A necessary evil in running an effective homeowners association (HOA) is member dues or association fees. These costs are assessed equally among all homeowners and provide funding for general management and upkeep of the association as well as improvement projects. But without proper oversight, it can be easy for these costs to get out of control. Kuester Management Group has released a statement to the press regarding how HOA boards can better manage costs and determine appropriate fees.
“There is a fine line between charging too much and too little,” says Bryan Kuester, President of Kuester Management Group. “The board really needs to take the time to evaluate its expenses, what charges are coming up, and how it manages spending and savings. Without adequate funds, the community suffers, but sky-high fees can also be a sign that money is not being managed effectively.”
The first place to start is by looking at the HOA budget, notes Kuester. Itemize expenses and identify areas where the association is spending the most. Has it been a while since vendor contracts were renegotiated? Are there duplications or overlap in services? Is the HOA paying for services that it doesn’t really need? Find opportunities to streamline costs and spend funds more strategically.
If no one on the board is particularly financially savvy – and even just for added protection – it is a good idea to work with a qualified property manager or financial professional. They can help the board to evaluate its spending and create a budget that fits its needs, goals, and income. A portion of assessment fees should be banked in a reserve fund while the rest goes into the operating fund.
“The board should also be working with its property manager to ensure that dues are collected on time or payment plans are put in place for homeowners who may be struggling,” says Kuester. “Timely payment is essential. If there is not consistent enforcement of collection policies and the association has a great deal of delinquent assessments, it can create a major financial hardship. It is difficult to accurately track expenses and have funds available when needed when payments are inconsistent.”
It is also important to manage expectations and be transparent with homeowners. If the association ends up spending more than usual on snow removal or landscaping, non-essential projects may need to be put on hold until more money is saved. Show members exactly how their money is being spent. If expenses rise due to inflation or the changing economy, let them know how that affects the HOA and why assessments may need to increase as well.
“Be upfront and honest when it comes to expenses,” says Kuester. “It’s easier to get more homeowners on board with a fee increase when they can see for themselves what the HOA has done to try to manage costs and how money is being spent. Encourage homeowner input on other ways to cut costs or generate savings.”
Kuester Management Group works with HOAs to improve communication, negotiate vendor contracts, manage budgets, enforce collections policies, and much more. This can be essential in supporting more effective operations and maintaining a strong, financially stable association.
Learn more about the wide variety of services Kuester has to offer homeowners associations throughout the Carolinas by visiting www.kuester.com.
Kuester Management Group, a division of Kuester Companies, works to protect property values and enhance the quality of life in each of its managed communities. Providing a full range of association management services, Kuester Management Group has worked to foster strong, resilient, and unified communities across North and South Carolina. The company is proud to offer on-site property managers, all zealous for building strong communities meant to stand the test of time. More information is available at www.kuester.com or @KuesterCompany.