HOA Management: The Pros and Cons of Hiring a Professional vs. Doing it Yourself

According to 2019 data published by the Community Associations Institute, there are 351,000 community or homeowners’ associations (HOA) in the U.S. and 73.9 million people have chosen to live in a community governed by an association. These numbers will continue to grow as 77% of new housing is part of an HOA.

Every HOA is responsible for managing a lot of information and small details, depending on the size of the community and the amount of common area that needs to be maintained. The duties of an HOA include:

• * Scheduling and conducting meetings. These include the annual meeting for all residents, more frequent meetings for board members, and special meetings as needed.
• * Creating a budget and determining residents’ dues. This includes collecting dues from all residents, deciding how much to set aside for reserves, and preparing monthly financial reports.
• * Hiring, managing, and paying subcontractors to maintain the common areas of the community.
• * Managing and enforcing the governing documents. This includes enforcing architectural standards established by the board as well as being knowledgeable on and enforcing all state and local laws.
• * Keeping residents informed of association activities.

Every HOA has a choice of either recruiting volunteers from the community to oversee and carry out these tasks or hiring a professional manager to handle it for them. Read on to review the pros and cons of each option.

Self-Management

Some communities – especially those with fewer residents or less common area – may decide to manage the HOA duties using resident volunteers.

Pros of self-management

• * The main reason a community would want to self-manage is to save money on operating costs, which will benefit small communities with fewer residents and a small budget.
• * A community may decide it has all the expertise needed to manage its HOA among its residents, including accountants, attorneys, and other professionals.
• * Self-management may be more feasible for communities with little to no common areas to maintain.

Cons of self-management

• When an HOA relies on an all-volunteer group to oversee its management, it is often difficult to get the commitment needed to ensure all tasks are completed consistently and sufficiently. Volunteers may not prioritize their HOA duties as highly as their other work and family commitments, and roles may change frequently as people move in and out of the community.
• Since a volunteer staff tends to have a lot of turnover, there are many management questions that need to be answered year after year, including:
  • * Who will develop the budget?
  • * Who will collect delinquent dues?
  • * Who will be available 24/7 for emergencies?
  • * Who will notify members who are violating the rules?
  • * Who will shop for insurance?
  • * Who will handle miscellaneous affairs of the association?

Professional Management

Many communities use the services of a professional management company to oversee their HOAs. While hiring a property management company comes at an expense to the community, using an outside firm also offers many benefits and efficiencies.

Pros of professional management

• * A professional manager can provide the skills and expertise needed to manage the community HOA, while the skills of volunteers may be unproven.
• * Professional managers will have systems and technologies in place to keep all HOA records and documents organized and accessible.
• * Established managers will have access to vendors and subcontractors to maintain the common areas, saving the community from having to find and oversee these professionals on its own.
• * Managers will provide all the financial services needed to ensure the HOA operates effectively, including preparing the budget and monthly financial reports, monitoring reserves, and collecting delinquent dues.
• * Professional managers will address the community’s insurance needs, securing proper insurance for the HOA and ensuring all vendors and sub-contractors have the proper insurance to protect the community.

Cons of Professional Management

• * Hiring professional management is an added expense to the HOA, which can be challenging, especially for smaller communities.
• * Finding the right manager for your community HOA can take time. Each company will offer different qualities, rates, and services, as well as various levels of experience and areas of expertise. Throughout the hiring process, the HOA may form a search committee to create a Request for Proposal (RFP) to state the community’s management needs, conduct interviews and background research into the candidate companies, and choose which company to hire.

Whether a community decides to hire a professional manager or use volunteers, it is the HOA’s board of directors who is ultimately responsible for the operations of the community and for providing oversight and direction to the manager. So effective communication is one of the most important attributes for any HOA manager, as well as the members of the board, to ensure a community runs smoothly and is well maintained.

To find out if Rachuba’s property management team is right for your community’s HOA management needs, please contact us.