When creating a homeowner’s association, there are a lot of operational requirements you need to grapple with. One of the most important is whether you will allow community members to manage the HOA or take bids from HOA management companies. There are pros and cons to self-management for HOAs. However, most of the disadvantages are easily resolved by partnering with a law firm when necessary and using software to help automate the rest of the process.
Even with these resources, you may feel like you are way out of your depth. So, is hiring an HOA management company the right option for you? There are certainly some times when it may be worth considering.
Not all community members may feel compelled to join the board of directors or otherwise participate in managing the HOA. Demographics may have a big role to play in this. If your community is composed of two-income families and younger people, you may have a much more difficult time finding people with the extra time to dedicate to HOA management.
However, communities with stay-at-home spouses, work-from-home spouses, empty nests and retirees may have the time and will to manage the HOA. It’s worth noting that some self-managed HOAs simply outsource the positions they need additional assistance with. To this end, they may hire secretaries to man the office, take calls and respond to emails.
Some community members may make it clear from the start that they prefer to interview HOA management companies for the job. These residents may have had negative experiences with self-managed HOAs in the past. They may also worry about the resale value of their homes, because buyers often shy away from properties within self-managed communities. When community members overwhelmingly ask for professional property management, it may prove difficult to pitch another option.
If you prefer self-management, however, there are points you may raise to convince community members. You may point out the cost difference to start. Realtor.com estimates an average of a $750 monthly difference in membership fees for HOAs managed by paid professionals and HOAs managed by community members.
It’s sad to say, but not all communities have peaceful relationships. Sometimes, neighbors develop a tendency for fighting. This may not always mean coming to physical blows or verbal exchanges. It may, instead, manifest in passive-aggressive actions. One person may over-police a neighbor and could even bring lawsuits against them. Legitimate disputes may also surface over property lines, fences or even who has the right to cut the limbs from a tree. In these situations, allowing community members to manage the HOA could worsen existing problems.
Upper-middle-class residents and upper-class residents tend to be more lawyer-happy than other demographics. The simplest mishap may lead to a lawsuit or the threat of one. This could bankrupt the HOA or even cause some personal liability for the individuals managing it. Wealthy homeowners may also feel less concerned about the high cost of hiring property managers. In these situations, it may be better to let property managers run the property.
On the other hand, some wealthy residents prefer to manage their own HOAs. This may be the case if they are concerned about privacy. Celebrities and other high-profile professionals may fall into this category. Naturally, these people also have less time to dedicate to managing an HOA. To get around this problem, many invest in HOA management software.
The smaller communities are, the easier it is for homeowners to manage the HOA on their own. Up to medium-sized communities can still do well with self-management. This may include a small block of townhomes or a planned community with 50 or so homes. However, large communities may need to consider hiring professionals. Otherwise, the sheer amount of work may overwhelm volunteers.
Larger communities often have more or bigger amenities. There are also far more people going in and out of these spaces, which increases the need for cleaning areas and servicing machines. It can also become difficult to keep up with all the residents and track whether they are following the rules.
Even the most luxurious condos are often built in areas where security may be a concern. Gentrified areas suffer from this the most. When safety becomes a concern and communities need to gate the community or hire security companies, it may be best to let property managers handle these HOAs. Should liability issues arise, property managers and security companies generally take the fall. This may offer additional protection for community members.
Some communities still insist on managing themselves, even in the wake of security risks. To get around the resulting legal complications, they may choose to hire attorneys to negotiate with the security company. Attorneys can ensure the creation of a contract that holds the security company liable for safety-related premises liability claims.
The Bottom Line
Hiring an HOA management company is expensive. Homeowners who wish to avoid the higher cost should attempt to manage everything in-house. However, if you start asking yourself, “Do I need to hire a property management company?” While there are some instances where hiring professionals may make more immediate sense, a little creativity and a lot of compromises can go a long way. It’s time to try to determine if it’s worth the cost of hiring an expensive firm or if there are other solutions. One solution to consider is making full use of technology. PayHOA is one software solution for self-managed associations to rely on to ensure smooth operations. The software helps HOA managers with many different tasks like tracking maintenance issues, accounting, collecting fees, and communicating with residents.