Benchmarking HOA Management

Started by NathalieR • 4 replies • 2458 views

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NathalieR (Oregon)
Posts: 1

Posted:

I am a new board member for our HOA, and upon reviewing the 2011 budget, was surprised to see that more than 1/3 of our budget is going to our HOA management company. This is my first experience being on an HOA board, so I would like to benchmark with other HOAs to find out if this is outrageous, or simply normal...

Would other HOA board members be willing to share the following:
What percentage of your budget goes to your HOA management company?
What services do they provide beyond accounting?
How many homeowners are in your HOA?
If possible also, an estimate of your yearly HOA fee

Thanks for your help!

MaryA1 (Arizona)
Posts: 388

Posted:

Nathan,

You cannot compare apples to oranges; each HOA is different. Your best bet would be to contact several mgmt co's in your area for a quote. Make certain are consistent in giving the services required so each co will be giving a quote on the same thing.

The same goes for the HOA assessment; it depends upon the size of the assn, what the financial obligations are and whether the assn is self-managed or not. The budget should show all the assn's financial obligations which can be divided by the number of members to arrive at the annual assessment.

RogerB (Colorado)
Posts: 5,067

Posted:

Nathalie, having 1/3 of the budget being management expenses seems outrageous to me. However, for onsite management of a small condo association it might not be outrageous.
Some guidelines are:
1) The larger the association the lower the percentage;
2) The less the services provided the lower the percentage; and
3) Decreasing percentage from condos to townhomes to single family homes.

DaveH4 (California)
Posts: 16

Posted:

Sounds like your getting your first wiff of management companies. Think about this... lets say you have 100 members in your association and the mgmt company charges $12.50 per door. I'm using this example because this what we have where I live (CA). Now if you were a property manager would you provide a full service contract for $1250 per month? This would include answering the phone when Homeowners call, financials, escrow disclosers, manage the vendors, seek bids, attend board meetings prepare a board packets, don't forget your overhead to run your management company, legal updates, going to court, etc...

I didn't think so. To balance this mgmt companies have their managers manage 12 or more associations or whatever that number may be but you get my point. What level of service do you think you will receive? Property managers make money off kick backs from vendors, or provide services from their own maintanance staff. They also employ other methods to slowly drain your cookie jar of cookies while trying to stay profitble.

Take a close look at your financials. when a homeowner is behind on their dues who does the collecting. Next when an owner starts to catch up by paying a little extra each month, how is this recorded in the finacials? Do you get a copy of the check showing they paid extra or is it a simple additional income entry? Once you figure this out you will know what questions to ask the property mgmt companies you interview.

Never forget a simple caveat.."Buyer beware" This also applies to propery managers. If you need to know other methods PM use, let me know.

NameW (Virginia)
Posts: 74

Posted:

Another question. Are your HOA dues realistic? When was the last raise in assessments? Was there an annual review of the property managements fee and a soliciting of comparable bids from other licensed (if your state has such a license) companies? Regarding what is an acceptable percentage, that is up to the Board to decide. The Board, not the owners, are who issue the contracts. I would love to find an HOA Management company whose costs were only 5 - 20% of our income, but I can't foresee it happening without a huge raise in everyone's assessment rates. In actuality I would be happy to find one at about 75% of current assessments. And will postpone recommending a management company be chosen for a few more years.

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