Running an HOA community is often a challenging task. And, for most HOA boards, it is a task that can’t be accomplished alone. Thankfully, there are a number of companies that offer professional HOA management services.
What Is HOA Management?
Before you can understand what HOA management is, you must first know what a homeowners association does. To put it simply, homeowners associations manage communities with the goal of protecting property values. These associations achieve this by ensuring proper maintenance of all common areas, providing convenient services, and enforcing rules.
Of course, members of an HOA community must follow these rules and pay monthly dues to the association. But, these dues go directly to the association’s operating and reserve funds, which ultimately cover the expenses needed to keep the community in operation.
The exact powers and responsibilities of an HOA will depend upon state laws and the association’s governing documents. These can vary from community to community, so it is imperative to check your own bylaws and CC&Rs to get a better grasp of your association.
Now that you understand what a homeowners association does, how does HOA management factor into things? At the very helm of every association sits a set of board members known collectively as the HOA board. The board is responsible for carrying out various duties, including but not limited to sending out invoices, collecting dues, coordinating with vendors, and overseeing maintenance and repairs.
Unfortunately, many HOA boards consist of members who either lack the time or adequate experience to properly run a community. And it doesn’t help that board members are essentially volunteers who don’t get paid for the job. An HOA management company, though, can step in to take over most of the tasks involved in running a homeowners association.
What Do HOA Management Companies Do?
An HOA management company assists the board with its many duties and responsibilities. These companies come in all shapes and sizes, offering full-service solutions and even remote management services.
A full-service management company assumes control of most things, diminishing the board’s role to a decision-making capacity. On the other hand, some companies offer more muted or selected services. In this case, the board retains a lot of its responsibilities, depending on the agreement.
While the exact nature of services can differ from company to company, they usually involve the following:
- Collecting dues
- Managing delinquencies
- Maintaining properties and common areas
- Selecting and coordinating with vendors
- Communicating with homeowners
- Handling complaints
- Resolving disputes
- Enforcing rules in a uniform manner
- Tracking violations
- Preparing the budget
- Processing invoices and paying bills
- Managing accounts receivable
- Generating financial reports
- Managing the reserve fund
- Filing taxes
- Offering legal assistance
- Maintaining association records
- Preparing and attending board meetings
- Executing the annual calendar
- Sending out notices
Do You Need an HOA Management Company?
There are many communities that opt for a self-management approach. And while there is nothing fundamentally wrong with that, it is sometimes in the community’s best interest to hire a professional service. Poor management can result in a bevy of consequences, including reduced curb appeal and lower property values. Additionally, it opens the door to potential fraud within the association.
But, how exactly do you know whether or not you need the help of an HOA management company?
For one thing, managing a homeowners association takes time. Board members must regularly attend meetings, respond to homeowner concerns, inspect the community for violations, and plan for the association’s future. Between your day job and your personal life, it is hard to balance these responsibilities.
Board members also often find themselves lacking the right experience or expertise. Running an HOA community involves a lot of financial work — from accounting and bookkeeping to budgeting and tax preparations. It also demands some level of proficiency in legal matters. Like many other organizations, HOAs must comply with federal, state, and local laws to avoid potential liability. Some decisions also require legal reasoning.
Other than that, hiring a professional service can expand your connections. Management firms usually have access to a network of vendors that have gone through a thorough vetting process. Beyond that, these companies also keep in touch with industry experts engineers, law enforcement, accountants, lawyers, and the like.
The Cost of HOA Management Services
Homeowners association management is obviously a time-consuming job that calls for expertise and skill. Therefore, companies that provide such services charge a fee in return. This fee can vary depending on the management firm, though it usually comes in the form of a flat rate per door. Several other factors can also influence this fee, such as the amount of work and the nature of services required.
On average, though, you should expect to pay about $10 to $20 per door every month. If you have a bigger community with more properties, companies will sometimes offer a lower rate. Make sure to thoroughly review your management contract as well as its duration. Some contracts can go for as long as three years, though most operate on a year-to-year basis.
Looking for the Right HOA Management Company for Your Community
Even if your association needs a management company, that doesn’t mean you should just choose the first one you stumble upon. Since management contracts usually last a year at a minimum, ending up with a bad firm can cost you money and put your community in more jeopardy. Thus, you must take great care and caution when it comes to the search process.
1. Determine Your Needs
First, it is important to lay down your association’s needs. What services does your board need help with? Are you looking for a full-service management company? How much is your HOA willing to pay for their services? Establishing these goalposts will allow you to streamline your search process and identify what company is the right fit for you.
2. Send Out RFPs
With a budget and service specifications in mind, the next step is to craft and send out your request for proposal (RFP). An RFP will help companies arrange their proposals in a uniform manner. It also lets companies know what you are looking for, so remember to write down your expectations as well.
3. Evaluate and Interview Candidates
Once you have your proposals in hand, it is time to evaluate the candidates. Make sure to set criteria that you can use to compare companies against each other. Watch out for the number of services they offer as well as the quality of their services. Cost is an important decision-making factor for many associations, but don’t just go with whatever is cheapest. Remember to weigh their fees against their services.
It is also a good idea to come up with a shortlist and then interview each candidate. This will allow you to familiarize yourself with your partner in management on a more personal level. It is also worth asking about each company’s client history and availability. You want a company that responds to your concerns in a timely manner.
4. Negotiate the Contract
Contract proposals are not always set in stone. More often than not, there is plenty of room for negotiation. If you feel like a company’s services and culture suit your association well but their price is too high, ask for a discount. Ask the company to explain or revise any clauses that don’t sit well with you. An HOA attorney can help you with this as well. Once you have a final draft, review the contract once more before signing.
5. Monitor Performance
Don’t assume your HOA management company will deliver all of its services even when left unsupervised. Track their performance to make sure they are holding up their end of the agreement. If you feel that they aren’t a good fit, after all, consider changing management companies after your contract expires. Of course, you can also terminate the contract before its expiry, though this usually means having to pay an early termination fee.
The Best Decision You Can Make
HOA management can be confusing and a pain to deal with, but it doesn’t have to be. With the help of a professional company, your board can feel more at ease knowing your association is in capable hands. Hiring a management firm is one of the best decisions you can make for your community.
For a trusted HOA management company you can rely on, call Elite Management Services at (855) 238-8488. You can also contact us online to request a proposal.
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