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Hiring A HOA Property Manager

PMI Garden State - Monday, June 19, 2017
Property Management Blog

Hiring a property manager is an easy decision for landlords who don’t want to worry about the day-to-day hassles of running a rental property. When it comes to Homeowners Associations (HOA), however, the decision isn’t so cut and dry.

Typically, an HOA exists when a group of people buy properties in a planned development. HOAs often oversee condominiums and townhouses in gated communities or subdivisions, and membership is mandatory. An HOA is usually run by property owners who volunteer to help manage the needs of their community. These needs include everything from ensuring compliance with community “rules”to routine maintenance and collecting HOA fees.

Using owner volunteers to manage an HOA seems like a no-brainer, especially since it won’t place an extra financial burden on the community. But, depending on the size of the community and the number of community needs, the demands can quickly get out of hand.

Small communities that consist of five or fewer residences may be easily managed by the owners. Obviously, the more owners you have, the more of everything there is to manage: bills, complaints, regulations, maintenance, collection issues, etc. However, even in small associations it can be difficult for owners to manage things on their own. It doesn’t take much for neighbors to feel uncomfortable about serving as bill collectors and rule monitors for one another.

Because proper management can make or break a community, it’s important to consider whether hiring a property management company for your HOA is worth the investment. Asking the right questions is one of the best ways to determine if it’s time for outside help.

How many buildings, properties, and amenities does the HOA manage?

There’s often more to consider than the number of residential units in an HOA. Many planned communities include extras like parks, swimming pools, and workout facilities. These amenities are part of the HOA’s responsibility. Communities need to ensure that shared use areas are well-maintained, safe, and covered by the required insurance to protect owners and visitors. That can be a lot for a group of volunteers to take on.

Is there a lack of volunteers to manage the HOA?

The number one problem volunteer organizations have is that they rely on volunteers. Owners already pay a monthly fee for HOA services. For many, they may fill that is all they should be expected to do. An HOA without an adequate number of participants often can’t even vote on decisions like hiring a snow removal company, let alone respond to daily needs in a timely manner.

Do volunteers have the right skills and knowledge to properly manage the HOA?

Some communities have plenty of people willing to step up, but if those eager volunteers don’t have the right expertise and abilities, they won’t be able to get much done. Unfortunately, a lot of the work HOAs need to do requires some familiarity with laws, liability, and basic home and lawn maintenance. When the HOA is hiring a contractor for work or needs to shop around for insurance policies, the owners expect the board to make a sound decision that protects everyone and makes financial sense. An uneducated choice by the HOA could cost time and money for every owner in the community.

If an HOA asks these questions and comes up with answers that indicate a lack of either manpower or expertise, it’s probably time to seek some outside help. That’s where a property management company can really help. Not only do property management companies come equipped to take on the demands of any size HOA, they can also save owners money, worry, and the occasional headache. Take a look at what property management companies can provide an HOA.

Discounts on services: Everybody wants to get more for less. Property management companies use their existing relationships to get lower rates on everything from insurance to lawn maintenance.

Financial management: Property management companies know how to handle monthly collection of HOA fees, dues, and fines, create and manage a yearly budget, establish and maintain a reserve account, and develop long-term capital improvement plans.

Rule enforcement: It’s easier for a nameless company to remind the fellow across the street that he needs to take down his Christmas lights, than for a neighbor to do it. The property management company can conduct regular inspections to ensure that owners are in compliance and can also do all the follow up (including fines) required for situations that go too far.

Legal representation: Most property management companies have a lawyer on board. This means the HOA has representation for contract disputes, delinquent account collection, and other legal issues that may arise.

When an HOA decides that hiring a property management company is the right thing to do, the next step is reviewing the HOA’s governing documents to make sure there is no prohibition against hiring a third-party to carry out some or all of the duties of the HOA. After that, it’s time to start looking for a reputable company to partner with.

The HOA should identify at least two or three property management companies to interview. If the interviews go well, the next step is to conduct reference checks. It’s best to talk to other HOAs that have worked with the company. In addition to verifying that the property management company can fulfill the required duties, it’s important to make sure they fit with the community’s values and long-term goals.

Thoughtful consideration and due diligence are the keys to establish a successful relationship with a property management company. HOAs should take a good look at their responsibilities, qualifications, and needs – then start the search for the perfect property mangement match. Contact PMI today to find out more!