Self-Managed HOA vs Hiring a Management Company: Pros and Cons
In the United States, it’s common for people to live in a Homeowners Association Community (HOA). The purpose of such an association is to operate the neighborhood and care for its security.
Like any other organization, this one also has members with various roles assigned to them. They all have different duties and responsibilities. Managing a community is not a simple job. That’s why a crew is needed.
HOAs often hire management companies to help them. There are many upsides to getting professional assistance, but there are upsides to the team working alone within the community. As an HOA board member, you might be unsure of which direction to take. To find out if it’s better to self-manage a community or hire a management company, read on and you will discover the pros and cons of each.
Self-managed HOA board members go around the neighborhood to collect fees, resolve disputes, find solutions to maintenance issues, and work on the safety of the community. They must manage many properties at once. The board members have a fiduciary responsibility to act in the community’s best interest.
When self-managed, they will handle collecting fees, resolving resident disputes, getting bids & contracting maintenance work, conducting board meetings & voting, daily community operations, and communicating with residents.
HOA Board members take it upon themselves to listen to the complaints of their neighbors. Even though there are many different roles in the team, keeping track of everything and managing a whole community gets tough. In such cases, the community decides to get the software to help.
Property management and HOA applications are designed to simplify the working process. Software, such as Pilera, serves condos, apartments, and houses. The HOA members use such platforms to communicate with each other and manage their tasks. These applications make it easier to respond to requests and complaints. Therefore, the right HOA software will help the community to be more productive.
Pros of Self-Managed HOAs
When HOAs work alone, the residents of the neighborhood elect the best candidates to take care of the community. These are the people who the neighbors trust. They are friends and acquaintances. These individuals know each other.
Stronger Sense of Community
The neighborhood has chosen each board member as a representative. When people choose someone to govern the area, they feel seen and heard. This is better for families because they get a sense of importance. Thus board members and residents are able to build a stronger relationship.
Less Financial Toll
This type of management takes less financial toll on the neighborhood. The community doesn’t have to pay management fees. Therefore, the residents’ monthly HOA dues may be directed to other areas. However, improper allocation is more likely with a self-managed HOA as they lack the experience.
The members of the HOA are also a part of the neighborhood. They occupy properties in the area, which means they will not only try to improve the community for their neighbors but for themselves as well.
Cons of Self-Managed HOAs
The members of the team are volunteers, which means that they are not getting paid for all of the hard work they do. The team might get discouraged because a lot of their time is being spent on the HOA when there is no compensation.
Lack of Time
There’s also the issue of other jobs. As already mentioned, the HOA members don’t earn income from the community. Therefore they need to have full-time jobs that consume most of their time. It can also be very exhausting to manage the community while also working a 9-5 job.
The members of the association can have disputes within the group. They are not professionals, therefore if their ideas don’t match they might get aggressive toward each other.
Lack of Experience
Another challenge is that the team will have difficulty dealing with the laws and regulations. In the end, there might be a necessity to hire attorneys. While board members will have varied experiences that they can bring from their profession, they may not know how to deal with the nuances that come with managing a community.
HOA Management Company
Homeowners Associations turn to management companies if the community agrees on it. Management companies have professional employees with experience in the field. More management companies are encouraging their employees to attain certification in the field. The management company can also be the HOA’s legal advisor and assist them with daily tasks.
HOAs hire such companies when the community is very large. Keeping track of many people at once and their problems can get very tough. In these cases getting external help is a wise solution.
This doesn’t mean that these companies do all of the work. The board is still responsible for making important decisions about the community. The association still has team members that have assigned responsibilities. However, this time, they have assistance.
HOA management companies handle the business of the association with many hired professionals and some efficient tools. Many HOA management companies use software to handle the daily tasks on behalf of the board members. This includes communicating with residents, managing maintenance and support requests, and handling violations. An additional benefit to the board is the oversight that it provides them. They can see all the tasks that managers are working on for them in real-time. As an example, learn how managers and board members of a 225-unit condo association in Maryland were able to modernize communications and improve workflow in the Solomons Landing Case Study.
HOA Software often has minimums, commonly in the hundreds of dollars. Therefore, it may not be affordable for smaller associations but can be subsidized by management companies who usually only charge a dollar or less per unit.
HOA Management Company Pros
We already addressed the fact that management companies have experienced professionals employed. This means that the company consists of a large group of individuals who have great experience in the field.
Whenever the HOA has any issues regarding insurance or finances, the management company can get involved. These companies have lawyers, financial specialists, managers, and accountants working for them.
More dedicated time
Lack of time is not going to be an issue for the board members with the assistance of professionals. They can go to their respective jobs without worrying about the association. This is because if they have any problems while working on the HOA, the company is going to provide them with solutions. A lot of time is saved this way.
Professional advice on rules and regulations
The HOA management company is going to help the community with its rules and regulations. HOA management company will help the community enforce its CC&Rs. It will also help the community stay compliant with local and state regulations. Each employee has their place in the team, so conflicts are less likely to arise.
Streamline the community’s maintenance
The management company is going to solve any maintenance issues the property owners are going through. The professionals are going to find the best vendors and oversee the working process. They will help vet vendors to make sure they are licensed and insured. It helps to avoid the concern with self-managed communities that might hire uninsured vendors to save money.
The management company is going to bring the community convenience and safety. These companies have members who know how to keep communities safe.
The help center is going to be active constantly. The members of the board can save their energy after work and let the professionals take over. The management company also acts as a liaison between the board member and the residents. The residents can go directly to management for any queries or concerns they have about maintenance, paying dues, or other community matters. They are going to act as your consultants.
HOA Management Company Cons
While the management company mostly brings relief to the board, there are going to be some problems as well.
The members of the community might be against paying higher fees. An independent association has its members working on the issues for free, while the management company is going to request payment.
Another issue that could arise is the lack of trust. Oftentimes small communities have trouble letting other people govern them. Especially professionals from corporations. This might cause the property owners to get dissatisfied even if the results are pleasing.
Many HOAs have to weigh the pros and cons of being self-managed versus hiring an HOA management company. One of these consists of members who don’t have much energy or time to complete the tasks but try their best and are elected by the members of the community. While the other asks for payment but in return creates comfort and a safe environment with little effort.
HOAs are recommended to hire management companies if their community is large. If the community is small, however, operating the neighborhood is going to be easy for the board. In the end, the community must decide what they prefer together. They can always use technologies and the right HOA management software to help them elect manage community tasks and communicate. Either way what matters is that the people work with each other.
Pilera Software is the premier community and property management software that has helped thousands of community managers enhance communications, improve customer service, and manage compliance and operations. To learn how Pilera can help to improve efficiency and reduce costs, book a personalized demo.