4 Important Line Items to Include in Your HOA’s Annual Budget
HOA budget planning will be a constant for any members on the board. While it can seem daunting at first, once you gain experience with creating and managing budgets, you will find there will always be elements that remain constant.
We at Wise Property Management, a Tampa HOA property management team, have put together four essential line items that should always be included in your HOA’s annual budget.
One of the most important line items, since it is an essential element of any community, utilities such as water, power, and gas are always necessary to ensure they are accounted for. It is also important to note these costs can rise year over year.
Ensuring annual budgets are constantly increasing for this line item will help you to conservatively budget with no surprises for something as needed as utilities. We recommend increasing the line item by at least 5% annually to account for cost increases.
2. Vendor Services
Many HOA’s will have vendors that help with services around the community. Annual budget creation is usually when these contracts are revisited, and rates can be negotiated. Knowing which services and vendors you want to continue having access to will help determine what exactly this line item looks like.
Regardless of the total amount, budgeting for services and vendors annually will help you determine these items’ prioritization. Having a clear idea of what you want to keep and renegotiate fees with will help to budget this out and resign contracts.
We recommend using the annual budget creation as a touch base with external partnerships to reevaluate services needed, fees associated, and any needs for updated contracts from the partnership side between your HOA and the service, as well as updated insurance information from each service provider.
3. Insurance Premiums & Deductible
No one wants to assume the worst will happen. Still, in Tampa, FL, where natural disasters in the form of hurricanes and flooding happen every year, ensuring adequate coverage is included in your HOA’s annual budget is incredibly important.
Tampa homeowners association management ensures your community and people are protected no matter what the year brings. It is also a good practice to reevaluate these costs annually and ensure you have the proper coverage needed for the best price.
Lastly, a line item every HOA annual budget should have is a reserve budget. If you currently do not have a reserve line item, there is no time like the present to start! Reserves can go towards long-term maintenance and projects that may come up through the year.
Even if you set aside a small portion of the total budget for this line item, starting small helps to incorporate the budget for a reserve moving forward. Reserves ensure you will always be able to support your community regardless of what the year brings.
Having funding that ensures support for unexpected maintenance jobs, higher-than-planned projects, or emergency services will always leave you in a better position than not. Reserves act as a safety net and assure that your HOA can successfully financially manage whatever may come.
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