Our newly developed neighborhood is on the brink of taking over from the builders. The builders are building the last 2 homes. We are trying to figure out should we go with a self managed HOA or managed HOA. The neighborhood is leaning towards self managed and I want to caution the neighborhood about this. It's a very small community comprised of 26 homes but need to know some disadvantages to self managed HOA's. I know self managed HOA's are cheaper but sometimes cheaper isn't always the best.
Self managed HOA's are not always cheaper. A good management can save you time and money. A lot will depend on what the HOA is responsible for. I bought into a self managed condo with 42 units. The Board was hiring themselves to collect fees and onsite management. They got a little wonky and went off the rails and ended up having the police called on them by me (should have seen them shaking in their boots) and our insurance ended up settling with me for $10,000. We are no longer self managed. And the management fee is about the same that was paid to our "board" employees.
If the HOA responsibilities were pretty limited and you have active participation by owners I would possibly agree for self management.
Hi @Devan R. I agree with @Bob Bowling. You'd need to have at least one to two responsible, dedicated, level-headed, collaborative, unpaid, retired persons on the board to supervise operations for a self-managed HOA to be successful. Some folks who have never managed before become power hungry and end up causing tons of headaches for the rest of the homeowners not to mention the unnecessarily significant expenses if they don't know what they're doing.
The HOA could hire a PM company to manage for the first year or so until everyone understands how things should be done, then slowly take over management.
Another option, instead of hiring a professional manager for full services, is to hire a professional manager for only certain services. So if there are skills or knowledge gaps in the board then hire a manager just to fill that gap. It may also be beneficial to have a third party demanding delinquent HOA dues instead of your neighbor, even if you decide to go the self-manage route.
Generally, its cost effective to use some sort of property management for a condo association over 8-10 units. Under that amount, its better to self manage. The most time consuming part is the financial management and property managers have resources to collect assessments and automate accounting so that the books are always in order on a monthly basis. You don't want to be in the business of collecting and enforcing HOA fees if you have a full-time job.
Start by soliciting Request for proposals by local property management firms who want to bid on managing your condo association. Interview them, ask them about their team, see what online tools/ website they use to show financial management and up to date accounting. Review the monthly management fees to find the most competitive rate and the impression of the firm and see if you can afford to pay that fee. Full service is the best choice however some firms will offer financial only services for a lower monthly rate which includes fee collection, accounting/ taxes, and financial management, which is the bare minimum you'll want.
Get the board to review the options and prices and vote to hire the top choice. If they don't like any of them, they'll have to decide who will substitute for the duties of property manager.
Here is one firm that just does financials, but I recommend someone local and offering full service management. never used them before so use due diligence.
unless you are looking for a second, unpaid full time job, hire a manager.
Co-signed on hiring a manager but make sure you get and call references. All PM companies are not equal. I can't tell you how many times I've taken over properties from companies that failed to renew elevator licenses, file taxes, renew basic business licenses, and a host of other stuff that would make self-management look more and more appealing!
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