HOA management companies are hired by busy HOA boards who need help maintaining property values and daily operations.
These professional companies can be very valuable to HOA communities because they help improve efficiencies, increase owner satisfaction, and reduce costs.
However, when it comes to payments, there are no standard management fees, and prices can vary greatly from one company to the next. If you’re wondering how HOA management companies calculate their fees, or if you want to know what a fair price looks like, we’ll get to both of those questions in this article.
Table of contents
- What do management fees cover?
- How much does an HOA management company cost?
- How are fees calculated?
- Is hiring an HOA management company worth the money?
What do management fees cover?
One reason why different companies charge different fees is because they each offer their own unique collection of services.
Some companies provide basic services such as administrative support and financial management, while others offer specialized services.
The more a company does for an association, the more it will charge.
Your community’s needs should dictate which company you hire.
While the list below does not cover every single service available, it will give you an idea of what management fees are used for.
Owner relations
Most companies help answer questions or fulfill requests for HOA owners. When disputes arise, managers work to find amicable solutions. Management companies often use technology, such as Condo Control’s HOA management software, in order to simplify communications. This may include online announcements, a portal for paying dues, a digital platform for submitting maintenance requests, and an online library where owners can access forms and HOA documents at any time.
Accounting and financial services
Most companies offer accounting and financial services. In fact, it is not uncommon for HOA communities to hire a company to take on just this one responsibility. Managers will look after bookkeeping, budget planning, and financial reporting.
Good accounting practices are critical to the success of every HOA, which is why boards don’t mind paying someone else to ensure the community has enough money to maintain operations and keep up with repairs.
Legal and compliance support
Navigating the complexities of state laws, as well as the HOA’s governing documents associations is a key part of a management company’s role. They guide the board and may advise them on how to approach legal issues or requirements.
Administrative support
A professional HOA management company assists with admin tasks like maintaining records and planning out the logistics of meetings and events.
Fee collections
HOA managers play a vital role in collecting past-due fees. Board members don’t have time to chase down late payments, but managers have the time and experience to handle delicate matters such as preparing notices of delinquent assessments or enforcing late fees.
Rule enforcement
No one enjoys issuing violations or fines, but HOA managers are always prepared to take on this task. In order to uphold the values and expectations of the community, HOA rules must be enforced. Otherwise, owners won’t have any reason to follow them.
Property maintenance
From arranging landscaping appointments to scheduling repairs, management companies will monitor the property to ensure the community is well-maintained. Regularly scheduled maintenance helps to keep property values high and people safe.
Project management
When it comes to maintenance projects, HOA management companies have preferred vendors who they can recommend to the association. As projects get underway, the manager acts as the point of contact, ensuring the work is done right, within budget, and on time.
Customized services
Some HOA management companies may have staff who specialize in event planning, tax preparation or property improvement. HOAs should expect to pay additional fees for these special services.
How much does an HOA management company cost?
So here’s the big question. How much will it cost for an HOA to hire a management company? Unfortunately, it depends on a lot of factors.
The size of the community, the scope of services required, and the location, as well as external factors like inflation and employment rates, will all impact how much a management company will charge an HOA.
That being said, most HOA management companies will charge based on the number of doors served. The specific rates vary depending on the size of the community, but larger communities often receive a discounted rate. A midsized community could expect to pay $20 to $40 per door per month, but that price could be higher.
To give you a more accurate estimate, the fee you pay will likely be 8% to 12% of the HOA’s annual assessments.
How are fees calculated?
As noted above, fees are usually calculated based on a per-door rate. But there’s more to it. There will be other fees, such as initiation fees, to consider.
Initiation fees
There is an initial fee management companies will charge to take over the day-to-day management of the HOA. This fee varies, depending on the size of the community.
Ongoing management fees
These are the most common monthly fees that an HOA pays to a management company.
Flat fee
A management company may offer an HOA a flat fee for its services. However, the scope of services would be limited under this type of agreement.
Per door pricing
The company charges the HOA based on its size. Large associations tend to pay less per door than small communities.
Tiered pricing
Some companies may provide three or four different package options. The more expensive the pricing, the more services the company will provide.
Additional charges
In addition to base management fees, property managers may also perform additional services not agreed to in the property management contract for additional fees. These extra fees should be clearly listed in the agreement so that the association isn’t left guessing how much a one-time service will cost.
Exit/early termination fees
If your HOA decides to end its contract early, a termination fee will apply. The specifics of exit/termination fees should also be included in the contract.
Is hiring an HOA management company worth the money?
In most cases, the benefits of a professional HOA management company outweigh the cost.
- The HOA gets professional help
Management companies bring expertise and experience when it comes to the intricacies of community management. From financial matters to conflict resolution, management companies take on a lot of the tasks that no one else wants to do.
- The board can focus on more impactful tasks and projects
Management companies lighten to workload for board members. Staff look after many of those tedious day-to-day items so that the board can devote more time to long-term planning and decision-making.
- The community enjoys improved efficiencies
Management companies are experts when it comes to efficiency. Since they manage multiple communities all at once, they have to know how to maximize time and resources. They implement tools and processes to streamline operations, maximize cost savings, and even improve the owner experience.
- The HOA may save money
While HOAs will need to set aside money to cover the management fees, they end up saving money in other ways. For example, a manager may help a community reach a quorum on the first try by getting more members to attend meetings. Previously, before hiring the management company, it always took the HOA two tries to reach quorum. Now, they don’t have to spend additional money reprinting meeting materials and rebooking a meeting space, and important decisions do not have to be delayed.
Conclusion
Every HOA management company has something unique to offer clients. Just like services, HOA management fees can vary depending on a multitude of factors, but most companies will calculate fees based on the number of doors in the community.
Does the value of a professional management team outweigh the costs of management fees? It truly depends on the specific needs and goals of your community. However, many HOAs would agree that having professional help is worth the extra expense.