Since this seems to be the time of year when many homeowner associations are holding their annual meetings I thought I’d post this for both incoming board members as well as homeowners who would like to know the “5 Keys to Managing HOA’s”
I was recently asked to speak to a group of investors about common issues that arise between HOA’s and their homeowners. When preparing for the talk I decided to take the 5 biggest issues or complaints we receive and turn them into tips that association board members could use as they plan for the future.
As you read through these, if you have any questions, feel free to call us at 615-255-2703.
Managing HOA’s requires communication. There are two primary areas where communication is most important. First is communication between the board and homeowners. The second is communication between the Home Owners Association (HOA) management company and the HOA board.
Almost all of the bellyaching by homeowner association members can be avoided with effective communication. Without it, homeowners will only know what they see and experience; or worse yet, what they hear by word of mouth. Keeping homeowners updated on what’s going on will squash rumors and help the homeowners see the bigger picture. So often I see Google reviews of companies where members are complaining about cosmetics, yet the HOA is struggling to keep out of bankruptcy due to plumbing or major structural issues. Taking the time to inform owners will not make everyone happy, but at least they will have a better understanding of the big picture.
Likewise, it is very important for HOA community managers to keep in regular contact with the board. A frequent complaint from board members who hire us is that the previous company that was managing the HOA did not keep the board informed on what was going on. Sometimes, this is a simple oversight on the part of the manager. Unfortunately, it can also be due to the managers not following through with work that was supposed to be done or worse yet, failing to do routine inspections. At Apex Ventures we keep in regular contact with the Homeowner Association Board about the condition of the property, financials, and in many cases, serve as a coach or mentor in order to allow the board to draw on our many years of experience.
Educated & Active Board Members
In order for an HOA board to be effective it has to be both informed and active. Why a board needs to be active versus simply reactive is self-evident. However, an uninformed or uneducated board that is active can be devastating to an HOA. Two of the most dangerous phrases that can be heard in a homeowners association board meeting are “yeah, but I think…”, and “we’ve always done it this way”. A board needs to be educated on the realities of where they stand currently, what it will take to meet the demands of the future, and open to the knowledge that comes from experience.
This means they need to examine the financials and budget on a regular basis. Board members need to ask questions when they don’t understand something. And board members need an experienced HOA management company they can trust to give them accurate information the board can rely on to make good decisions.
For older properties, it can be wise to invest in a reserve study. This independent study looks at all the anticipated needs for the property over the next 40 years, and makes suggestions on how much to budget in order to meet those needs.
When board members have reliable information available to them they can then then create a plan to insure the success of the property.
A Homeowners Association is a business and every business needs to maintain their documents. Proper record keeping of minutes from board meetings, vendor repairs, accounting and collections are examples of some of the documentation that needs to be preserved and should be expected of anyone managing HOA’s. Likewise, it is beneficial to keep notes of when you speak to property owners or when they call about a particular issue. Instead of deleting old emails from homeowners, you might want to save them to a “HOA” folder for future use.
Maintaining association documents is a “no brainer”, right? I thought so too, but what happens if you end up with a large HOA management company with lots of turnover? What happens when that management company assigns you a different property manager every few months or if you’re lucky, only once a year? Most companies should have a secure database that houses the documents, and most probably maintain, at least for a while, access to the company email accounts of old employees. However, if the old employee communicated by text or from a personal email account, that documentation could very well be lost forever once they are gone.
Our HOA managers at Apex Ventures tend to stick around a long time. With low turnover, about the only time there is a change is if it makes sense geographically to provide better service. In those cases, the other manager is still with the company and is available to assist with questions or in locating documents, emails, etc.
Follow Up on Repairs
There’s really not much need to explain this one other than to say, “don’t assume the work was done, or that it was done correctly.” Also, if the repair is the responsibility of the homeowner you must be extra vigilant. The failure to properly fix a damaged door frame could lead to water getting into the wall and creating structural damage. That $100 repair that was the responsibility of the owner could easily turn into a $5000 repair that is the responsibility of the association. Usually, if you have a good HOA community manager, they will be the ones to make sure that repairs are done quickly and correctly. Ultimately, if you do not trust your property manager, or if the association is self-managed, you will need to follow up yourself.
Plan for the Future When Managing HOA’S
If you are a builder or a community that is less than 5 years old pay close attention to what I’m about to say. You must start saving NOW for repairs that will be needed in 20 years. If you’re really smart, you’ll start planning for the next 40 years.
Are you responsible for your own roads and sidewalks? Are you a condo development with shared sewage? Depending on the size of the development, an extra $10-20 a month per unit now, could very well prevent high assessments and $200/ month association dues in the future. When you have a sufficient operating budget and a healthy reserve fund, repairs can be addressed quickly before they lead to serious damage.
Apex Ventures, Managing HOA’s for YOU
The Apex Ventures HOA Management team has been providing real estate and property management services in the Nashville area for over 30 years. We are known for managing HOA’s all around the Nashville area, including Franklin and Smyrna. Whether a builder or board member, if you are in need of association managers you can trust, click here or call 615-255-2703 and one of our team members will get back to you with the requested information.