A homeowner's association has bills, just like every other organization. The source of the funds to pay those bills? HOA fees.
In the U.S., HOA homeowners pay, on average, $190 a month to their HOAs, and. However, collecting hundreds of thousands of dollars doesn't necessarily mean the community's needs will be met. A lot depends on how those funds will be managed.
If you're part of the team that's responsible for managing your Charleston HOA's fee collections, you need to equip yourself with the right knowledge and skills. Here's some practical advice on how to stay on top of HOA finances.
Ensure Efficient HOA Fee Collection
HOA homeowners are responsible for paying a pre-determined monthly fee and any other assessments the community might introduce. As a board, you might sit back and wait for the funds to roll in, but that would be the wrong approach. While most homeowners in your community might be responsible people, there might be others who won't bother to pay until someone comes for the money.
The first step in HOA fee management is ensuring an efficient collection mechanism is in place. For example, provide multiple payment options to improve ease of payment and collection. If you already have an owner portal, use it to send invoices, payment reminders, and receipts. It can also be used to automate fee collection.
HOA Financial Planning/Budgeting
Budgeting is the lifeblood of HOA financial management. Whether your HOA collects $200,000 or $2 million annually, without a proper budget, most of the funds can go to waste.
Considering that an HOA board comprises elected volunteers who own a home in the community, your board might not have the right expertise to budget for the HOA's funds.
The best move is to outsource the job to a professional association management company. These companies have a staff that includes accountants and financial managers, putting them in a strong position to handle the task.
However, if you'd like to keep the function in-house, keep in mind the following important expenses:
- Maintenance and repair of communal facilities
- Security services
- Garbage collection and cleaning services
- Utilities like electricity, water, and internet
- Insurance
- Staff salaries
- Reserve fund
Ensure Transparency and Community Engagement
HOA boards have a fiduciary duty, but it's not always taken seriously. Stories of misappropriation and/or embezzlement of HOA funds aren't uncommon.
If you don't want your HOA to sink into trouble and take down home values along with it, ensure open communication and transparency on financial matters. Keep residents involved in the budget-making process so that everyone has a say in where the community's financial resources are going.
The hiring of contractors to serve the estate must be open and above reproach. Without transparency, allegations of self-dealing, whether with or without merit, will inevitably arise.
Put HOA Fees to Prudent Use
HOA boards have a responsibility to collect HOA fees and manage community expenses. With these tips, you're now in a better position to implement strategies to with lead to sound financial management.
If your Charleston community needs professional help, Adams Properties, which is powered by PMI -- a global property management company with over two decades of experience -- is ready to step in.
Schedule a consultation with our association management experts today.
