An important decision homeowners associations (HOAs) face is whether to hire a third-party property management company or to operate as a self managed HOA. Both options are fairly common. Nonetheless, it’s important for your HOA to weigh the pros and cons in order to make the best choice for your needs.
Neither option is “wrong” and will depend on what is the best fit for each community. This decision relies on many factors, such as the number of units and amenities in a neighborhood and other operational demands.
However, self managed HOAs offer distinct advantages to their residents.
Some of these include massive cost cutting, lower dues for residents, more community control, and, with the right tools and strategies, better management practices overall.
Investing in the right self managed HOA accounting software can also help board volunteers manage complex accounting tasks, invoice and collect dues and fees, and track and manage other important management needs such as rules violations, maintenance requests, and general communication.
While self-managing an HOA can seem challenging at first, the reality is that many small and medium sized associations can reap multiple benefits by choosing to manage their own communities.
Here are the top 5 advantages of self-managing your HOA.
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1. A Self Managed HOA Costs Less
Hiring a property manager is a major tradeoff. They handle the daily needs of your community, manage your finances, and mitigate risk. In turn, a large chunk of your budget must be dedicated to upwards of tens of thousands of dollars in annual unit fees, possible per-use or other fees, and further costs should you choose to part ways and incur a penalty for early termination.
For communities with even 100 or more units and multiple amenities, a responsible and dedicated volunteer team can self-manage your community and reinvest the savings back into the neighborhood.
2. Dues Are Lower When You Self-Manage
Naturally, when your association doesn’t have to grapple with the sizable expense of a third-party property manager, this can translate to lower membership dues for residents. Having competitive dues rates for your community means you’re more likely to attract new residents, and current residents may be less negative and critical of how the board manages HOA finances.
Generally speaking, lower dues means happier homeowners with more cooperative and less antagonistic attitudes about how their neighborhood is managed. It can also potentially help improve dues collection rates.
In the end, there may still be a balancing act between offering a high community standard of well-managed amenities and shared spaces versus lowering dues, but even a marginal savings for residents can make a difference.
3. Self Managed HOAs Aren’t Inherently Riskier
You may think your association needs a property manager to mitigate risk and potential liability issues. After all, these firms are often willing to take on the responsibility of maintaining adequate property insurance, staying a step ahead of financial trends, and maintaining legal compliance.
By contrast, an HOA may initially believe self-management is too risky of a proposition. However, there are many ways a self managed HOA can avoid potential risks.
For instance, board members are likely already familiar with all the governing documents, but reviewing these documents can help you build a sound self-management strategy. These documents define the procedural rules you must follow and the limitations on your authority. For legal representation, advice and filing documents, an HOA may choose to keep a lawyer on retainer. A CPA may be hired for financial audits and tax filings.
Finally, making sure your community has adequate insurance can help protect a self managed HOA from potential lawsuits and other liability issues.
4. SelfManaged HOAs Can Be More Responsive and Better Connected with Homeowners
Hired management companies typically work within a fixed 9-to-5 schedule and have a cookie cutter approach to how they address community needs. In addition, it can be frustrating to have to consult with a third-party company when the board needs to make decisions.
Community-driven management leads to community-driven solutions.
Self managed HOAs have the advantage of cutting out the middleman and being able to implement decisions that benefit their community more quickly and efficiently. In addition, board members will be able to form tight knit relationships with other homeowners and communicate and problem solve beyond typical business hours.
5. Self-Managing Your HOA Is Easy with the Right Software
Self-managing an HOA may seem overwhelming at first, especially if you have more than a small number of units and shared amenities to maintain. Your board members are juggling volunteering with other responsibilities in their day-to-day lives, so you should make their job as easy as possible to set them up for success.
Using HOA software can streamline and automate your budgeting and accounting needs, and offer important management tools like bulk billing, electronic dues collections, a central repository for vendor and unit management, tracking rules violations and maintenance requests, and more.
Other features include multiple channels of digital communication with homeowners, unique homeowner portals to pay bills and track relevant info, and the ability to send physical invoices and other documents all from one central hub.
At PayHOA, our software offers the ability to manage your HOA easily and effectively and our expert support team loves helping our customers find unique solutions to their unique challenges at no extra cost. That’s why over 6,000 HOAs use PayHOA to make their communities better across the country.