Hiring a property manager is an easy decision for landlords who
donât want to worry about the day-to-day hassles of running a
rental property. When it comes to Homeowners Associations (HOA),
however, the decision isnât so cut and dry.
Typically, an HOA exists when a group of people buy properties
in a planned development. HOAs often oversee condominiums and
townhouses in gated communities or subdivisions, and membership
is mandatory. An HOA is usually run by property owners who volunteer
to help manage the needs of their community. These needs include
everything from ensuring compliance with community ârulesâto routine
maintenance and collecting HOA fees.
Using owner volunteers to manage an HOA seems like a no-brainer,
especially since it wonât place an extra financial burden on the
community. But, depending on the size of the community and the
number of community needs, the demands can quickly get out of hand.
Small communities that consist of five or fewer residences may be
easily managed by the owners. Obviously, the more owners you have,
the more of everything there is to manage: bills, complaints,
regulations, maintenance, collection issues, etc. However, even in
small associations it can be difficult for owners to manage things
on their own. It doesnât take much for neighbors to feel uncomfortable
about serving as bill collectors and rule monitors for one another.
Because proper management can make or break a community, itâs
important to consider whether hiring a property management company
for your HOA is worth the investment. Asking the right questions
is one of the best ways to determine if itâs time for outside help.
How many buildings, properties, and amenities does the HOA manage?
Thereâs often more to consider than the number of residential units
in an HOA. Many planned communities include extras like parks, swimming
pools, and workout facilities. These amenities are part of the HOAâs
responsibility. Communities need to ensure that shared use areas are
well-maintained, safe, and covered by the required insurance to protect
owners and visitors. That can be a lot for a group of volunteers to take on.
Is there a lack of volunteers to manage the HOA?
The number one problem volunteer organizations have is that they
rely on volunteers. Owners already pay a monthly fee for HOA services.
For many, they may fill that is all they should be expected to do.
An HOA without an adequate number of participants often canât even
vote on decisions like hiring a snow removal company, let alone
respond to daily needs in a timely manner.
Do volunteers have the right skills and knowledge to properly manage the HOA?
Some communities have plenty of people willing to step up, but if
those eager volunteers donât have the right expertise and abilities,
they wonât be able to get much done. Unfortunately, a lot of the work
HOAs need to do requires some familiarity with laws, liability, and
basic home and lawn maintenance. When the HOA is hiring a contractor
for work or needs to shop around for insurance policies, the owners
expect the board to make a sound decision that protects everyone and
makes financial sense. An uneducated choice by the HOA could cost
time and money for every owner in the community.
If an HOA asks these questions and comes up with answers that
indicate a lack of either manpower or expertise, itâs probably
time to seek some outside help. Thatâs where a property management
company can really help. Not only do property management companies
come equipped to take on the demands of any size HOA, they can also
save owners money, worry, and the occasional headache. Take a look
at what property management companies can provide an HOA.
Discounts on services: Everybody wants to get more for less. Property
management companies use their existing relationships to get lower
rates on everything from insurance to lawn maintenance.
Financial management: Property management companies know how to
handle monthly collection of HOA fees, dues, and fines, create
and manage a yearly budget, establish and maintain a reserve
account, and develop long-term capital improvement plans.
Rule enforcement: Itâs easier for a nameless company to remind
the fellow across the street that he needs to take down his Christmas
lights, than for a neighbor to do it. The property management
company can conduct regular inspections to ensure that owners are
in compliance and can also do all the follow up (including fines)
required for situations that go too far.
Legal representation: Most property management companies have a
lawyer on board. This means the HOA has representation for contract
disputes, delinquent account collection, and other legal issues
that may arise.
When an HOA decides that hiring a property management company is
the right thing to do, the next step is reviewing the HOAâs governing
documents to make sure there is no prohibition against hiring a
third-party to carry out some or all of the duties of the HOA. After
that, itâs time to start looking for a reputable company to partner with.
The HOA should identify at least two or three property management
companies to interview. If the interviews go well, the next step
is to conduct reference checks. Itâs best to talk to other HOAs
that have worked with the company. In addition to verifying that
the property management company can fulfill the required duties,
itâs important to make sure they fit with the communityâs values
and long-term goals.
Thoughtful consideration and due diligence are the keys to establish
a successful relationship with a property management company. HOAs
should take a good look at their responsibilities, qualifications,
and needs â then start the search for the perfect property mangement
match. Contact PMI today to find out more!