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What are you paying your HOA Management Company for?

May 2, 2021 BLOG Feature

One of the most frequently asked questions when it comes to this industry is, “How much does an HOA management company cost? There’s not a one-size-fits-all answer—there are several variables, including the size of your community, the services you’d like provided, the amenities and common areas in your neighborhood, and more. While we can’t definitively tell you, “expect to spend ‘X’ amount of dollars,” we can give you an idea of what your money might be paying for.

What an HOA Management Company Offers

This can vary depending on the size of the company and their scope of work, but you can typically expect several basic services from most of them. You may be assigned a property manager or HOA manager who assists with or handles some or all of these aspects.

  • Financial Services: this can be anything from keeping your books to budget management to maintenance and repair planning. Your manager might assist the HOA board with meetings, reporting on financial status and community progress, especially with maintenance and capital improvements.
  • Overseeing Collections: when members of your association default on their payments, a manager can help facilitate collection of outstanding dues, handle paperwork such as past due notices and legal filings, and work with collections companies on severely delinquent accounts.
  • Enforcing Bylaws and CC&Rs: HOA managers might assist with enforcing community rules, such as dealing with parking violations, inappropriate common area conduct, and so on.
  • Insurance: when claims need to be filed or agents need to be corresponded with, a manager might help handle these incidents, as well as communicating with any residents who may be involved in the claim. Because this is not a regularly needed service, you may need to pay additional fees on top of your regular monthly payment to the management company.
  • Community Correspondence: in some cases, if your association has or wants to distribute regular communications, such as newsletters or website announcements, an association manager may handle this, from creating content to printing and related costs.
  • Contractor Management: your HOA manager might oversee work done on the property, including searching for, vetting, and selecting contractors for various projects. Depending on the management company, there may be an additional charge for this service.

The Specifics of HOA Management Fees

Based on the depth of services they offer, management companies may offer set bundles or packages, or they may give HOAs the ability to pick and choose the services they need. This may also depend on your community’s size and how active and involved your residents and board members are.

So what kind of fee breakdown can you expect? Excluding additional fees for special services, your HOA management fees will likely fall into one of three categories.

  • Initiation Fees: this refers to the fee a manager or management company will charge to take over the day-to-day responsibilities of the association. This is typically a flat rate and is negotiated based on the scope of work being provided and the size of your HOA. A small community may pay a few thousand dollars, while massive communities pay tens of thousands of dollars.
  • Ongoing Management Fees: this is typically paid on a monthly basis and will be a set fee agreed upon in the contract. Though they’re usually year-long, management contracts can extend from one to three years. One way to estimate monthly fees is roughly $10-20 per unit in the community, though this can vary based on the size of the management company (larger firms can often charge less per unit) and the cost of living in your area.
  • Exit Fees: losing business isn’t ideal, but splits between HOAs and management companies are part of the process. When an association decides they would like to transition to another management company, exit fees are often paid to the existing manager for assisting with transferring the books and files over to the new company.

Though these are the main categories, there may be additional fees paid for extra services.

Choosing the Right Company

Cost is a big factor when choosing an HOA management company, but don’t let that be your only condition. You should consider the services they offer versus what your community needs, and the quality of service they provide. Cheap doesn’t always equal a good deal, and some more expensive companies might deliver outstanding management and support that is well worth the cost.

Choosing the right HOA management company can be nerve-wracking, but we can help! We’ll walk you through what services could be beneficial to your community and guide you in planning and implementing your vision for your community.

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