Homeowners associations come in all shapes and sizes, though the ones with fewer units are usually the ones that opt for self-management. But, contrary to popular belief, small HOA management isn’t as easy as you might think.
In this article:
Small HOA Management: How to Self-Manage Your Community
“How do I manage my small HOA?” This is a question that many HOA boards ask. A small self-managed HOA is usually difficult to maintain without professional help, but it can be done. Here are some tips to keep in mind when managing your small community:
1. Act Like an HOA Board
If you want to be a good HOA board, you have to act like one. One of the best ways to do that is to familiarize yourself with your governing documents. Your governing documents should contain the correct procedures to follow as well as the extent of your board’s authority. You can’t just meet over dinner and make major or minor decisions arbitrarily. You need to hold board meetings and follow due process.
2. Don’t Overcharge Dues
One of the challenges of a small HOA community is raising the funds necessary to keep the association going. There’s only so much money you can collect from an association with fewer than 50 residents. Although you need money to pay for various services, you must also be careful not to charge too high a fee. Expensive dues can be a huge deterrent to potential new residents.
If you do intend to raise your regular dues, make sure to give sufficient notification to residents. In doing so, you can help them prepare their finances for the coming year.
3. Practice Smart Spending
Since smaller communities tend to have a more limited budget, you should make sure to spend it wisely. Allocate funding for important expenses such as the maintenance of common areas, trash collection services, and insurance. Don’t spend money on things your association doesn’t need.
4. Be Transparent
Associations with fewer than 50 residents tend to charge more money for the upkeep of the community. Therefore, your HOA board should make an effort to be transparent when it comes to all financial decisions.
Residents deserve to know how the association is spending their money. You can keep them informed with monthly reports or regular updates. Doing so will foster trust between members and your board.
5. Record All Financial Transactions
When learning how to manage a small condo association or HOA, it’s imperative to keep accurate and careful financial records from the start. It’s impossible to assess the financial health of your association without proper documentation and bookkeeping. As such, you should religiously record all incoming and outgoing financial transactions. Meticulous records will also help you generate accurate financial statements.
6. Control Input
Some small HOAs might think they’re doing better than larger ones because they can get feedback from all members regarding major decisions. But, in truth, it’s actually counterproductive to obtain input this way.
If your governing documents don’t require getting feedback from all members, then going the extra mile will only prove time-consuming. It will take you much longer to come to a decision if you listen to what each member has to say about the matter.
The best way to control input is to remind homeowners that you’re not required to obtain their feedback for all major decisions. Set (or reset, in some cases) their expectations and clearly explain to them that asking for their opinion is a courtesy and not mandatory.
7. Get Professional Advice
One of the pitfalls of self-managing an HOA is poor management as a result of a lack of board expertise. Many board members don’t have the necessary knowledge or experience to properly carry out certain HOA management tasks.
The easy solution to this is to seek advice from professionals such as accounting firms or law firms. It’s not the same as outsourcing all tasks to a management company, but it can certainly help lighten the load.
8. Use a Self-Managed HOA Software
Many developers offer HOA management software designed to help small or self-managed communities. Features of such software usually include modules for dues collection, work order management, communication, and violation enforcement. Most of them also offer accounting and financial management capabilities.
HOA Management for Small Communities: What Services Do You Need?
Does an HOA need a management company? Most people think that only bigger associations need professional HOA management, but smaller communities need help, too. The reality is that smaller HOAs have fewer resources, and they are the ones that need the most guidance on community management.
When thinking about professional management for a small HOA community, you first need to determine the services that your association needs. Here are the most common services for small homeowners associations.
1. Financial Management Services
Even smaller communities need to stay on top of their finances. However, board members don’t always have the expertise to deal with the financial aspects of community management. Accounting and bookkeeping are essential tasks that need to be done each day.
Otherwise, the work will pile up and this can easily overwhelm an already clueless HOA board. Small communities need solid budgets as well in order to operate properly.
So, if your board doesn’t have a solid grasp of accounting and finance, HOA management for small communities is worth considering.
