HOA management solutions are great tools to help you keep your HOA on-track, but they can’t do all the work for you. Setting an HOA budget still requires a lot of thought, as well as an understanding of the laws that govern property management in your area.
Things can go badly if an HOA manager doesn’t efficiently set their budget. It’s important to keep these best practices in mind to ensure smooth operations in the year ahead.
Five Best Practices for Setting HOA Budgets
- Periodically Review Your Governing Documents
Many HOAs can have potentially-complicated processes for having budgets set and approved, particularly if that budget could have direct impact on the residents – such as raising fees. Does it require a vote from the HOA board, the homeowners, or both? Or under what circumstances?
Always understand this before putting a budget together. Good HOA management solutions can streamline the voting process, but often it’s better to avoid the need for community-wide votes.
- Keep Your Reserve Studies Up-To-Date
Much of your budget will be largely pre-determined, based on your reserve studies and their suggestions for future improvements and investments. Keep these up-to-date, and always ensure the amount in the reserve fund matches what’s supposed to be there. You’ll avoid unpleasant surprises this way.
- Be Willing To Renegotiate Contracts
Don’t immediately re-sign with a contractor\vendor as soon as their term is up. Negotiate, and look for alternative providers. Smart haggling can often cut large chunks out of your services budget, which in turn frees up more funds for other projects without needing to increase HOA fees.
- Encourage Money-Saving Among Your Community
Don’t forget that keeping the budget reasonable is partly the responsibility of the homeowners. Send out frequent communications encouraging them to behave in ways that keep your costs down, like reducing water usage during the summer. Consider offering rewards\bounties for residents who find creative ways to lower overall management costs.
- Keep Communication Open and Transparent
Trust is a necessity between an HOA manager and the residents, so be open about the budgeting process. Invite numerically-minded residents to look over the books, or make suggestions on cutting costs. You’ll boost community goodwill and increase the chances of your budget passing in the process.Posted by Angie Jimenez Posted on 15 Sep