HDB better than condo, in the social media age

In a recent post on Instagram, social media influencer Xiaxue highlighted the ‘derelict’ state of her HDB common areas in Hougang. Lo and behold!

Cover pic and above pic from Xiaxue instagram account

Aljunied-Hougang Town Council (AHTC) wasted no time in addressing her concerns. Aside from explaining the situation online, AHTC also engaged workers the following day to fix the chipped cement surfaces and painted over the ceiling. https://www.asiaone.com/singapore/xiaxue-raises-concerns-about-destitute-state-her-hougang-hdb-block-town-council-responds

Pound for pound, in a Condo setting the Managing agent would have to …

  1. Get MCST council approval
  2. Mobilise contractors to do minor repairs
  3. Supervise minor works and ensure completion
  4. Release official statement to all residents

All within 24 hours.

Here’s the extra points. AHTC ended their note with “The town council recognises that there is always room for improvement, and welcomes feedback from residents.” My idol MA. Such eagerness and endearing level of service reminds me of SG in the 1980s or Japan today.

Not only that, in this instance the Public model trumps the Private model in both cost and efficiency. An extremely rare sighting for me.

Evaluation of Property Managing Agent (MA) performance

Recently came across a detailed technical research on Managing Agents, written and published by Yung Yau and Daniel Chi. Skip the models and calculations if they don’t speak to you.

A few note-worthy excerpts:

“relationship between the board of directors and CEO is vulnerable to the classical principal-agent problems because of the diverse incentives of the two parties. The same also occurs in the case of MOH (Multi-owned homes a.k.a Strata) management. It is very common that PMAs (Property managing agents) act for their own benefits at the homeowners’ expense. Opportunistic PMAs may embezzle fund from the common financial pool (such as sinking fund and maintenance reserve) to their own pockets or make procurement decisions on their own instead of the homeowners. These malpractices of the PMAs have been widely reported in different parts of the world [29303132].

https://www.landlords.co.nz/article/976511044/former-acc-property-manager-pleads-guilty-to-corruption-charges

https://www.thestandard.com.hk/breaking-news/section/3/104629/Ex-manager-charged-with-bribery-over-Garden-Vista-renovations

https://www.domain.com.au/news/csi-corrupt-strata-investigations-20111202-1o9nd/

“Performance measurement and benchmarking are essential elements of strategic management. While there has been a large body of literature on benchmarking in the field of business management, little attention has been paid to benchmarking of housing or property management performance… various key performance indicators were employed or suggested in the literature for measuring or evaluating a PMA’s performance. These performance indicators or measures can be broadly classified into four types, namely input-based measures, output-based measures, process-based measures, and hybrid measures.”

https://www.intechopen.com/books/strategic-management-a-dynamic-view/evaluation-of-property-management-agent-performance-a-novel-empirical-model

Condo resident asks MA for transparency on facebook

A resident took to facebook group MCST and posted the following.

To which a few others replied…

I assume every seven years the residents re-accumulate the equivalent of 60% of their existing Sinking fund. Sounds like one of the following.

1. The condo has very few things to maintain, except for painting. 2. Condo is running out of funds after the paint job. (see previous post)

If only more residents start attending AGMs/ EOGMs, asking the right questions (“not the second parking lot”). Then will the prudent decisions be made.

As to Fand’s question about how an AGM can be conducted without sufficient owners. A quick reference to BCA will show you the criterion. See screenshot below.

Is your condo running out of funds? (part 2)

“Yah lar,” cries my friend over kopi. He laments the existing playground and landscaping are not properly maintained. Some parts of the rubber-floor lining had dislodged due to wear and tear. Nothing done. The greenery used to be tended by two gardeners, now only one.

Related posts: “How much for your green?”

But as he showed me the financial reports, I pointed out the total Strata funds are plentiful and robust. That is, the total of Sinking funds (SF) and Managing funds (MF).

How did I know? Well, let me show you a real-life example of one condo running out of funds. An almost twenty year old condo development in Upper Bukit Timah, I call “PanCit”. A relative had bought a unit and appointed me to take charge of it.

PanCit awakening from ten years of grandiose

In 2018, PanCit finally voted to raise their SF from $15 per share value to $25, and to increase MF from $72 per share value to $78. Managing agent had highlighted the operating deficit over the past two years. This resulted in drawing down from the existing MF. The SF had approximately $2.1 million(M). Taken together, total funds was $2.56M.

To put in perspective, this condo with about 350 units comprises of three blocks. Since TOP, the maintenance fees were largely unchanged. Annual contributions amounted to $1.16M for MF, and $0.24M for SF. Over the past 17 years, total collections are as shown below.

 Managing Funds (MF)Sinking Funds (SF)
Annual $1,160,000$240,000
17 years $19,720,000$4,080,000
Current $460,000$2,100,000
PanCit’s funds as of end year 2018

Most of the building, equipment and facilities were estimated to have a lifespan of 10-20 years. MA calculated weighted average of 16 years and projected $750,000 annual provision. In total that’s $12,000,000 replacement costs. It is already the 17th year. Assume all monies accumulated in SF since have been used for replacement. There is still a shortfall of $8,000,000.

MF isn’t doing too well either. The operating deficit raised earlier meant whatever was collected was spent, and more. No wonder both MF and SF were raised, albeit insignificantly, amounting to less than $260,000 annually.

How do we raise $8,000,000? Oh dear, now it’s clear. We could not afford those gardens, pools, guards, cleaners and fresh coat of paint for the past ten years. Not possible, unless we triple the recent increments from $260,000 to $780,000, ten years ago. We thought we could have our cake and eat it.

Related posts: “Sinking funds tell a tale of two cities”

Source: Jock McTavish on Quora