Evaluating HOA Fees: How to Reduce Expenses
One of the most difficult aspects of running an effective homeowners association (HOA) is managing the budget and expenses, including determining the fees that fund the association. The collection of these fees, on time and in full, is crucial for the proper maintenance of your community and its amenities. HOA boards attempt to keep things relatively stable by defining the guidelines for these payments and avoiding any unnecessary increases in dues; however, it can be difficult for the board to find a balance with fees that effectively support the community without displeasing homeowners.
This article will cover how to evaluate whether your HOA fees should increase or remain the same and the steps you can take towards reducing expenses and keeping HOA fees reasonable. Partner with Wise Property Management, one of the best St. Petersburg HOA management companies, today for assistance in reviewing your expenses, identifying opportunities for cost savings, and improving communication between the board and residents regarding fee changes and any impact on the community.
What Do HOA Fees Cover?
Before we can begin to evaluate the fees of your HOA, it’s important to familiarize yourself with the broad range of tasks HOA assessments go toward. This way you can be better informed regarding how HOA fees work and transparent with residents regarding how these fees are being used to benefit the neighborhood. Here are just a few of the tasks HOA fees may cover:
- Amenities: If your community has a park, pool, clubhouse or other amenity, HOA fees will go toward the daily maintenance and upkeep of these features, such as providing electricity or making repairs and improvements.
- Services: Trash, recycling, and sewage services all fall under the category of assessments homeowners may be paying for in their HOA fees.
- Pest Control: To prevent damage and avoid safety concerns, some percentage of the HOA fees will always go towards annual inspections and pest management services.
- Upkeep: To ensure the community remains safe and aesthetically pleasing, assessment fees will also go towards improving home value, such as exterior painting, sidewalk repair, landscaping, and more.
- Reserve Funds: Some portion of the HOA fees will go into a reserve fund for emergency repairs, capital improvements, or larger projects to reduce the need for special assessments when unexpected expenses arise.
Needless to say, this list only scratches the surface of the wide range of operations HOA fees cover in pursuit of a well-kept, safe community. Above all else, there should be a clear demonstration that these fees exist to enrich the value of the property and ensure the long-term success of the community. A Tampa homeowners association management company can help HOA boards to communicate better with homeowners through a number of methods, including a traditional bulletin board, e-newsletter, or a closed Facebook group.
When Fees Need to be Increased
Homeowners may feel like they’re getting a great deal by moving into a community with lower than average HOA fees, however, too low fees can indicate a number of concerns. First, there may not be enough money to cover emergency repairs or regular maintenance of facilities, leading to lower property value. Second, there’s the potential for shortages. If at any point there is a shortage of funds, then residents are likely to see special assessments or a large increase in fees at a later date.
That being said, these certainly aren’t the only circumstances when HOA fees are bound to increase. Even if the board is doing an excellent job of managing the budget, overall expenses may rise or service providers may raise their rates. If there’s no other options for major service providers, such as electric or water companies, then the HOA must adjust its budget to accommodate for these changes. The same will occur in situations where maintenance can no longer be deferred until a later date or reserve funds are needed to ensure there’ll be enough money to cover repair or replacement in the future.
What Steps Can You Take to Reduce Expenses?
Although some fee increases may be unavoidable, there are steps you can take to reduce expenses and keep these increases reasonable for residents. First and foremost, the HOA should perform a regular review of contracts. This way, any unnecessary or duplicate services can be removed during a contract update. Likewise, the HOA can negotiate more competitive rates and get bids from other providers during this time.
Similarly, insurance coverage can be reviewed to see if there are more affordable options available by comparing options with other providers. On the other side of the spectrum, any non-essential projects should be deferred until there is room in the budget or more money within the reserve fund. Many homeowners will be wary of communities with high costs because it may indicate that the budgeting does not align with the costs of the community or the funds the HOA is collecting are not being properly managed.
Related: HOA Fee Problems? We Can Help
How an HOA Management Company Can Help
If your HOA has struggled with monitoring expenses, procuring payments, streamlining collection efforts, or crafting an appropriate budget, it’s time to partner with a Tampa homeowners association management company like Wise Property Management. WISE has managed associations in the Greater Tampa Bay Area for over 35 years, and we pride ourselves on consistently providing first-class service to the boards and communities we serve. As a superior St. Petersburg HOA management company, WISE handles all aspects of community management, including monitoring expenses, receiving and processing payments, preparing a monthly financial statement, budgeting, and more.
If you partner with WISE today, we can assist you in the process of reviewing your current budget and identifying any opportunities to reduce expenses, such as switching providers. We can also protect the longevity of the community by creating and enforcing policies for fee scheduling to ensure any delinquent payments are handled appropriately and the HOA isn’t barred from making improvements to the community because of them. This also includes assisting with annual budget preparation and financial planning. Leave the hard work to us and reap the benefits of a successful HOA. For more information on evaluating HOA fees, reducing expenses, or obtaining payments from residents, reach out to one of the best Tampa HOA management companies today.
Disclaimer: This website is not a substitute for legal advice. If you have a serious legal, tax, or other issue requiring professional advice, please consult with an attorney or CPA.
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