What Is HOA Management?
HOA management means residents working together to maintain the value, safety, and prosperity of their neighborhoods, condominiums, or apartment complexes. Effective HOA management boards achieve this by collecting dues, addressing maintenance requests, and upkeeping the neighborhood's amenities.
HOAs: A Quick History
Homeowners associations (HOAs) grew to prominence in America in the 1960s and 1970s. The expansion of the country's highway system resulted in a growth of large-scale development outside of city centers, making it possible for people to live in suburban residential neighborhoods and commute into the city to work. Residents of these neighborhoods formed HOAs to handle the maintenance and upkeep that, in an urban environment, were handled by municipal workers.
HOAs still exist because they serve an important role in the communities of millions of Americans — and because when run efficiently, they work. Residents are happier, and housing prices remain strong.
HOA Management Today
While HOAs have continued to evolve, there remain a few important core functions of all HOA management. Everything an HOA does comes down to keeping a community running successfully. These duties include collecting dues and assessments, as well as budgeting finances in a transparent way that contributes to the upkeep of the community. HOA management software can make these tasks much simpler.
HOA Management Structure
Self-managed HOAs are run by volunteer residents. Some communities may hire an outside third-party management company, though there are notable benefits to self-management when this is an option (more on this below). The details will vary according to the size of the community and the complexity of its needs.
The HOA board of directors, a group elected by residents, has final say on decisions within the community. HOA board members are responsible for enforcing governing documents, protecting community assets, and making financial decisions.
The board of directors must also act ethically according to the CC&Rs (Covenants, Conditions, and Restrictions), Bylaws, and Articles of Incorporation.
What Are the Main Functions of HOA Management?
An HOA's number one goal is maintaining the community and bringing value to those who live there. HOAs accomplish this through several key functions. One of the most important functions is collecting dues and fees from residents.
HOA dues may be used for:
- Upkeeping common areas, like a pool, garden, club house, or tennis court
- Fulfilling maintenance requests
- Vetting and paying vendors on time
- Doing studies and reviews for architectural upkeep
- Monitoring and reporting community violations
- Protecting property values
- Managing and spending money in a transparent way
Successful HOAs help provide a safe and secure community with clear and consistent communication between board members, homeowners, and vendors.
Self-Managed HOAs Versus Hiring a Third Party
Whether a homeowners association hires a third-party company to manage its properties will depend on such factors as the HOA's size and specific needs.
Third-party management companies may be necessary for HOAs that maintain many spaces and complex amenities, which can prove too much for a volunteer to handle. HOA management companies are hired to take on the HOAs finances, deliver violations and other communications, and ensure regulatory compliance. Yet, any benefits must be weighed against the sizable cost.
Depending on the number of homes in a neighborhood, outside companies can cost a community tens of thousands of dollars in annual fees.
For many HOAs, a third-party company simply won't make sense in the long term. These communities should instead use volunteers to handle management duties and, if necessary, retain a lawyer to help maintain compliance.
Self-managed HOAs offer certain advantages. Self-managed HOAs rely on volunteers who've taken on this commitment part-time while balancing other life obligations. It may seem reasonable to simply hire someone to take on this role, but volunteers are often more than capable of managing their own communities and reaping the benefits of doing so.
Self-management provides more control over the community. Self-management allows more flexibility in how rules are enforced, whereas a third-party group will likely take a more prescriptive approach. Though a third-party may take on much of the burden, the HOA board will still have to manage the relationship with a third-party. This can often require more effort than if the board managed the HOA with volunteers. As residents themselves, board members will have insights based not only on maintaining higher property values, but also on how different, perhaps more nuanced approaches can lead to better outcomes.
Self-management saves money for HOAs and homeowners. Volunteers are typically engaged in their roles because they care about the communities and are motivated to do a good job. Given the right tools, volunteers can feel empowered to perform well and continue to grow as managers. As mentioned, self-management can save communities tens of thousands of dollars. By comparison, self-management is free and tools like HOA management software come at a negligible cost. These savings translate to lower dues for homeowners and more budget to spend on amenities.
