Associations can greatly benefit from the services of an HOA management company. Since board members don’t always have the time or expertise, it’s good to have a professional handling essential managerial functions on a full-time basis. But, how much do property management companies charge to manage HOAs? Here’s a closer look at HOA management fees and how much your association can expect to pay each month.
How much should an HOA pay a management company? The cost of management services will vary dramatically. Associations must understand that the cost of HOA and property managers will depend on several factors. This includes the HOA management company itself, the scope of its services, and the size of the community.
For example, a large HOA community may have numerous communal areas and amenities that require regular attention. The community may have hundreds of homes, as well. This means a large volume of work for management when it comes to enforcing homeowners association rules, collecting dues, and so on.
An association of this magnitude can most likely expect to pay a higher HOA management fee compared to a smaller community with fewer amenities, services, and homes.
Some HOA or condominium property managers may also charge extra for additional services, such as organizing and planning community events, preparing and distributing newsletters, setting up and maintaining the HOA website, and so on. For these services, typical HOA or condo association management fees may be on a cost per unit basis.
When looking for new HOA management, it’s important for associations to have an idea of typical HOA management fees to see if it will fit their budget.
How much does HOA management cost? On average, management services typically range from $10-20 per unit, per month. These per-door rates still vary drastically, though, depending on the scale of your community.
It’s also important to consider property management laws in your state, city, or municipality. Some states regulate property management activities, and this may have some bearing on your HOA management fees.
How much do HOA management companies charge? The cost of an HOA management company will also depend on the type of services you receive.
Depending on the needs of your community, you may opt for one of the following:
A full-service HOA management company provides all the services that your community needs. An on-site manager will handle the day-to-day operations of the HOA, which includes maintenance, financial management, and homeowner communications.
This type of HOA management is ideal for larger associations or communities with struggling board members. Communities can greatly benefit from the expertise of an HOA manager, combined with the vast resources of an HOA management company. Accordingly, HOA management fees will be higher.
There are HOAs that can handle the overall operations but may need some help with administrative duties or financial management. A remote HOA management company can provide the support that these HOAs need.
The HOA board still handles on-site operations but they receive virtual assistance when it comes to tasks like contract reviews, reserve planning, maintenance tracking, violation notifications, and so on. This is a cost-effective solution because HOAs receive crucial support but can save on HOA management fees.
Even a well-functioning HOA needs some help from time to time. If your association needs assistance on certain projects, the board can opt for HOA consulting services.
An HOA consultant will come in and advise the board on what needs to be done. After the project is done, the HOA contract also terminates. Thus, HOAs won’t have to keep paying for HOA management fees in times when they don’t need it.
When choosing a management company, another important distinction that should be made would be HOA management vs property management. They provide very similar services but still have unique differences. Keep the distinction in mind as you consider the costs of HOA management.
What do property managers do? If the HOA owns and rents properties in the community, the property manager will be in charge of managing these properties. Property management duties include rent collection, accounting, maintenance, and so on.
These services are very similar to HOA management. However, an HOA manager’s role is all-encompassing. They are responsible for the entire community, ensuring that it is functioning smoothly on a daily basis.
Upon choosing an HOA company and the type of HOA management, the association will have to sign a management contract. This should clearly detail the management services they will provide as well as the HOA property management fees to be paid.
Here is a sample breakdown of the HOA management fee:
The initiation fee is what an HOA management company may charge to handle the day-to-day management of your community. This can range from a couple of thousand dollars up to $30,000 depending on the size and need of your HOA.
HOAs may also pay an HOA management fee each month. This amount will be clearly stated in the HOA contract.
The cost of HOA management company services can vary greatly. On average, though, you should expect to pay between $10 to $20 per unit per month. Typically, you can command a higher discount when you have a larger community with numerous units. This is because administrative cost scales quite well, allowing the company to charge a lower price per door.
You should also note that other factors such as location can influence ongoing management fees. For instance, if you live in a luxury neighborhood or a city with a higher cost of living, monthly management fees will likely reflect that as well.
An HOA manager can still provide services that are not initially stated in the contract, but it will come at an additional cost. Make sure to clarify this with your HOA management company so that the association won’t be surprised by hidden costs.
A typical HOA contract lasts for one year. It’s not usually recommended to sign a multi-year management contract unless the association is already familiar with the quality of service of the company. It’s also easier to renegotiate terms with a yearly contract.
If for some reason, the association wants to terminate the management company’s services before the end of the contract, or vice versa, a termination fee will be imposed.
Then, at the end of the year, if the association wishes to transfer to change their management company, there may also be transition fees. Your former company can orient the new management but they will have to be compensated for it.
You can generally pick and choose what services you want your management company to carry out. Some companies offer set packages, while others offer services on an a la carte basis. Regardless, you should ask your company how they approach services and what the pricing structure will be like.
Once your association has signed with an HOA management company, the board can expect assistance with the following aspects:
Again, the scope of work provided by your management company should be clearly outlined in the HOA contract. This is to set expectations and avoid disappointments for both parties involved.
Because property management companies deal with rentals, the cost of their services usually falls under one of two categories: flat rates or percentage rates.
Flat fee property management companies charge a fixed rate per door per month. For instance, if you have two rental properties, a property management company may charge you a total of $500 per month. That is equivalent to $250 per door per month.
On the other hand, property management companies may also collect a percentage of the monthly rent as their fee. As such, if a company charges 10 percent and your rental rate is $1,500, then according to property management fee calculation, you will pay them $150 per month.
What is the average property management fee for rental properties? On average, property management companies will charge 8 to 12 percent of the gross monthly rent. Some will lower this to 4 to 7 percent if you have 10 or more rental properties. Commercial properties also tend to pay a lower percentage.
Keep in mind that there are several factors that can influence the property management cost. This includes the size, type, condition, and location of the rental property. You may also pay higher or lower depending on the extent of services you ask for and the company you ultimately choose.
Some also charge additional fees such as initial setup fees, tenant placement fees, vacancy fees, maintenance fees, early termination fees, and eviction fees. Make sure to ask your property management company about any hidden fees. Reviewing your contract with an attorney will also help.
When choosing an HOA management company, of course, it is important to look at the HOA management fee. However, it shouldn’t be your only consideration.
It’s important to stick to your HOA budget. But considering the invaluable services of a management company, HOA management fees may be greatly justified. It can be a worthy investment that leads to HOA growth and success. So, make sure to spend time looking at different companies to find the one that best suits your community.
If you need help looking for an HOA management company, feel free to use the HOA management online directory. With just a few clicks, you can find the best HOA management companies and vendor services in your area!