Community Managers and Cost Savings

Management Fees Analysis

Homeowner Association Management is one of the most challenging forms of property management there is.  Associations are controlled by the board, governing documents, state statutes and property rights.

Association Managers are called on to do everything regarding the association plus be an expert at public relations, mediation and human psychology.  They are often called on to work a full day and then attend night meetings.  It is demanding work and those that are good at it are a rare breed indeed.

HOA management companies typically work by contract for a monthly fee.  But how is that amount computed?  It generally is based on the estimated time it takes to accomplish the tasks outlined in the management agreement.  There is often an hourly charge for tasks not deemed to be routine.

So what goes into the management fee?  There are fixed costs like rent, phones, copier, insurance, computers and internet.  Labor charges based on the estimated time it will take to accomplish the prescribed work.  Total fixed and labor costs plus profit margin equal the monthly management fee.  It’s common to divide this number by the total number of units/lots to derive the charge “per door”.  Size matters: small HOAs pay more and larger ones pay less per door.

Typically, an HOA management company will assign a manager, a bookkeeper and administrative assistant to the account.  All will handle multiple HOAs.  The salary levels of the staff can have a major impact on the management fees.  If an HOA wants experienced professionals, there is a price to pay.  This is one of the most challenging forms of management there is and a jack-0f-all-trades just won’t do.  A qualified HOA manager attends seminars, has professional designations and credentials and focuses exclusively on HOA management.  The HOA will benefit from this training and experience so expect to pay accordingly.

Managers spend a great deal of their time preparing for and following up on board meetings.  For a typical board meeting, the manager gathers information and prepares a management report, reviews the financial statement, attaches relevant correspondence, puts board packets together and emails or mails them to individual directors.

Most board meetings are held on weekday evenings at the HOA so the manager is required to work after hours and travel, both of which costs the HAO money since it’s built into the contract.  After the meeting, the manager usually has a laundry list to follow upon that occupies most of the following week.  A manager can easily spend many hours on board meeting related business.

Community managers and tips for cost savings

 Community Managers and Cost Savings

What can you do to reduce management costs?  Keep board meetings to 2 hours maximum and consider daytime meetings.  Move the board meeting to the management office and hold them during normal business hours.  Reduce monthly to quarterly meetings.  With an approved budget, proper policies in place and a management planning calendar, the manager should be able to handle most issues with only occasional input from the president.  Letting the manager manage without micro-management from the board may be the single biggest cost saver.

Another cost saving involves manager administration of insurance claims and damage reconstruction.  Insurance matters can take many hours of a manager’s time.  If the management agreement specifically states that insurance claim work is an extra cost to the HOA, the management company can bill the insurance claim for the time to takes to administrate the claim and renovation work.

How about the manager providing sale disclosure statements to owners who are selling their homes and buyers lenders:  The management company should bill owners and buyers separately not have the homeowner association bear the cost.

These are but a few ways that management costs can be trimmed..  Be sensitive to your manager’s time and don’t pile on unnecessary tasks that ultimately will raise the cost.  While it’s important to get what you pay for, it’s equally important to pay extra for extra services.  The best approach it to forge a partnership with the management company and adjust as time and work load permits.

HOA managers are a breed apart and waiting to serve.  Put them to work for your homeowners association and get back to living that carefree lifestyle advertised in the brochure.