The financial outlook for real estate is borderline apocalyptic. Revenue is capped or down.
You're putting your co-op/condo (and board) at risk
I've been on co-op boards in New York City for the last decade. It's a nonstop game of looking for risks and ways to mitigate them. And yet, the number one tool we have to prevent potential issues is the one that almost no co-op ever thinks about - it's the technology that runs the building and monitors every system in it.
If you have no idea what's happening in your building, you don't know when problems arise. And that's a critical problem because most buildings today are running on technology from the 1960s. So when issues arise, people don't know about it, let alone in seconds or minutes. They often don't know about it for hours or days, and the damage is already done by then.
I'll give you a couple of examples. Right now, in about a third of New York City co-op buildings, the mixing valve device is broken. When that device breaks, 170 or 180-degree water is often sent to tenants. In horrific cases, somebody will put their child in a shower and turn on the water, and that child will get burned with scalding hot water.
Let me give you another example. When the heating system goes down on a cold February day, we assume management will know about it instantly, right? But that's not actually what's happening in most buildings. You don't get an alert at all. You only know your heat is out eight hours later when the building's already freezing.
Then you have to call your service company. They take hours to get there and hours to fix it. You're a day behind fixing it. People could potentially be harmed or die because their apartments are freezing for a day. What about leaks? Leaks can be incredibly destructive, not only to the building and apartments but to the critical systems like the boiler.
About 30% of a building's energy usage might come from a single return line leak. When that water goes out, you have to pay for a ton of new water to replace it, and that new water's ice cold. You might have to heat it from 30 or 40 degrees up to 212 degrees. You're going from super hot water to super cold water, and it's stretching the metal boiler.
Eventually, that boiler will break, which can cost millions of dollars. But more often than not, that leak happens underground, and nobody ever sees it or knows it's happening. The good news is that modern smart controls can monitor and tell us in seconds when things are going wrong and how to fix them.
That mixing valve that breaks and starts sending scalding hot water? We'll know about that in seconds and can fix it before any child is burned. When the heat goes out on a cold February day, not only will the building management know about it in seconds, but your service company can too, and they can respond and fix it before anybody even knows the heat ever went out.
With smart controls, we can detect a leak even if we can't see it, which means we can fix it before it destroys the building, apartments, or the building's budget. The most effective tool for limiting risk and mitigating potential harm, not only to shareholders and a building but to the board itself, is information.
Having the correct information in real-time completely changes how you manage a building. And that's really what excellent co-op management is all about. It's about implementing not only procedures. But modern tools to keep shareholders, the building, and the board ultimately safe.