When Should My HOA Consider Self-Managing With Accounting Support?
Over one third of condo communities and homeowner associations (HOAs) are self-managed. If you have 200 units/homes or less or have a high level of board participation you are a prime candidate to self-manage with support. By support I mean with financial management services, administrative services and relying other professionals. Benefits include saving money, increased control and often less frustration. Self-management with support may be the best solution for your community.
You Won’t Be Alone
According to the most recent Community Associations Institute (CAI) Statistical Review an estimated 30-40 percent of community associations are self-managed. The number of community associations in 2018 is estimated at 347,000 which included 27 million housing units. If we use 35% that are self-managed that means approximately 121,450 communities and 9.45 million housing units are self-managed. A lot of communities use this form of management successfully.
The Myth of the Burden
But you heard self-management is hard? No one has time to volunteer for the board. No one wants to do all the additional work involved. Well guess what – board members don’t have to do all the work themselves – does that alleviate some of your fear? Maybe the self-managed community board member that told you it was a lot of work isn’t using the formula for success outlined below.
Which HOA Aspects to Outsource?
Financial Management Services
Handle all the monthly accounting activities such as: mail or email monthly, quarterly or annual statements or coupon books, deposit funds, answer owner payment questions, apply late fees and send late letters to delinquent owners, pay approved bills, answer vendor payment questions, send out year end 1099 tax forms, liaise with your collection attorney with late payers, produce monthly financial reports and reconcile the reports against your bank accounts. You don’t have to worry about pestering your neighbor that paid late or have to keep track of all the accounting activity on your own.
Handle many of the common administrative tasks a community needs such as: assist with community mailings, handle resale certificates and lender questionnaires for refinancing, offer 24/7 emergency maintenance call handling, keep unit owner rosters and more.
Rely on Your Current Cast of Professionals
You probably have been using a host of community specialists successfully and that doesn’t have to change when you become self-managed. Use your attorney that specializes in community associations to handle legal issues and foreclose on delinquent owners. Continue using your CPA that knows community associations to do your tax return and audit. Utilize all the good maintenance & construction vendors that have worked hard for your community who will still want to work for you – just get the vendor list from your manager before you leave.
The Numerous Benefits of Self-Managing Your HOA with Accounting Support
Save over 50% of the cost of “full management” even after hiring a financial management company to do a lot of the work. The cost of other professionals you use has been a line item in your previous budgets so not much will change there.
A manager won’t be paying for things that you are not aware of and you will have complete control over your expenses. You will also have more control over when items on your to do list get done – remember having to go over the same items at every board meeting without getting results?
Remember having to email and call the manager numerous times to get answers – you won’t have to. Through improved communication, including tools for 24/7 online access to information, you will lower your blood pressure.
Your financial management vendor may offer e-statements, accept online payment of owner fees, reduce delinquencies with the threat of reporting late payers to credit bureaus (impacting their credit score), offer greater transparency to the board to review bills online before payment, may offer websites and mobile apps for enhanced communication, and other new features that your current manager doesn’t offer.
You can get what you want: less frustration, increased control and save big money without having the burden of traditional self-management. By partnering with professionals you will get the support you need to make a change from “full management” to self-management with a much reduced and manageable workload.
If you want to learn more about making a change to becoming self-managed read our 10 Steps to Self-Manage your Community guide.
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