If you’re planning to self-manage your condo or HOA because of a bad experience you had with your property management company or to save money, there are a few things you need to consider first.
For one, self-managing your community means that you’re personally liable for all decisions you make on behalf of the association. This is arguably the scariest part of a self-managed HOA. But, there are ways to protect yourself and your association from this risk, and we’re going to outline them below. Read on to discover what it takes to successfully self-manage your HOA while making sure that your asset sees year-on-year growth.
Pros and Cons of Self-Managing your HOA
The most apparent benefit of self-managing is that it’s an opportunity to save money that you’d spend paying a property manager.
But, managing an HOA is not as easy as property managers make it seem. There are many stories of HOA members who decide to self-manage only to feel overwhelmed at the sheer volume of work that’s required.
As a result, HOA members often slack off and fail to maintain the property’s facilities and financial records. This reckless behavior can cost the association dearly in the long run.
Self-managing your HOA comes with a certain allure of freedom, but as they say, “with great freedom comes great responsibility.” Unfortunately, most HOA members are unable to shoulder this responsibility due to busy work schedules, family life and other issues that demand their time and attention.
The HOA suffers as a result because there’s no-one there to take care of essential tasks. There’s also the matter of staying abreast of HOA regulations which are continually changing. Failure to update your association’s documents accordingly can lead to legal issues down the road.
The good news is that members of a self-managed HOA don’t have to do everything on their own. And they don’t have to feel forced to hire a management company either. Thanks to property management resources like Condo Control Central, you can effectively self-manage your association from a central cloud-based application.
Thanks to Condo Control Central’s comprehensive range of tools, you don’t have to spend nearly as much time taking care of your HOA management duties. You see, CCC is web-based condo and HOA management software that allows seamless collaboration between board members and committees.
The software even comes with an app that makes it easy to maintain and access accurate and updated records of every aspect of your association. You’ll also have access to solutions like maintenance tracking, online payments, financial reporting, discussion forums, a centralized database, and even cutting-edge security solutions.
Your role as an HOA board is protecting the interests of fellow homeowners and occupants as well as the property itself. Online software solutions like CCC can significantly simplify this process.
How to Self-Manage Your HOA
As you’ll see below, the key to self-managing an HOA lies in prioritizing your time. You also need to have systems in place, build a reliable and capable team, and stay on top of important tasks. Here are a few more tips and tricks on how to self-manage your HOA successfully.
Maintain a careful record of all financial transactions
Financial record keeping is the cornerstone of running a sustainable HOA organization. You can’t get much done without taking care of collections and payments. Shoddy work in this regard will catch up with you soon enough and affect your ability to manage and maintain the association’s affairs.
If you decide to hire an accounting firm to do your books, make sure they’re familiar with HOA regulations and issues. The most important thing is to maintain accurate and up to date financial records that’ll enable your association to thrive.
Build a good team
When managing an HOA, it’s essential to surround yourself with an excellent team of advisers and specialists. This includes a lawyer or a law firm that specializes in HOA or property law to advise you on legal matters about HOA management.
For instance, let’s say you’re dealing with an applicant that wants to move in with a support animal even though you’re a no-pet building.
This is a grey area and a challenge that you can only overcome through a combination of understanding your association’s rules and HOA laws. Consulting with a lawyer on such matters will give you a professional perspective while insulating yourself from liability.
You’ll also need an accountant who will audit your financials once a year, as per HOA regulations in your state or country.
While it’s tempting to do everything by yourself, we highly recommend that you consult with professionals on matters where you have limited knowledge so you can make informed decisions.
Act like a well-run HOA board
Another key to success when it comes to a self-managed HOA is to organize your board correctly. This means holding regular board meetings to iron out maintenance and other issues before they develop into severe problems.
Make sure that you have a dedicated record keeper or secretary who’s responsible for writing, filling and following up on meeting minutes.
Also, create policies and follow them, while keeping in mind that an HOA board is a formal organization. It’s an association that must serve the community it represents, so you can’t just “wing it.”
You need to act in an organized manner because you have a great responsibility to preserve and improve your community.
Create a sustainable budget
As an HOA board, it’s essential to set budgets early in the year and stick to them and set regular dates on which you’ll review your budget throughout the year.
It’s also crucial that you review your association’s budget history to get a good idea of where you are so that you can adjust when necessary.
All associations need to have a budget reserve, which is a percentage of the association’s fund that goes into a savings account. This percentage will vary according to the association’s income and needs but is usually between 10% to 20%. Remember that condos have a higher obligation in terms of maintenance which means they may need a higher reserve amount.
Having budget reserves on hand can help you pay for unexpected major repairs while avoiding special assessments. According to experts, the main rule of thumb is to prepare for the breakdown of at least two significant pieces of equipment at the same time. For instance, you might need to replace the roof and revamp your entire HVAC system at once due to a natural disaster or other calamities.
Since the cost of water, gas, and electricity will continue to rise each year, you would consider these costs when deciding on your yearly budget. Consult with your local and municipality schedules to make sure that you’ve covered your bases.
All projects and future repairs should be prioritized accordingly, which means you must differentiate between the association’s needs and member wishes. You’ll do well to eliminate any potential liability before you proceed on a proposed community beautification as well.
Since we’re discussing planning, make sure you’re aware of the franchise levels for the various elements of the compound. For instance, you might need $15,000 in your reserves to cover unexpected roof replacement costs. The key is to ensure that your association is ready in the event of unforeseen disasters so that you won’t have to strike for individual assessments to cover insurance claims.
Put aside some money in your budget for monthly service providers. This includes your pool contractor, a landscaping company and plumbing specialist. Ask them if they’re planning on altering their rates soon so you can negotiate fair prices and plan accordingly.
Special assessments are for special projects only. If your association is struggling to cover expenses because finances are tight, you’ll have to increase the frequency of assessments or merely increase the assessment amount itself.
Special assessments should only be relegated to urgent needs because they’re not intended to pay your bills. Try and avoid special assessments altogether by developing a water-tight budget and stick to it.
Stay on course
Creating and maintaining a budget for a self-managed HOA while making sure that members act according to rules and regulations is crucial to maintaining a fiscally responsible organization. By making small changes to your budget and performing regular evaluations, your HOA can transform from struggling to a thriving association.
If you’re going to self-manage, make sure to keep your members in the loop on all current developments by holding frequent meetings. Communicate regularly through email, text and physical notice boards. It’s essential to keep your members informed so that they feel like they have a voice and a say in community progress and the growth of their assets.
Whether you’re managing three properties or hundreds of homes, self-managing an HOA is not rocket science. All you need are a few willing volunteers with the time and dedication required to make sure that you have a sustainable and smooth-running organization.
Thanks to digital tools like Condo Control Central, self-managing an HOA has never been easier. You can run all aspects of your operation from one central platform with features such as electronic filing, messaging, maintenance and so much more.
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