How to lower HOA fees and make residents happy? That’s a question many HOA board directors try to answer as they step into the position. But first, why are HOA fees so high in the first place? That’s a good approach to look for ways to reduce HOA dues. When HOA fees are too high, it’s perhaps time to take steps to reduce HOA fees. Are HOA fees negotiable for the budget you have, and do HOA fees ever go down in your community? Hopefully, this guide will help you to cut down on fees without sacrificing the quality of service you provide.
How to Lower HOA Fees? Know Where to Trim The Budget
Homeowners associations exist because of and for the residents. Because of this, one of the main concerns of an HOA is on how to lower HOA fees. Most associations try to do this by reducing expenses as much as they can, without skimping on the quality of service from vendors. These cost savings can be passed down to the members in the form of lower HOA dues. With prices going up each year, keeping expenses under control can be a massive challenge.
What Happens When HOA Fees Are Too High
An association that can work with a huge budget can only be good for the community, right? Not when this budget is paid for by overly high HOA fees. When homeowners pay their HOA dues, that’s money out of their pocket. Since it’s a recurring payment, that’s a huge factor for prospective homebuyers.
A high HOA fee can negatively affect the rate that people buy the properties or condos in a managed community. A prospective owner may have fallen in love with your immaculately maintained condo. But when the HOA dues are way out of reach, they could decide to settle down elsewhere.
Existing homeowners or condo residents are even more impacted by high HOA fees. That’s money out of their annual budget that they have no direct say over its use. And when they do decide to move out, high HOA fees can again get in the way. When HOA dues are way too steep, future buyers are deterred from buying a home in that community. That’s not a good situation to be in as someone selling.
How To Lower HOA Fees By Reducing Expenses?
A homeowners’ association may be a non-profit organization for the most part. But just like any other organization, they should look into ways to reduce expenses as well. Slimming down the HOA expenses is a great way to trim the budget without abandoning important projects. When you have a smaller budget, it can lead to lower HOA fees next year.
If you’re able to trim down the expenses well enough, it may even result in a healthier reserve fund, too. Healthy reserves also mean less chance of a special assessment later on. That’s another thing that board members will be happy about.
Review Your Vendor Contracts
A HOA will have contracts with service providers, and they need them to maintain the community. That does not mean you have to stick to the same agreement, not if it’s costing the HOA a lot of money. Take the time to review those contracts, especially if they allow for annual rate hikes. Sometimes, you’ll just need to renegotiate to get more favorable rates.
Many HOAs can get into a rut when it comes to their vendors and insurance companies. Although the task can seem time-consuming and tedious, it is important to contact your vendors each year to make sure you are getting the best prices. This can be done with insurance as well. Negotiations can be made on a yearly basis to lower your premium or keep it the same.
Even if negotiations fail, you still have a recourse. You can bid out to other vendors, and secure a lower monthly cost that way.
Many HOAs spend a large portion of their yearly budget in maintaining full-time employees that complete tasks that could be done at a lower cost with vendors. Paying for extra insurance and salaries can cost more than the position is worth. Many of these jobs can be outsourced to a local vendor that can complete the task for a fraction of the cost of employing an inside person to do the job.
Know When to Invest More Money
Saving money sometimes means spending money. This is especially true when it comes to construction and maintenance. It is important, when embarking on a large repair or new addition, to ensure the quality of the building by paying a little extra. This extra money may put a bigger hole in your pocket in the short term, but will save both time and money by avoiding tedious unnecessary repairs down the road.
Stay On Top of Maintenance
It is important to be vigilant with regards to the maintenance of the property. Small leaks are much easier to fix than big leaks, and a small amount of mold is cheaper to get rid of than rotting infrastructure. Regular inspections should be scheduled to be sure that everything on the property is in good condition, and repairs should be dealt with in a timely fashion.
Maintain Detailed and Diligent Budgeting
A lot of money can be saved on a yearly basis by simply keeping meticulous records of all finances. If a budget is not under control, HOAs can find themselves wondering where all of the money went, and a lot of income can be wasted. Keeping detailed records and staying on top of your budget on a monthly and yearly basis will ensure that your HOA knows exactly where each dollar goes throughout the year. This will make it easier to find ways of cutting back and using funds more wisely.
How To Lower HOA Fees? Keep An Eye On Your Finances
The biggest asset a board can have when trying to cut costs is a strong commitment to pay close attention year by year to the HOAs finances and yearly budget. Associations can stretch their budget far with the right financial management processes. If your association needs more ideas on how to lower HOA fees, we’re here to help. Give us a call today and find out how you can save your residents from steep HOA dues.
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