Washington area residents have a love-hate relationship with homeowners associations (HOAs): Some appreciate them for keeping up home values; others resent them for governing what can be done to homes and yards. Tab Ratra and Zahed Ali have found a sweet spot in the middle with a business that conducts inspections for the associations and takes some of the emotion out of the process.
Tab and Zahed grew up in the Washington area and attended college locally. They met when they were working for an insurance marketing firm, where they used to toss around business ideas together, and they stayed in touch after Tab went back into the mortgage business. But Tab was restless. "The money was good, but I just felt like I didn't want to be defined as a loan officer for the rest of my life," he says.
In 2005, Tab mentioned to Zahed that he needed someone to conduct inspections of a neighborhood where he owned a rental house and sat on the association board. "I'm always looking for something new to do," Zahed recalls. "I said, 'You know what, I could do your inspections for you; it doesn't seem that complicated.' " The friends realized that other communities could use the service, and the idea for a new business was born. "It was a very niche market that I thought you could take advantage of," Zahed says.
The partners began to determine how to conduct impartial inspections: what their methodology would be, what technology they would use. "This is something that as far as we know has never been done before," Zahed says. They learned by trial and error until early 2007, when they took Community Inspection Services full time. Tab is in charge of the inspections; Zahed, the technology and data. Startup costs for advertising, direct mail and equipment were about $17,000.
Tab spends about three days a week in the field, walking each entire neighborhood. He carries a copy of the association guidelines, a tape recorder or handheld device and a camera to take photos of possible violations, though he says: "We call them 'findings.' We don't even want to use the word 'violation.' " The work calls for consistency and good judgment, he says, because what might be an infraction is unclear. For example, some communities prohibit plastic pots in front yards, but nowadays there are composite pots that look like stone.
Tab and his two assistants wear work vests and "Save My HOA" hats, so residents won't worry that their homes are being cased. Reactions are varied: "There are those who will commend you -- 'Thank you; you're doing a good job' -- and there are those who say, 'Why is this necessary?' " he says.
Tab uploads the data to Zahed, who works out of his home office in Winchester. Zahed, who has two assistants, then prepares a report for the association. It is up to the associations to decide what findings rise to the level of violations.
In 2007, the company made about $175,000; in 2008, $250,000; and this year, Tab and Zahed are projecting they'll bring in $365,000. Their net profit is 12 to 15 percent. They serve 42 communities and want to reach 100.
Community Inspection Services conducts covenant checks from April through November. Tab and Zahed spend the winter searching for new customers, which they say is the toughest part. "This is not something where people wake up and clamor, 'I want my community inspected,' " Tab says.
But they feel good about what they have built. "We take pride in it," Zahed says. "We're kind of pioneers in homeowner community inspections."