Hiring a professional HOA management company is an important decision. There are many factors to consider such as monthly costs and the board’s available time. Some self managed associations can run efficiently through their board members while others need a manager to take over daily operations. Which option is the best for your community? If you’re not sure, consider the difference between self managed HOA vs HOA management company.
Self Managed HOA vs HOA Management Company: What’s the Difference?
Every HOA has an elected board of directors. These are homeowners who volunteer to run the community. Board members all have roles and responsibilities they need to uphold to ensure that the community is running smoothly and efficiently. The extent of their duties, however, will depend on the type of HOA management that your community has. In most communities, it’s often a choice between self managed HOA vs HOA management company.
What Is a Self Managed HOA?
With self-management, board members are the ones who handle the day-to-day operations and maintenance of the community. They also deal directly with the homeowners — answering calls, facilitating requests, collecting HOA fees, issuing violations, resolving conflicts, etc.
The HOA board also communicates with vendors to schedule maintenance services as well as city officials to ensure compliance with laws and regulations. Financial management is also a major responsibility of the HOA board. They have to perform accounting and budgeting, prepare financial statements, and manage community funds, among others.
What Is an HOA Management Company?
For communities that pursue HOA management services, an HOA manager will be the one to handle daily operations and maintenance services. Your HOA management company will also take over communications with homeowners, vendors, and city officials. They can also help the board with financial management and provide legal advice.
Even with an HOA management company, the board is still involved with community matters. An HOA manager may do most of the legwork, but it’s still the board members who will make important decisions for the community.
Self Managed HOA vs HOA Management Company: What Are the Advantages and Disadvantages?
Managing a community can be very difficult and time-consuming. If you’re deciding between self managed HOA vs HOA management company, it’s important to consider their pros and cons.
Advantages of a Self Managed HOA
Lower Monthly Costs
One of the main reasons why some communities choose self management is due to the costs. Hiring a community association management company is a significant operating expense. Homeowners will have to pay higher fees to cover the costs each month.
Full Control of HOA
In a self managed HOA, the board will be able to retain full control of the community. They can quickly implement rules and strategies that they feel will enhance the well-being of the homeowners. The board can be more efficient as well since they don’t have to consult any third-party company before making decisions.
Connection to Homeowners
Since the board is directly in charge of community matters, they can develop better relationships with the homeowners. The board will have many opportunities to talk with the residents and discover how they feel about certain matters. They will be more in tune with what the members need; thus, they can make better decisions for the community.
Disadvantages of a Self Managed HOA
Time-Consuming
Self managing an HOA is very time-consuming. It can seem like a full-time job with the amount of work that needs to be done to maintain a community. Remember, board members, are just volunteers. They also have full lives outside of the association. If they cannot devote the time and effort necessary, the community will not be able to run smoothly and efficiently.
Lack of Management Experience and Expertise
Not all board members have the experience and expertise needed to properly run a community. They need to have a basic understanding of financial management, insurance, and laws. Proper communication and conflict-resolution skills may also be necessary to avoid any disputes or issues with homeowners, vendors, and other third parties.
No Checks and Balances
In a self-managed HOA, the board essentially holds all the power. They will be able to do whatever they want, and this can be to the detriment of your community. There is nobody to hold them accountable for how they manage the community and handle HOA funds. In extreme cases, the board members’ actions lead to lawsuits and other legal problems.
Advantages of an HOA Management Company
Industry Expertise
An HOA management company will have the experience and expertise to successfully run your community. They have access to the best strategies, management tools, and resources. An HOA manager will also have connections with the best-rated vendors and contractors in your area. They will be able to provide a level of service that you may not experience with self-management.
Better Quality of Life
Having a management company will be able to relieve most of the burden on the HOA board. Since an HOA manager will be the one to deal with daily operations and maintenance, board members will have time to focus on more important matters. The board can easily make financial decisions by reviewing statements and documents prepared by HOA management.
HOA management is more convenient for residents as well. They won’t have to run around trying to look for an available board member to entertain their queries or requests. The HOA manager will always be available for them to talk to.
Less Risk for the Community
With an HOA management company, there can be fewer risks for your community. They will ensure that community rules and regulations are always compliant with the law and that the community has proper insurance coverage. An HOA manager can also act as a buffer between the board and the homeowners. They can mediate during disputes so the association can avoid harassment cases and lawsuits.
Disadvantages of an HOA Management Community
High Monthly Costs
Hiring an HOA management company can be a major expense. The more services they provide, the higher the monthly fee. Though having an HOA manager can be very helpful, not all communities can afford this operating expense. Raising HOA fees might be too much of a burden for some homeowners.
Less Control for Board
If your HOA board is very involved with community matters, the presence of an HOA management company could be a disadvantage. When HOA management takes over the board’s responsibilities, they also gain significant control or authority over the community. With daily operations, they can make decisions even without the board’s approval. Of course, when it comes to major decisions, the board still has the power to approve or disapprove.
Issues with Homeowners
You can be assured that an HOA management company will be nothing but professional. However, in an effort to be strategic or methodical, they may lose personal touch with the homeowners. An HOA manager may not have insight into how the residents feel or what they want. This could lead to issues or misunderstandings with both the residents and the board.
Self Managed HOA vs HOA Management Company: Choosing the Best Management Approach for Your Community
Both self managed HOA and the HOA management company have their fair share of advantages and disadvantages. It’s important to consider the community’s needs when choosing the best management approach.
For example, what is the size of your community? Self management can be enough for a small HOA with 15 units or homes. However, you may want to consider a management company if you are a large HOA that’s struggling to keep up with operations.
Cost is an important factor to consider as well. Yes, an HOA management company will be expensive. However, it may also be cost-effective in the long run. If a self managed HOA’s board is not knowledgeable about community matters, they may enforce rules that are incompliant with the law or neglect to have proper insurance coverage. This can result in massive fines, legal costs, and expensive repairs. In the end, the HOA doesn’t really save any money with self management.
Is There a Middle Ground?
If you feel that self-management is not enough but a full-service management company is too much, you can consider a middle ground: remote HOA management. A remote HOA management company like Clark Simson Miller can handle the more time-consuming aspects such as administrative tasks, financial management, and collection services. Meanwhile, the board will still be active and handle some of the responsibilities such as communication with homeowners and managing contractors. They will also remain the face of the association.
Self Managed HOA vs HOA Management Company: Which Option to Choose?
The distinction between self managed HOA vs HOA management company should be clear by now. Before choosing which direction to take, make sure to talk to your board and community members. If you have a very involved and available board, self management might be the better option. However, investing in an HOA management company is also worth considering if it means that your community will be well-managed and maintained. If you have more questions about HOA management services, don’t hesitate to give us a call.
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