Homeowner Associations (HOAs) play a crucial role in maintaining the value and the quality of life within residential communities. Effective management of these associations is pivotal, but not all HOAs have the expertise or the time to handle the demands of day-to-day management. This white paper serves as a comprehensive guide for homeowners considering hiring a property management company. It outlines the key factors to consider, industry norms around costs, essential questions to ask potential managers, what to expect (and what not to expect), common regrets homeowners may have after hiring the wrong company, and how things should ideally run under the management of a competent firm.
Listen to this MoveZen Featured Podcast for tips on hiring a Property Management Company
Understanding Property Management Services for HOAs
Property management companies offer a variety of services to HOAs, including but not limited to financial management, maintenance, compliance enforcement, and administrative support. The breadth of services can vary significantly from one company to another, so it’s essential to understand what a management company offers and whether it aligns with your association’s needs.
Industry Norms Around Costs
Typically, property management fees for HOAs can be structured as a flat monthly fee or based on a per-unit basis. The fees depend on several factors including the size of the community, the scope of services provided, and the geographical location. While exact costs can vary, most management fees range from $10 to $20 per unit per month for basic services. For more comprehensive management, fees can increase accordingly. It’s also common for companies to charge extra for services like major project management or emergency response activities.
Questions to Ask Potential Management Companies
When interviewing potential property management companies, consider the following questions:
- Experience and References: How long have you managed HOAs? Can you provide references from current or past clients with similar-sized communities?
- Scope of Services: What services do you offer? Are there additional fees for services beyond the basic package?
- Communication: What is your process for handling homeowner concerns? How frequently do you update the board on ongoing issues?
- Financial Management: How do you handle billing and collections? What financial reports do you provide to the board?
- Vendor Relationships: Do you have established relationships with quality vendors? How do you vet them?
- Compliance and Legal: How do you ensure the HOA complies with federal, state, and local regulations?
What to Expect and Not to Expect
Expectations: A good property management company should offer clear communication, reliable financial reporting, and efficient problem-solving skills. Homeowners should expect their property manager to be responsive, transparent with HOA funds, and proactive in maintaining the community.
Misconceptions: Homeowners should not expect a property manager to resolve disputes that are legally complex or beyond the scope of management duties, such as neighbor-to-neighbor conflicts not related to HOA rules. Additionally, while property managers handle vendor relations, they should not be expected to perform actual maintenance work themselves.
Common Regrets After Hiring the Wrong Company
- Poor Communication: One of the most frequent complaints from HOAs is lack of communication from the manager, leading to unresolved issues and dissatisfaction among residents.
- Financial Mismanagement: Ineffective management of funds can lead to budget shortfalls and inadequate reserve funds, which might necessitate unexpected assessments.
- Lack of Attention to Maintenance: Neglecting regular maintenance can lead to bigger, more expensive problems down the line, causing frustration and potential decreases in property values.
Characteristics of a Competent Property Management Company
The right property management company will act as an extension of the HOA, working closely with the board to understand and achieve the community’s goals. Characteristics of effective management include:
Conclusion
Choosing the right property management company is a decision that can significantly affect the quality of life in your community and the value of your properties. By considering the outlined factors and asking the right questions, HOAs can form productive partnerships with their management companies, leading to well-maintained properties and satisfied homeowners.