2. HOA Compliance with Laws and Ordinances
Non-compliance with local, state, and federal laws can end up costing your community. Since small communities have smaller budgets to begin with, fines and legal action can significantly devastate your finances.
To ensure your association’s compliance with laws and ordinances, you might want to consider small HOA management.
A professional management company will have expertise when it comes to HOA legislation. Thus, they can ensure that your governing documents, as well as rules and regulations, are all compliant with the law. An HOA manager also ensures that all legal documents are filed and executed.
3. Administrative Services
Regardless of size, running an HOA community entails a lot of administrative work. You need to answer calls and emails, communicate with residents and vendors, schedule meetings and maintenance, process invoices, collect HOA fees, and so on.
All these need to be done, or else the community won’t be able to function properly. However, most board members cannot really devote all their time to administrative work. They also have full-time jobs, families, and other personal matters to attend to.
If you find that small community management is taking up too much of the board’s time, consider the services of an HOA management company. They will make sure to take care of the simple but time-consuming tasks each day.
4. Maintenance Management
Associations big or small also have to conduct maintenance management regularly. This is to ensure that the community’s shared assets are in good working condition.
If there are repairs or replacements, you will have to find vendors or contractors to handle the issue. However, as a board member of a small community, you may not know which companies to contact.
The best HOA management companies will not only handle your community’s maintenance needs, but they will also have a list of trusted companies that you can choose from. An HOA manager will be able to procure bids from various companies and the board will just have to choose from the shortlist.
5. Value-Added Services
Even though value-added services are not as essential as the others previously mentioned, these are also services that a small community needs to function.
For instance, HOA management can help set up and maintain your community’s website, provide emergency assistance, consult with the board on major decisions, and prepare board meeting agendas.
These are little tasks but having them taken care of can provide HOA boards with a lot of relief. If this is something you are interested in, you should consider HOA management for small communities.
Benefits of Professional HOA Management for Small Communities
The main disadvantage of professional HOA management is the cost. As stated, smaller communities don’t have much wiggle room when it comes to finances. However, in some instances, HOA management for small communities can be a more cost-effective option. Here are some benefits to consider.
1. Better, More Informed Decisions
The support and expertise of an HOA management company will help the board make better, more informed decisions. It’s not the manager’s job to make the decisions for you. Rather, they can present the board with all the relevant information they need to decide. HOA management can also review the board’s decisions to ensure that they comply with relevant laws.
2. Less Workload and More Freedom
Just because there is an HOA management company doesn’t mean that the board doesn’t have to work anymore. Ultimately, the HOA board members are still in charge of the community.
However, they won’t have to waste the limited time they have on simple, routine tasks such as answering calls or preparing paperwork. The HOA manager will handle day-to-day management tasks so that the board can focus on more pressing community matters.
3. An Effective Management System
A professional company can create a management system for a small community. This is not only critical for the association’s operations and resident satisfaction, but it also prepares your community for eventual growth.
With the support of an HOA management company, your small community will have the tools and resources it needs to expand.
Choosing the Best Management for Small Communities
There are a number of big and small HOA management companies out there. To choose the best one for you, it’s imperative to assess your needs and budget first. From there, you can start your search and narrow down your options with evaluations, interviews,
Keep in mind that not all HOA management companies will cater to small communities. However, there are several options in between self-management and professional HOA management.
You can always choose the option that best suits the needs of your small community. For example, with financial-only management, the board can rely on a company to handle financial tasks. Meanwhile, an on-site manager will primarily take care of administrative tasks. Remote management services may also be a cost-effective option when it comes to HOA management for small communities.
Is Small HOA Management Right for Me?
Upon considering your management needs, as well as the benefits of an HOA management company, you can decide whether small HOA management is the right move for you. You may want to think of HOA management as an investment that can save your small community money in the long run. However, since this is a major decision, make sure to consult with your community’s board members and residents.
If you decide to take the leap, you can begin your search for an HOA management company that suits your needs and budget using our online directory.
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