HOA management companies often work under a contract for a monthly fee. But how is that the amount calculated? In general, it is based on the estimated time needed to perform the tasks outlined in the Management Contract. There is often a workload of tasks that are not considered routine.
So what goes into the monthly management fee? There are fixed costs such as rent, phones, copiers, computers, insurance, and the internet. The workforce is based on the estimated time needed to perform the prescribed work. Total fixed costs and labor plus profit margin are equal to the monthly management fee. It is common to divide this number by the total number of units / lots. (In Georgia, the average is between $ 10-25/door for condominiums.) Size and staff required matters: HOA’s pay less per home.
Typically, an Owners Association will be assigned a manager, an accountant, a maintenance supervisor, and possibly an administrative assistant to the account. The administrator can manage 10-15 accounts.
Staff salary levels can have a major impact on management fees. If a Homeowners Association wants experienced professionals, there is a price to pay. A qualified HOA manager attends seminars, has credentials and professional designations and focuses exclusively on HOA management. The Homeowners Association will benefit from this training and experience so expect to pay accordingly.
Managers spend much of their time to prepare and monitor Board and Annual meetings. For a typical board meeting, the manager gathers information and prepares reports, reviews the financial statements and relevant correspondence. The Board puts together packages or emails messages to each member.
Most Board and Annual meetings are held in the evenings from Monday to Friday at the Homeowners Association so that the manager is not required to work weekends; which costs money to Homeowners Association, this is incorporated into the contract. After the meeting, the Community Association Manager has a long list to follow-up on which occupies most of the following week. A manager can spend many hours on business related to the meeting.
Another cost savings is in charge of managing insurance claims and damage reconstruction. Insurance inquiries can take many hours of a manager’s time. If the management contract specifically provides that the insurance claim work is an additional cost to the HOA, the management company can collect the insurance claim by the time it takes to manage a claim and the renovation work. A similar principle is the time spent on collections or legal action against a delinquent account. This time, management will be charged to the HOA.
Are disclosure statements provided to homeowners who are selling their homes and lenders to buyers? The management company bills owners and buyers so that the Homeowners’ Association does not assume the costs.
These are just some ways that management costs can be cut. Be sensitive to the time of your manager and not pile on unnecessary tasks that ultimately increase the costs. While it is important to get what you pay for, it is equally important to pay extra for additional services. The best approach is to establish an alliance with the management company and adjust the time and workload demands.
HOA managers are dedicated and waiting to serve. Put them to work for your homeowners association and actually rejoice in the carefree lifestyle advertised in the brochure.