’s the person who is managing the account, so it’s very important to get the right person who will be with you long term
2. Your property manager needs a clear message/guidelines about what they can do on their own and what needs consultation with you. For us, that means anything out of the ordinary in the budget or problems that occur
3. We get comprehensive monthly accounting and “issues” related reports that I can share with our board treasurer and book keeper. That also includes a check register. That way I know what’s going on in case there are other things I want to get involved with.
4.Our manager copies me on all messages to tenants, knows all of them, and comes to our annual holiday party.
She has nothing to do with the programmatic operations, screening new tenants, deciding on space renovations etc. I do all of that. But she does join in their orientation in terms of what she handles e.g. keys, parking, rent payments, etc.
Hope this helps. Feel free to contact me with follow up questions or, if you want, I can send you a copy of her report so you can see what you might expect from a management company.