Is HOA Self Management Right For You?
Depending on the complexity of your HOA, self management may be the best option to collect and manage dues and fees, budget finances, hire and pay vendors, track violations, and perform other tasks to maintain your community.
Homeowners associations (HOAs) for single-family homes, condominiums, townhouses, or other types of planned communities typically must choose one of two property management styles—either hiring a third-party company or self-managing with volunteers from within the community.
Making a Management Decision
HOA members may find themselves weighing the benefits of hiring a property manager versus self-managing their organization. Or they may be considering terminating their contract with their current manager and wondering, "Is HOA self management a better option for us?"
Either way, a neighborhood must consider what management style is best. Usually this comes down to cost versus the complexity of the community's management needs.
Does your HOA manage a large number of units and amenities, or have other complex needs that require a full-time dedicated management group? If so, the sizable cost of hiring a third-party firm may be necessary.
Yet, some HOAs may hire outside property managers only to find out it's not the right fit, and that it creates more problems than it solves. In most cases, if an HOA can self-manage its properties, the savings and benefits are worth the time and effort. HOA accounting software simplifies and streamlines many management practices for an affordable price, which enables almost any community to consider a self-managed approach.
Is a Third-Party Property Manager a Good Investment?
HOAs may hire an outside property manager on the assumption that outsourcing the duties of collections, violations, and so forth will translate to more efficient operations, timelier communications, and more overall value. However, hiring a property manager isn't a cure-all.
In most cases, the cost of a third-party manager far outweighs the value they stand to provide. Third-party management companies can cost tens of thousands of dollars in annual fees and other expenses.
For instance, if an HOA wants to terminate their property manager's contract early, they may be charged an early termination fee. A third-party company can also be slow to relinquish community data, like banking information, bookkeeping records, and other important documents.
Thus, it's important to decide if a third-party property manager is worth the community's investment. If not, self-management is an option worth considering.
A quick checklist to see if self-management is right for you:
My board of directors has capable volunteers willing to take on a management role.
Homeowners see the value in self-management.
My community is small- or medium-sized, and its amenities can be managed by neighborhood members.
My HOA is capable of maintaining compliance without hiring a property manager.
My community places value on strict budgeting and lowering dues for homeowners.
My community is comfortable using homegrown ingenuity to solve management challenges.
HOA Self Management Responsibilities
There are certain HOA management tasks that volunteers must perform to keep their communities thriving. As opposed to hiring a full-time management group, HOA self management often requires volunteers to balance these duties with other responsibilities in their daily lives.
Collecting dues and fees: This includes tracking and collecting monthly members' dues and other fees, then depositing the money in the association's account. Dues collection also involves sending late notices to homeowners who are past-due and communicating the board's expectations and delinquency policies.
Financial management: The HOA board's biggest responsibility lies in the overall management of the community's finances. A volunteer treasurer usually oversees day-to-day bookkeeping needs, tracking revenue and expenses, and issuing checks to vendors, among other financial duties. The treasurer usually presents financial summaries and reports during board meetings.
Soliciting and managing vendors: A community's amenities and common areas will likely require regular maintenance and upgrades. Community necessities like landscaping and security may be fulfilled by third-party vendors. The HOA board solicits bids from potential vendors and manages these contracts and payments.
Other management duties: Generally, HOA self management is all about maintaining the value of a neighborhood for its residents. Common operational goals include upkeep of shared areas and architecture, handling maintenance requests, monitoring and reporting community violations, and acting as a contact point between the board, vendors, and homeowners.
HOA Self Management Benefits
HOAs who effectively self-manage enjoy significant benefits. Most immediately, HOA self management keeps more money in your HOA's bank account. Third-party managers charge annual fees based on the number of units in your community, on top of numerous other costs. These fees can add up, potentially costing the HOA tens of thousands of dollars each year.
The savings afforded by self-managing translates to lower dues for homeowners, as well as a bigger budget portion devoted to maintaining and upgrading the community's properties and amenities.
HOA self management can be more efficient. The right volunteer managers will almost always find more direct and innovative solutions. When volunteers take ownership of their role in the HOA, composing a proactive board that operates with discipline, organization, and timeliness, the community will prosper.
