You won’t save by self-managing, but you will by hiring a homeowners association (HOA) or condominium owners association (COA) management company.
It seems counterintuitive, but it’s true. Although management companies are associated with costs, they can actually save your community a significant amount of money each year because they are high are skilled in managing HOA finances.
In this article, we’ve compiled the top reasons why you should consider hiring an HOA condominium management company. But before we dive into the benefits, let’s take a look at how HOA and COA management companies can reduce your community’s operating costs.
How an HOA Management Company Helps Save Money
Many HOA-or-COA-regulated communities make the mistake of not hiring a property management company. They think that delegating the demands of association management to the board is the best way to cut costs. However, what they don’t understand is that board members don’t always have the skills to handle the critical aspects of HOA management. Board members won’t be able to apply industry-standard practices, and ultimately, the lack of experience will result in unnecessary spending.
Although the fee for an HOA management company may be high, the know-how that they provide will make it worthwhile.
#1 HOA management companies have connections.
Property management companies have been in the industry for far longer than your board members have. They’ve established long-standing relationships with contractors such as plumbers, electricians, landscapers, and so on. They’ve done the tedious task of vetting each vendor to ensure their professionalism.
By hiring an HOA management company, you can reap the benefits of their vendor network. Their association managers will provide you with high-quality services at reasonably lower rates.
#2 HOA management companies can negotiate cheaper contracts.
When you work with an HOA management company, chances are, they’re working with other HOAs and COAs in the area. This means that they’ve probably secured the services of a single contractor to take care of routine tasks across the communities that they manage. For instance, they might have hired a single contractor to take care of pool maintenance for all of the neighborhoods under their wing.
From a property owner’s point of view, this means significant savings. This is because the HOA management company can negotiate low-cost contracts with their current contractor.
#3 HOA management companies know the law.
Your HOA or COA board likely doesn’t know the law well enough. Property management companies, on the other hand, can provide you with much-needed direction when it comes to understanding state and local laws. This is because they typically have a team of in-house attorneys that study and stay up-to-date with the laws affecting HOAs and COAs.
In addition, property managers have years of experience under their belt. This allows them to share valuable advice with your HOA or COA. A community that complies with the law can avoid lawsuits that can cost your association thousands of dollars.
#4 HOA management companies have their own technology.
By hiring an HOA management company, you won’t have to worry about building a website or creating an app from scratch. Instead, you can take advantage of their existing infrastructure.
Management companies typically use their own tools. For example, they may have an online portal where residents can pay for their dues and violations. Similarly, they may use an app that lets associations keep track of work orders.
#5 HOA management companies know how (and who) to hire.
Self-managed HOA and COA boards are at risk of facing serious legal repercussions, especially if they aren’t adept with the Equal Employment Opportunity Act. This is because they tend to forget that even though they aren’t “employers”, they should still follow labor laws.
Property managers, on the other hand, know how and who to hire. They know that the vendors they hire should be insured and licensed and that they should submit the necessary documents during tax season.
Since the risk is too high, it is crucial to hire a property management company. With their help, you can prevent potential missteps that could lead to financial loss.
Cost of Hiring an HOA Management Company
If you’re enlisting the services of an HOA management company, expect to pay three types of fees: the initiation fee, the management fee, and the exit fee.
#1 Initiation Fee
The initiation fee is a one-time fee that you have to pay once you sign the contract with the management company. The price varies depending on the day-to-day tasks that you expect of them, hence, it’s important to specify these in the contract.
The initiation fee can range from $25,000 to $30,000, and it can be paid in installments if your HOA management company allows such an arrangement.
#2 Management Fee
The management fee is the monthly fee that you have to pay your property management company. The average cost ranges anywhere between $10 to $20 per household, however, rates differ depending on the size of the community.
#3 Termination and Transition Fees
A standard contract with an HOA management company lasts one year. In the event that you decide to change your management company in the middle of the contract, you will have to pay a transition fee. This fee indicates that you wish your former management company to orient your new management company. Simply put, a transition fee ensures a smooth “hand-over”.
If you simply want to terminate their services before the end of the contract, you will have to pay a termination fee or an exit fee. The pricing varies depending on the property management company.
Conclusion
Does your HOA need help? With a full-service property management company like Luxury Property Care, you’ll have reliable support in maintaining your community or condominium. Our property managers have been doing this for decades, which means we have the experience and expertise to manage your multi-family property efficiently.
If you’re looking for an HOA management company in South Florida, look no further. All you need to do is to get in touch, and we’ll walk you through the terms and conditions of our HOA and COA management services.
Call us today at (561) 944 – 2992. We’d be delighted to help you with your HOA.
