Blog / 7 Ways to Minimize Risk in a Self Managed HOA

7 Ways to Minimize Risk in a Self Managed HOA

Self-management is a common choice for homeowners associations that want to reduce their expenses and retain control of their operations. However, there are some risks that come with self-management. For the success of your community, consider these 7 best practices.

 

How to Minimize the Risks Associated with Self Managed HOAs

Most associations start out as small communities. Since they have limited funds and services, it makes sense to adopt a self-management approach. But as the community grows, you also see an increase in services and amenities. As the scope of HOA management becomes more complex, many associations opt to enlist the services of an HOA management company.

If your community prefers self-management, just make sure that you’re aware of the risks involved. If you’re able to minimize these risks from the start, the easier it will be to sustain a self-management approach for your community. Here are some ways to help you get started.

 

1. Don’t Be Afraid to Enforce HOA Rules and Regulations

In a small community, board members may hesitate to enforce HOA rules and regulations. They may think that confronting the neighbors will disturb the peace and harmony in the community. However, this reluctance will end up harming your community in the long run.

Non-compliance to collection policies, architectural standards, noise restrictions, and code of conduct could deter potential homebuyers from joining your community. It could also lower property values for the entire community.

Consistent rule enforcement is the best way to maintain peace and order in your community. Those who violate HOA rules and regulations should be held liable based on your governing documents. If homeowners learn to follow the rules from the start, you’ll have less compliance issues later.

 

2. Invest in Board Education

The success of a self-managed HOA will depend on the abilities of its board members. That’s why it’s important to elect the most competent homeowners to your board. However, in a small community, you won’t always have homeowners with HOA management experience. Even if you have passionate members, the lack of expertise can increase your risk for mismanagement.

Board education is very important for self-managed HOAs. Your board members must have a solid understanding of the governing documents. They must learn the different aspects of HOA management including financial management, maintenance, insurance, and legal compliance.

Having this knowledge base will allow your board members to make good decisions from the start. This will reduce your vulnerabilities as the community continues to grow.

 

3. Conduct Regular Board Meetings and Stick to the Agenda

No matter how small the community, board members are faced with countless tasks and responsibilities. This can make it harder to focus on the long-term growth of the community. If you want to stay on track, make sure to schedule regular board meetings.

Board members lead busy lives outside of the HOA so these meetings are the best time to talk about plans for the community. At each meeting, it’s also important to have an agenda — and stick to it. Since time is limited, you don’t want to get off track and miss important or urgent topics. If you’re able to plan them well, board meetings can lead to a more organized and goal-focused HOA.

 

4. Keep Communication Lines Open

In a self-managed HOA, the cooperation and involvement of homeowners will make a huge difference. You’ll have a pool of candidates to choose from when it’s time to select board members or enlist committee members. However, if homeowners feel ignored and neglected, they won’t be willing to help with HOA projects.

From the start, make sure that the association keeps communication lines open. You might want to have several points of contact so that homeowners’ calls, emails, and requests are addressed in a timely manner.  Board members can also keep homeowners updated on HOA matters by publishing newsletters, announcements, or email blasts. These small but meaningful gestures will create camaraderie in your community. When the time comes and the board needs help, you’ll have more than enough homeowners willing to volunteer.

 

5. Stay on Top of Financials and Vendor Services

Accounting is one of the more challenging aspects of HOA management. It’s also a must if you want to have a successful HOA. Self-managed HOA must be able to create sustainable budgets and keep track of all financial transactions. With proper financial reporting, board members can make better decisions for the community. You’re also less likely to levy special assessments on homeowners.

Similarly, associations rely on the services of third-party vendors. You want to make sure that invoices and payments are sent on time. If vendors are not paid, there will be a delay in delivering essential services. This can halt HOA operations and disrupt life in your community.

For continuous operations, make sure that you’re able to regularly monitor HOA financials and vendor services.

 

6. Always Plan Ahead

It’s easier to sustain self-management if the association is well-organized. Whether it’s for preventive maintenance, disaster management, or reserve planning, always make sure to plan ahead. This will help HOA boards prioritize capital projects or future repairs. Planning ahead also enables you to identify potential challenges or liabilities. For small communities with limited funds, proper planning will help you save as much money as possible.

 

7. Hire HOA Management Experts

A self-managed HOA does have to do everything on its own. When dealing with complex matters, it’s always better to seek the expertise of professionals. HOA attorneys can provide much-needed advice when it comes to lawsuits and legal compliance. Meanwhile, accountants can help you make sense of your finances.

In the same way, HOA management companies provide support when the work becomes too overwhelming for board members. These professionals have industry expertise so they can address your concerns according to best practices.

As a self-managed HOA, you also don’t have to worry about surrendering control of your community. There are many different types of HOA management. You can strike a balance by choosing a plan that addresses the current gaps in your association. It’s also a worthwhile investment knowing that board members and residents alike can see an increase in their quality of life.

 

Achieving Success as a Self Managed HOA

Not all communities succumb to the pitfalls of self-management. As long as you’re aware of the potential risks and are able to make the necessary adjustments, you can achieve success as a self-managed HOA. It helps to have a capable HOA board and passionate homeowners who are willing to devote their time to the community.

In case you need the support of capable professionals and don’t want to take the risk alone, you can browse our extensive list of HOA management companies in our online directory.

 

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