If you’re planning to self-manage your condo or HOA because of a bad experience you had with your property management company, or because there’s no room in your budget to hire help, there are a few things you should know.
For one, self-managing your community means that the board is responsible for all decisions made on behalf of the association. This is arguably the most daunting part of self-managing a community. But, there are ways to protect yourself and your association from risks, and we will outline them below. Read on to discover what it takes to successfully self-manage your condo or HOA while making sure the property retains its value.
Pros and cons of self-managing your community
The most apparent benefit of self-managing is that it’s an opportunity to save money that the association would spend on a property manager.
But, managing a community is not as easy as property managers make it seem. There are many stories of members who decide to self-manage, only to feel overwhelmed at the sheer volume of work that is required.
Community members do what they can, but it’s simply not enough to maintain the property’s facilities and financial records. When the condo/HOA isn’t properly cared for, it can cost a corporation dearly in the long run.
Self-managing your condo/HOA comes with a certain allure of freedom, but as the saying goes, “with great freedom comes great responsibility.” Unfortunately, board members are bombarded with work, personal and community responsibilities.
The condo/HOA suffers as a result because the day-to-day tasks, such as responding to residents, pile up. There’s also the matter of staying informed about new regulations – which are continually changing. Failure to update your association’s documents accordingly can lead to legal issues.
The good news is that members of a self-managed corporation/association don’t have to do everything on their own. And they don’t necessarily need a management company either. Thanks to property management solutions like Condo Control, you can effectively self-manage your association with fewer headaches and greater efficiency.
Using Condo Control’s comprehensive range of tools, you don’t have to spend nearly as much time taking care of your condo/HOA management duties. By eliminate manual tasks, streamlining processes, and minimizing administrative chores, Condo Control’s solutions make life easier for boards and residents.
The software even comes with an app that makes it easy to stay connected to your corporation/association. You’ll also have access to solutions like maintenance tracking, online payments, vendor management, financial reporting, discussion forums, a centralized resident database, and practical security solutions.
Your role as a board member is to protect the interests of residents as well as the property itself. Online software solutions like Condo Control can drastically simplify this process.
How to self-manage your condo or HOA
The key to self-managing a community lies in prioritizing your time. You also need to have systems in place, build a reliable and capable team, and stay on top of important tasks. Here are a few tips and tricks on how to self-manage your condo/HOA successfully.
Maintain a careful record of all financial transactions
Financial record keeping is the cornerstone of running a sustainable organization. You can’t get much done without taking care of collections and payments. Shoddy work will catch up with you soon enough and affect your ability to manage and maintain the association’s affairs.
If you decide to hire an accounting firm to do your books, make sure they’re familiar with condo/HOA regulations and issues.
Build a good team
When managing a governed community, it’s essential to surround yourself with an excellent team of advisers and specialists. This includes a lawyer or a law firm that specializes in condo/HOA or property law to advise you on legal matters about property management.
For instance, let’s say you’re dealing with an applicant that wants to move in with an emotional support animal even though you’re a no-pet building.
This is a grey area, but it’s also a challenge that you can only overcome through a combination of understanding your association’s rules and local laws. Consulting with a lawyer on such matters will give you a professional perspective while insulating the community from liability.
You’ll also need an accountant who will audit your financials once a year, or as required by regulations in your state or country.
While it’s tempting to do everything by yourself, we highly recommend that you consult with professionals on matters where the board has limited knowledge. This way, it can make informed decisions.
Follow board requirements
Another key to success when it comes to a self-managed corporation/association is to operate as a professional board. This means holding regular board meetings to iron out small issues before they develop into severe problems.
Make sure that you have a dedicated record keeper or secretary who is responsible for writing, filling and following up on meeting minutes.
Also, create policies and follow them; plans won’t work out well if you just “wing it.” Plus, boards are obligated to meet certain requirements.
You need to act in an organized manner because you have a great responsibility to preserve and improve your community.
Create a sustainable budget
As an board, it’s essential to set budgets well before the new calendar year and stick to them. Set regular dates on which you’ll review your budget so that you can identify any problems early on.
Review your association’s budget history is just as important, especially if you are relatively new to the board. Studying long-term trends will help you understand how money has been used and where cuts have been made.
All corporations/associations need to have a reserve fund, which is like a savings fund used for major repairs. This percentage of fees that are directed into the reserve account will vary according to the association’s income and needs, but it’s usually between 10% to 20%. Remember that condos have a higher obligation in terms of maintenance which means they may need a higher reserve amount.
Having budget reserves on hand can help you pay for unexpected major repairs while avoiding special assessments. According to experts, the main rule of thumb is to prepare for the breakdown of at least two significant pieces of equipment at the same time. For instance, you might need to replace the roof and revamp your entire HVAC system simultaneously due to a natural disaster or other event.
Since the cost of water, gas, and electricity will continue to rise each year, you will need to factor increases into the annual budget. You will likely need to increase owner dues/fees to keep up with the cost of living.
All projects and future repairs should be prioritized accordingly, which means you must differentiate between the association’s needs and member wishes. You’ll do well to eliminate any potential liability before you proceed on a proposed community beautification project as well.
Since we’re discussing planning, make sure you’re aware of the franchise levels for the various elements of the compound. For instance, you might need $15,000 in your reserves to cover unexpected roof replacement costs. The key is to ensure that your association is ready in the event of unforeseen disasters so that you won’t have to strike for special assessments to cover insurance claims.
Negotiate supplier contracts
Put aside some money in your budget for monthly service providers. This includes your pool contractor, a landscaping company and plumbing specialist. Ask them if they’re planning on altering their rates soon so you can negotiate fair prices and plan accordingly. Consider signing a long-term contract if you trust the vendor. This way, you lock the condo/HOA into a good service rate.
Use special assessments sparingly
Special assessments should only be used if the condo/HOA has no other options, but sometimes they are necessary. If your association is struggling to cover expenses because finances are tight, increase regular dues in the upcoming budget first. Owners don’t like to see fee increases, but most would rather pay $50 more each month than scrape together $5,000 for a one-time special assessment payment.
Create fair and practical rules
Creating and enforcing rules and regulations is crucial to maintaining a happy organization. Even rules become dated after some time, and if they no longer serve the community, they will need to be revised. Other times, the rules are unclear, leaving owners with more questions than answers. By reviewing and making small changes to rules, the board can help reduce conflict and misunderstandings.
If you’re going to self-manage, make sure to keep your members in the loop on current condo/HOA business by holding frequent meetings. Communicate regularly through email, text and physical notice boards. It’s essential to keep your members informed so that they feel like they have a voice and a say in how their community develops and operates.
Whether you’re managing 20 units or hundreds of homes, self-managing a condo/HOA has its challenges.
Fortunately, thanks to user-friendly management platforms like Condo Control, self-managing a community has never been easier. You can run all aspects of your operation from one platform and stay in control of requests, documents, amenity bookings, events, and so much more.