Homeowners associations can be expensive to set up and operate. They become even more expensive when community managers hire property management companies to do the job. So the first thing HOAs can explore to keep costs low is to choose self-management. However, even self-managed HOAs can run into extensive man-hour requirements, budget problems, and high fees if special measures aren’t put in place to reduce the cost of operations. So, how do you accomplish this while still providing a high-quality experience to association members?
Volunteers staff self-managed HOAs. Some may work inside the office, while a select few may serve on the board that oversees the HOA. Determine how many workers you need to keep operations running smoothly and then recruit them. Try to target households with a homemaker, empty nest or retiree. You can also attract people by offering perks, such as a discount on HOA fees.
Your personal budget and that of most community members may not be the same. You might be surprised by how much — or how little — other residents may feel comfortable paying. Talk to as many residents as possible to get a feel for their preferences. This helps ensure the monthly fees are in line with community values. When cost-cutting becomes necessary, you may also decide to let community members chime in on what to prioritize and when.
When creating an HOA, you may have your own ideas of the perks you want to provide. Residents may also have strong opinions about what they want. Stick to options that are popular, cost-effective and that may require less maintenance or budget. Expand amenities and services on a schedule as more funds become available, but stick to what is most important until you find the right vendors or opportunities.
It is possible to cut costs and still add value. One way to do this is to add perks that reduce costs for everyone. For example, ordering products and services in bulk reduces costs. Are there any shared products or services that most homes use? For instance, you may find that you can charge slightly higher fees to account for landscaping for all properties. You might even invest in a community-managed garden that helps reduce grocery costs for everyone.
The more familiar you are with day-to-day and annual expenses, the better position you will be in to forecast expenses. This, in turn, makes it easier to determine the lowest HOA fees you need per household to cover expenses and still set aside enough to build the reserve fund. Try to leave a cushion. The last thing you want is to need to assess an additional fee to cover major projects, at the end of the year.
HOAs carry insurance plans like most other responsible organizations. The cost of this insurance can add up over time. In fact, it is the most expensive item for most HOAs. Sometimes, the cost may even begin to increase. Shop around for the best rates possible and negotiate with your insurance company. You can also ask what things you need to put in place to qualify for lower rates. Your insurance provider may choose to only disclose this information if you ask.
Choosing not to hire a property management company doesn’t mean you have to only choose from volunteers to staff the HOA. Budget for hiring individuals for administrative and professional tasks that you cannot fill in-house. In some cases, you may end up contracting this out. For instance, many HOAs contract with attorneys, accountants or even virtual assistants.
Negotiate With Vendors
When you hire contractors for specific tasks, allow them to compete with each other. Accept as many bids as is reasonable and choose the option that provides the best balance between cost and value. Try to avoid allowing community members to pigeon-hole you into choosing specific vendors, unless the vendor is qualified and plans to do the work for free or at a greatly reduced price. One example of this is pro bono legal services.
Choose Energy Efficiency
Shared amenities for the community will generate utility bills that the HOA needs to pay. You can keep these costs low by choosing energy-efficient building principles. This may dictate the side of the building you put windows on, the materials used in construction or the type of lighting used. Some fitness centers get even more creative by using some of the cardio machines to generate electricity. Others may have all lights turned off and on a sensor, so they only come on when the building is in use.
If there are items that may prolong the lifespan of other aspects of the property, complete them as soon as possible. For instance, cleaning the gutters and resealing driveways may cost money today, but they can save you money tomorrow. Staying on top of maintenance also helps ensure amenities remain in good working order and property values remain high.
Technology can make your life much easier as an HOA manager. You can use association management software to manage fee collections, communications and other aspects of HOA management. HOA managers often also use technology to set up controlled access to shared amenities. Common options include keypads or swipe cards. Technology reduces costs and cuts down on the need for extra workers.
If you’re looking for HOA software that can achieve this and more, consider PayHOA. We feel so confident that you’ll love the product that we’re allowing HOA managers to try it free for 30 days, no credit card needed, no obligation.