Managing a condominium property requires expertise, time, and resources. Condominium property management companies offer a range of services to ensure the smooth operation of these communities. However, many condo owners and boards are often unsure about how much these services cost and most importantly how this cost is calculated. In this article, we will demystify the factors that influence the pricing of condominium management services in Toronto and the Greater Toronto Area (GTA).
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It is important to note that the cost of hiring a condominium property management company varies depending on the size and type of community. For instance, the management fees for a high-rise building with 500 units will differ significantly from a townhouse complex with only 12 units. Typically, the more units in a condo, the more reasonable and efficient the cost of management per door becomes.
Condominium management companies structure their pricing based on several major costs. These costs include labour costs, benefits for employees, direct costs for head office support, emergency backup, vacation backup, site management supervision, and legal and insurance expenses. By understanding these cost factors, condo communities can better assess the pricing structure proposed by management companies.
To obtain accurate pricing for condominium management services, it is recommended to write a clear and concise RFP. The RFP should outline the number of hours required for onsite management and the desired management layout (e.g., full-time manager and full-time administrator). By clearly specifying these requirements, condo associations can compare different proposals on an apples-to-apples basis.
When evaluating different proposals, it is essential to request a detailed breakdown of the condominium management fees. This breakdown allows for a more accurate comparison of the services offered by different companies. It enables condo associations to better understand how their budget is being allocated between labor costs, office support, emergency response, and other expenses.
A significant portion, around 65-75%, of the total cost of management is usually attributed to direct site labour costs. For example, in a typical high-rise condo corporation with 350-400 units, the labour cost would include a site manager and a site administrator. As per the industry standards, a site manager with a General License (OLCM) would often earn a salary ranging from $70,000 to $85,000 depending on her experience. On the other hand, a site administrator with a limited license would earn a salary ranging from $45,000 to $55,000. Benefits to these employees would add another 16,000-25,000. Head Office Additional costs for accounting, office support, emergency response, and vacation backup would amount to around $30,000 to $40,000.
It is important to note that condominium management companies operate as businesses, and without a profit, they cannot sustain their operations or ensure stability. Hence, it is common for management companies to add a profit margin to cover their business expenses. This profit margin can range from 0% to 10% of the total costs, which translates to approximately $10,000 to $20,000.
In some cases, a management company that is eager to secure new business may agree to provide a proposal without any profit for the first two or three years, with the expectation that profitability will be achieved in the future.
When it comes to the cost of condominium property management in Toronto and the GTA, there are several factors to consider. The size and type of the community, as well as labour costs, play significant roles in determining the pricing. To ensure an accurate assessment, it is crucial to write a clear RFP and request a detailed breakdown of costs in proposals. Ultimately, investing in a qualified and experienced site manager is crucial for the success of any condominium community, as their expertise can result in substantial cost savings and preventive maintenance measures.