HOA self management encourages community-specific solutions. Self-managed HOA boards have more direct control over how rules are enforce and how homeowners' issues are addressed. Volunteers are more likely to make decisions in the community's best interest and are more equipped to solve problems. A third-party group, on the other hand, knows little about the community and makes decisions from across the country.
Volunteers can flourish with the right tools. Self-managing your HOA doesn't mean volunteers perform their duties in a vacuum. Volunteers may not bring significant managerial experience to their role, but they are usually plenty capable of serving their communities when given tools that make their job easier. HOA management software can help streamline tasks like accounting, communication, and record keeping.
Communities who forego third-party management may still contract out select duties. For instance, many self-managed HOAs retain legal counsel to help with compliance and liability issues. Some may hire an accountant to audit their finances. Board meetings are a good way to coordinate the goals and directives of the HOA.
HOA Self Management Pitfalls
In complex communities with several units and amenities, volunteers may simply lack the time to juggle their HOA commitments with their other responsibilities. In this case, outsourcing community management may make sense. However, not all self-management pain points will be solved by hiring a third-party property manager.
Half the battle lies in simply recognizing common self-management issues and making a plan to address them. Some common self-management pitfalls include:
- Trouble keeping consistent paper records
- Inefficient dues collection with paper checks
- Using too many spreadsheets or other record keeping tools and apps
- Accounting software isn't geared to an HOA's unique needs
- Difficulty communicating consistently with homeowners
- Balancing volunteer schedules.
These issues don't stem from an inherent flaw in an HOA self management approach. Rather, they are caused by how an HOA is self-managed. Giving volunteers the right tools to stay organize will solve most of these problems.
HOA Self Management Tools
For a community managed by its own residents, having the right tools at your disposal will build confidence and success. When these resources are lacking or inefficient, volunteers are more prone to burnout and more prone to making mistakes.
Educational Tools to Grow
For HOA treasurers and other volunteers to grow in their roles and pick up new skills, there are plenty of educational resources to help grow your experience. For instance, some HOA trade journals offer practical advice, industry news, and learning opportunities like classes, workshops, and educational content.
A few places to start are:
- Community Associations Institute (CAI): A national organization that inspires professionalism, leadership, and citizenship through seminars, online resources, and research on the latest best practices in HOA self management.
- Educational Community for HOA Homeowners (ECHO): For California HOAs, ECHO helps communities with finances, legal issues, insurance, maintenance, and management.
- Institute of Real Estate Management (IREM): This international institute provides education, certifications, and networking opportunities to help property manages meet their unique challenges.
These organizations may have chapters or branches in your area. Be sure to look for other local networks and publications, as well.
Software Tools to Thrive
The right HOA management software will allow volunteers to be more affective and streamline their operations. Software designed for HOAs is more likely to offer the functionality homeowners associations need in one holistic solution.
Some features an HOA management platform may include are:
- Digital, customizable dues collection and tracking
- Automated accounting for tracking income and expenses
- A member hub to submit and track payments, view community calendars and alerts, submit requests, and more
- Tracking violation enforcement
- Managing maintenance for units and shared spaces
- Data storage and reporting
- Centralized management hub
- Communication tools like mass texts, email, voicemail, and physical mail capabilities
- Management for multiple properties
- Remote access for volunteers
The right HOA management software will help volunteers be more successful and timely in their roles, leading to better outcomes for all residents. The best software will help achieve all your management needs using a single platform at an affordable cost. Top-quality software companies often offer a 30-day free trial to help you make an informed decision for your HOA.
As an HOA manager, PayHOA offers you an all-in-one software platform to replace all those fragmented tools so accounting, communications, payments, documents, violations, and owner requests can all live in one place. PayHOA is the single portal where you can connect directly with the needs of your homeowners. Your residents can use PayHOA to make online payments, view their payment history and important documents, submit requests, and access important updates, streamlining management for your whole community. Try a 30-day free trial today or contact us at firstname.lastname@example.org to learn more.