Self-management can foster tight-knit communities. Although there is the potential for disputes or conflicts between neighbors, self-management can ultimately lead to communities that innovate and pull together. Smaller HOAs may find that foregoing a third-party company leads to more camaraderie and a simpler, more straightforward management style.
Some HOAs' complex needs may require them to hire a third-party management company. However, whenever feasible, self-management has the potential to drive the most value to homeowners.
HOA Management Common Pain Points
When HOAs hire a third party to manage their properties, they're expected to do the job in a timely and efficient manner. Yet, outside firms may fail to live up to a community's expectations.
Third-party companies take control of the community's data, bank accounts, bookkeeping materials, and more. When an HOA decides to transition to self-management, they may be left wondering, "Who owns our data?" It can be frustrating and time-consuming to regain this information.
Staying organized is one of the toughest HOA management challenges. When evaluating whether your property is managed effectively, some questions an HOA can ask are:
- How do managers go about collecting and managing dues, violations, and maintenance requests?
- Are bookkeeping records current and accurate?
- How are records logged and tracked over time?
- Are they in compliance with state regulations and laws?
- Are tax filings managed effectively?
- How often do HOA managers miss deadlines, payments, receipts, or phone calls?
- How effective are managers at settling disputes?
- What kind of tools are community managers using to perform their duties, and are these tools effective?
Answering this last question can help HOAs determine how to address the others. Out-of-date management tools may be holding volunteer HOA managers back from reaching their full capabilities.
Managers may be using spreadsheets to manage finances or track other information. Or they may be using paper for maintenance requests, violations, and other recordkeeping. They may be reconciling delinquent accounts, issuing checks, and collecting dues using paper checks.
This old-school style of management leads to disorganization and potential legal liability. Information falls through the cracks, requests aren't filled in a timely manner, and there is no history or documentation around payments, etc.
If they're using software for management and bookkeeping, is that software as effective as it should be? Is it tailored specifically to the HOA's needs?
What Is HOA Management Software?
Many HOAs have discovered the effectiveness of using management software to replace using multiple spreadsheets or paper records. Volunteers can perform their jobs more quickly, more efficiently, and with bigger savings for their community using this type of software.
However, not all software platforms are created equal. As with other tools an HOA utilizes, it's important to research software and find a platform that meets your management needs. Here are a few of the main features to consider:
Features for Members
One of the most attractive features of HOA management software is that it allows for the easy online collection of dues. Some programs allow members to pay remotely, after normal business hours, using tools such as auto pay.
Members may also use this software to track their payments, submit maintenance and architectural requests, view a calendar of community events, access important documents, and communicate with managers electronically.
Financial and Community Management
For managers, collecting dues is much easier and more consistent using an online system from a central management software hub. It also makes tracking and managing other revenue and expenses easy via an automated system. This can add a layer of transparency when disclosing annual budgets and balance sheets. Board members may be able to view certain types of accounting reports to help them analyze and make decisions about finances.
Managers can also manage multiple properties with the right software, including maintenance and payment histories, document storage and tracking, and a system to organize and easily search information about individual units and owners.
Remote access can allow community managers to perform their jobs from anywhere, in the hours they're available.
Streamlined Communication
Communication plays a big role in homeowners satisfaction with their HOA. Software can offer access to homeowners, in addition to features managers can use to streamline communication. Automated bulk billing, mass email and text capability, and other tools make it easier for volunteers to contribute their time and help out their communities.
HOA management software may also allow users to create and send surveys, social calendars, past-due notices, anonymized violations notices, and more—all of which are tracked and organized within the platform.
PayHOA offers far more than a payment and invoicing platform. Our robust HOA management software solution gives any size or type of HOA the tools to stay organized and improve their communities. To see how PayHOA can help your HOA run more smoothly, try our software free for 30 days.
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 info@payhoa.com to learn more.