Is your association considering the switch to a self managed HOA? Are you interested in HOA management software but hesitant to make the transition?
For board members who have a familiar system in place and worry about the time and effort of taking on more community responsibilities, weighing the challenges and benefits of self management makes sense.
Yet, self management may be more easily achievable than you think. In reality, the right HOA management software can drastically boost efficiency, centralize and streamline your community operations from top to bottom, and save your association tens of thousands of dollars per year.
Consider that, on average, a third-party HOA management company may charge monthly fees ranging from $10 to $50 or more per unit.
Even at a conservative $20 per unit, a 50-unit neighborhood will pay $12,000 per year in unit fees alone.
Now let’s say your community has 100 units or more. While a lot depends on your contract with a specific management company, a more complex HOA overseeing more properties will often see those fees jump dramatically. That’s also not including other associated costs of hiring a property manager, such as hefty initiation fees for transitioning files and records.
Compare that to self-managing with HOA management software, which can cost as little as $50 per month.
With the right team in place, using the right software tools, you can effectively manage your community at a fraction of the price.
Here’s what property management companies really cost, and how to save by switching to HOA management software.
Table of Contents:
Per Unit Fees and What They Cover
How your management company structures their fees depends on the services they provide. Other factors can include where your community is located, its size and complexity, and even the age and physical condition of your properties.
Some of the services third-party property managers charge for include:
· Managing finances and tax filing
· Invoicing and collecting dues and fees from residents
· Enforcing community rules
· Communicating with homeowners about violations, delinquencies, complaints and requests, and other community matters
· Managing vendor contracts and payments
· Maintaining the proper level of insurance
· Keeping compliance with federal, state, and local laws
· Overseeing governing documents and documentation for board meetings
While services may vary, property managers commonly include these with their unit fees. Though there are times a company may charge extra for certain services you expect to be included with unit fees (more on this below).
The Cost of Hiring (and Firing) a Management Company
On top of flat monthly fees, hiring or firing a third-party property manager can create a major expense for your HOA. These are costs included in your contract for the initial transition a company makes when they acquire financial and other community documents, as well as termination fees should you cancel the contract.
When a management company first takes on a community’s responsibilities, they may charge an amount based on the workload of transitioning files, documents, bank accounts, and other community data. Essentially this is all the work the company does on the back end to set up and prepare for their management responsibilities.
Cost: Initiation fees span a wide range, averaging from several thousand dollars to tens of thousands of dollars for bigger communities.
Early Termination Fees
Let’s say you initiate a contract with a management company and they don’t live up to your expectations, they make costly mistakes, or they’re simply a bad fit for your HOA. Unfortunately, your contract may stipulate that you have to pay to end a contract early.
Cost: An early contract termination can cost your association anywhere from a month’s worth of unit fees to having to pay out the remainder of the contract. This can be even costlier if you have a multi-year contract. Transitioning management duties to a new company may also cost extra.
Legitimate Vs. Suspicious Costs
Aside from monthly per-unit service fees and the cost of initiation or early termination, a property manager may invoke other costs in certain instances. However, any fees not included in your contract should raise suspicion and be reviewed thoroughly.
Some property managers may charge “per instance” or “per activity” fees for tasks such as sending or collecting on a late notice. A company may also charge extra to attend board meetings, print newsletters, prepare documents, perform inspections, and more.
Some other services third-party property managers may charge extra for include:
· Marketing vacant rental units and showing properties
· Placing new residents and overseeing lease agreements
· Managing vacant units
· Maintaining common spaces
· Evicting residents
It’s important to always ask if a company charges any hidden fees before signing a contract.
The Value of HOA Management Software
Hiring a property management company makes sense when HOA boards can’t reasonably handle overseeing a large amount of properties and amenities in addition to their other responsibilities.
However, a vast majority of small and medium sized HOAs can achieve self management with dedicated volunteers and the right tools at their disposal.
HOA management software gives your board members the functionality you need to streamline your operations. Unlike the outmoded approach of using general accounting software, spreadsheets, and piecemeal document storage, HOA software provides a holistic approach to effectively managing your neighborhood day in and day out.
Some critical features software may include are:
· Digital, customizable due collection and tracking
· Automated accounting for tracking income and expenses
· Financial reporting and analytics
· A member hub to submit and track payments, view community calendars and alerts, and submit requests
· Tracking violation enforcement
· Fielding maintenance and architectural requests
· Securely storing important community documents and files
· Managing easily searchable unit, resident, and vendor data from a central repository
· Communication tools like mass texts, email, voicemail, and physical mail capabilities
The right HOA management software allows associations to better meet their residents’ needs, all while eliminating the sizable cost of third-party property management and adding value to their communities. To find out more about how PayHOA’s top-quality software can benefit your association, try a 30-day free trial.