Typically, an HOA saves money by cutting back on all expenses, but this is not always practical. It is essential to look at the HOA’s budget, identify items where the association is overspending, and adopt strategies to ensure financial health. Saving money is essential in current times when inflation and costs seem to be rapidly rising, but there is a right way to do it.
Top Ways an HOA Saves Money
Homeowners associations operate on a budget. Sometimes, though, costs can become unmanageable, leading the HOA board to cut back. Far too many boards make the mistake of cutting corners without consideration. This will ultimately cause the HOA to suffer.
For instance, significantly cutting back on maintenance costs would not make sense — and may even be downright irresponsible. Maintenance is vital to running a community that would have detrimental effects when eliminated. Instead of slashing the most expensive items or blindly cutting costs, a competent board would find practical solutions.
Here are realistic ways an HOA saves money.
1. Go Digital
Perhaps one of the simplest yet most effective HOA money saving tips is to go digital. Many associations still send out traditional newsletters and collect dues through check payments. An HOA can save money on paper and delivery costs by going digital.
A mobile app or HOA website makes it easier to connect with homeowners and disseminate important information. Moreover, a homeowner portal will allow for easy account access and dues payment.
2. Look Into Your Cable TV Subscription
Some HOAs have good deals with cable companies, especially if this is included in the agreement when a homeowner buys a home in that specific HOA. Some cable TV companies even give significant discounts if they service an entire neighbor than on a per household basis.
On the other hand, if your cable TV contract doesn’t seem to be worth it anymore, and the HOA is just offering this as a benefit, then it may be time to revisit this. It may cost the HOA more money, which is unnecessary because some households prefer online streaming services. It can free up money for the HOA that may be better saved or spent elsewhere.
3. Renegotiate Vendor Contracts
How can an HOA cut costs? One surefire way is to evaluate and renegotiate vendor contracts. An HOA may be overspending on specific services, and cutting back on those costs can save an association a pretty penny.
The best time to review and renegotiate vendor contracts is when they are nearing expiry. Of course, doing this mid-contract is also a good idea so the board can prepare itself for negotiations.
A good tactic is to offer to extend the contract for a lower rate, which is particularly effective if an HOA has had a long working relationship with the vendor. If a vendor refuses to renegotiate, an HOA shouldn’t be afraid to shop around.
More often than not, HOAs find that a large chunk of their budget goes to waste on landscaping services. Some HOAs pay for weekly lawn maintenance, which can stack up costs, especially when full-service landscaping isn’t necessary year-round. An HOA should consider cutting back on services in the months when growth is slow or minimal.
4. Cut Back on Social Events
If you want to save money for your HOA, consider dialing down on the social events. While social or community events do help boost morale and camaraderie, an HOA doesn’t have to have one every month. Additionally, events don’t always have to be grand or showstopping. Plenty of events can be simple and accomplish the same objective.
5. Reevaluate Utilities and Switch to Energy-Saving Options
How can an HOA save money? An HOA can do this by assessing its energy consumption through an audit. Local utility companies may offer this service, providing associations with a comprehensive report on their usage. From this, an HOA can identify areas for potential energy savings.
A top recommendation nowadays is to switch to LED lighting in common areas and install automated systems. Considering LED uses up to 90% less energy than traditional bulbs, an HOA stands to save quite an amount through the simple act of switching its bulbs.
In addition to energy-efficient lighting, an HOA can save energy and money on its HVAC system. Programmable thermostats that adjust temperature and turn the power on/off automatically can reduce waste and increase efficiency.
6. Learn to Prioritize Projects
When trimming your HOA budget, learn to prioritize projects. Some projects are essential to the HOA’s operations, while others may be delayed for a year or two. Urgent matters such as roof leaks should be promptly addressed, especially during the rainy season. In cases of limited funds, consider rescheduling non-urgent renovation projects.
7. Implement Routine Maintenance
Another way an HOA saves money is through routine maintenance. Spending money to save money may sound counterintuitive, but maintenance is a cost that shouldn’t be neglected. Routine maintenance can identify potential problems, allowing the board to devise a solution before the issue gets out of hand or becomes too expensive to repair.
8. Go Solar
Solar energy is the future, so HOAs would be wise to invest in it early on. It will require HOAs to spend money on the installation and the system. However, it will pay for itself when it’s up and running, so think long-term.
Some HOA boards may also be worried about the impact of solar panels on the community’s aesthetics. Fortunately, solar panels and systems come in various designs and forms nowadays. As such, finding something that blends seamlessly with the community’s personality is easier.
9. Encourage Resident Involvement
How can a homeowners association save money? Encourage residents to participate and volunteer.
An HOA that relies on many willing volunteers can save money on select services. Even if residents don’t have HOA-related expertise, they can still contribute through other means. For instance, residents can serve on committees and do their part to ensure the HOA runs smoothly.
10. Raise Fees
Most HOAs seek money-saving tips to avoid raising fees. Raising HOA fees is sometimes the only way to solve a budget issue, especially if cutting costs isn’t an option or if no cost is left to cut.
This decision will understandably encounter some pushback from homeowners, but a competent board knows that transparency is the key to a harmonious community. Let homeowners know the reason behind the increase and how dues affect the association. Moreover, if the HOA can swing it, consider raising fees slowly and in small increments instead of simultaneously pushing for a large sum.
The Bottom Line
An HOA saves money in several ways, as evidenced by the tips above. However, an HOA board shouldn’t implement all of these tips without first evaluating the condition of its association. Some of these tips may not be applicable, leading to more headaches than relief. When in doubt, an HOA management company can help ease your worries.
Clark Simson Miller provides expert HOA management services, including help with budgeting and accounting. Call us today at 865.315.7505 or contact us online to learn more!
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