If your community has less than 200 units, chances are that your HOA is self-managed. It makes sense. Smaller homeowners associations do not have the funding or need to be professionally managed by a full property management company. If you self-manage a community association, here is how to do it.
Tips to Self-Manage a Community Association
If you want to self-manage a community association, it’s going to take a great deal of effort on your part. It’s not as easy as professionals make it seem. In fact, there are a lot of moving parts and considerations you must take into account. Follow these tips to successfully self-manage an HOA:
1. Diligently Keep Records of Financial Transactions
Keeping track of your HOA finances is an important part of self-managing an HOA. A community association is, first and foremost, a business organization. It earns revenues and incurs expenses. And, like any good business, your HOA must diligently record all financial transactions. This way, you can ensure accurate reporting and keep track of where your money is going. Moreover, you can determine whether your HOA is in dire financial strain.
2. Assemble a Reliable Team
An HOA board of directors is composed of volunteers from members of the community. Typically, that means having somewhat inexperienced people leading the association. When building your team, it’s best to recruit residents with strengths in leadership, management, and planning. While just about anyone in your community can run for a position on the board, it’s the members who ultimately elect leaders into office. Consider experience and qualifications when voting.
3. Rely on Professional Advice
Wouldn’t it be great if there was a way you could reap the benefits of being a self-managed community while still having the support of professional staff in your corner? Luckily, there is.
It is extremely beneficial to work with support staff, such as a law firm or financial management company. The board of directors maintains all the decision-making power and does not have to go through a property manager to accomplish goals. But, at the same time, the board can utilize the technology and expertise of a property management company to relieve some of the administrative responsibilities.
One major benefit of choosing an HOA support team is cost. Hiring a financial management company instead of a full property management company can save your community association more than 50%. You can then reinvest these savings into other projects.
Financial management companies use the same technology as full property managers. Even at half the cost, some support companies can still provide services such as e-statements, online payments, and mobile apps that allow for more communication and transparency between the board and community members.
4. Fulfill Board Duties
When you self-manage your HOA, it is essential to do what an effective board would do. This means fulfilling board duties, such as holding board meetings, creating and enforcing policies, and preparing a budget. A homeowners association isn’t an excuse to meet with your neighbors every weekend to decide how to improve your community pool over drinks. It’s a business organization that collects HOA dues from residents and uses those dues to maintain the community.
Benefits of a Self-Managed HOA
The most obvious benefit of having a self-managed HOA is that homeowners maintain complete control over all association decisions. They manage all the finances, schedule maintenance repairs, choose the contractors and work on projects they deem necessary for their community.
A property management company may try to manage a unique community with a cookie-cutter approach, but no two communities are the same. The people who know what a community needs are the people within that community, so who better to manage it?
Furthermore, property management companies are expensive. Staying on a budget is extremely important for smaller communities. They have limited funds to work with, so in order to remain effective, they must be efficient with money. By not hiring a management company, they can save thousands — if not tens of thousands — of dollars every year. That’s money they can invest back into the community towards maintenance repairs or new projects.
Other than budgeting issues, there’s also the issue of schedules. Community problems don’t always fit into the 9-to-5 work schedule. In some cases, it can be hard to get in touch with a property manager when you really need them. After all, you are not their only client. Phone call upon phone call go unanswered and problems go without solutions. In a self-managed community, the residents oversee solving problems. There are no middlemen to get in the way. You can quickly and decisively take action the moment an issue arises.
Disadvantages of a Self-Managed HOA
The downside of being a self-managed community association is that you are reliant on the skills of untrained volunteers. When it comes to something as complicated as HOA finances, that could potentially be a problem. Volunteers also rarely have experience with or knowledge of HOA laws, which could make your HOA incompliant. Law violations are no joke and can lead to serious consequences.
Furthermore, when you self-manage a community association, timing is an issue. Most board members have full-time jobs outside of the HOA and families to take care of. With so many things that can take up your time, community affairs usually take a backseat. For other board members, the HOA is simply not a priority. With this indifferent attitude, an HOA will suffer.
The Case for Financial Management Companies
Without a professional property manager, that leaves a lot of responsibility on the busy board of directors. Not everyone has time to take on the responsibility that is maintaining a successful HOA. Specifically, financial management can be an everyday job to keep track of multiple accounts, write checks, collect dues, balance the books, and maintain all financial records. In addition to the time it takes, managing the finances of an HOA, even a small one, can require some accounting expertise.
Property managers have contacts. They know who to talk to in order to get things done. They have worked with all the contractors in the area, know association regulations and laws, and have lawyers and accountants for collections issues. Beyond that, they have special knowledge about HOA management that volunteer board members might not understand.
With the various laws and regulations regarding HOA accounting, it could be beneficial to have an expert on your side. Hiring a company, not to act as a property manager, but as a support system for your community association, can be very helpful to ensure that finances are properly maintained, organized, and reported while maintaining managerial control.
The Answer to Self-Management Problems
While you can self-manage a community association with great success, the result is, more often than not, the opposite. The solution to this problem is simple: Get support where it counts.
Your community has been working with contractors since it was built. You don’t need to pay a property manager to make a phone call when the sidewalks get dirty. In fact, by not using a property manager, your board of directors won’t have to rely on the manager’s word that their contractor is the best. They will be able to do their own research, find the best vendor, and maybe even save some money. Finances, on the other hand, require some expertise.
By hiring support staff in select areas of need, you can have peace of mind knowing that even the most complicated aspects of HOA management are being handled properly by trained professionals. If you find yourself in the same situation, don’t hesitate to shoot us a message.
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