Typical management fees

Tom,

While the HOA board is comprised of homeowners, that by itself does not mean you are "self managed". Most HOA's (except for those still under developer control) have boards made up of homeowners. Nevertheless, many have a contract with a management company. The management company, depending on the contract, performs a range of services such as collection, deposit and disbursement of monthly assessment funds, oversight of other contractors, such as landscape contractor, etc.

Does your HOA have a management company? If so, that is what the management fee covers. Do the homeowners mow the grass, fertilize, etc. the common areas? If not, then there must be a landscaping contractor to whom the grounds maintenance fee is paid.

I live in a much larger HOA so our management fees are several hundred thousand dollars as are our grounds maintenance fees. For the size of your community your numbers sound pretty modest.

Tim, thanks for the feedback. We do have a management company that is responsible for maintaining the modest common areas in our neighborhood. I'm not sure what else they are being paid to do. It just seems to me that ~11,000 (on top of the ~$12,000 grounds maintenance) is high. I'm not sure what in the world the management company could be doing for us to warrant that high of a fee.

We have our yearly HOA meeting coming up soon, so I hope to get more answers then. I was just looking for some ideas of what those fees could be for (the "management fees") so I could better educate myself for the meeting.

Thanks,

Tom

Tom:

Before you attempt to find fault perhaps you should get some facts.

Who collects your dues each month? Who handles that accounting?
Who handles maintenance calls that might occur? 24X7?
Who handles your recordkeeping for the property?
Who handles the payment for services each month? Who pays the bills? Who writes the checks?
Who enforces the rules and regulations?
Who covers the payment of your taxes, insurnace, lawn maintenance, snow removal, or any other services?

If you pay $11,000 per year that comes to less than $1,000 each month or less than $250 each week. Does that sound like a lot to you still?

The grounds maintenance and management fees are two completly different items it is not duplicate cost to the property.

OUR manage fees runs over $30,000 so the $11,000 you pay sound like a bargin.

Before you begin to question why thigs cost so much you should perhaps understand what those fees actually cover. I would guess your HOA Board has an understanidng of what they are getting and for how much.

Jon,

My intent on posting the questions isn't to find fault. This is the first time I've lived in an HOA, so
I'm trying to understand why we're paying the fees we're paying to our management company. I think if you saw
how small our common areas are, you'd understand why I'm questioning the two fees.

It really does consist of a few areas that need mowing, and maintenance of our entrance (where they plant
flowers each year). Guess I need to start asking questions at the board meeting to get a better understanding
of things.

Thanks,

Tom

Tom:

I would guess as a first time owner you would have little if any idea as to what costs are incurred in the operation of your entire property. Nor would you understand the day to day operations of the property and the role of an MC on your property.

The cost of providing BASIC services to our property runs about $250,000 each year. That's snow removal, garbage removal, utilities, lawn maintenance, insurance, management fees, insurance, taxes, legal fees, accounting fees etc.

Anything else is in addition to that basic cost.

You have nearly 200 units to manage.

The cost you have quoted of $11,000 for management fees would seem reasonable on its face.

As an owner you certainly have the right to review the financials of the property. Perhaps, they have a budget, audit and financial report you might gain access to. Perhaps, by attending monthly meetings, if they are open to the owners, or annual meetings you might gain more of an understanding as to what the costs are and more to the point why a management company would need to be paid to handle these operations.

The HOA Board directs the operation of the property its members do not handle the day top day operations. Unless the property is quite small or you are lucky enough to have people willing to volunteer their time to operate your property for no pay most properties enlist the services of a MC.

I would suggest when you request information you do so to be informed not with the comments or observations that you do not understand why things would cost so much or what could the MC be doing to be paid so much. You might ruffle some feathers and in the end you might learn your assumptions and understanding were what was in fact in error.

Good luck

Tom:

You are most welcome. The operations of any HOA can require some getting used to.

Many owners don't have a real idea of the cost to operate or finances of their property. Nor do they ever bother to learn.

Should you look into your property's finances. YES You are a home owner.

Just use a little courtesy and tact when asking for information and avoid making enemies with the Board or the MC. If you read some of the other posts here many times people approach the Board with accusations and suggestions something is wrong. That sets up for a bad realationship going forward between you and the Board. Sometimes that relationship can never be repaired.

I joined the Board, sat by and watched for YEARS to learn who was who and what the procedures were and then after gaining enough knowledge worked to change things for the better.

Sometimes if you are lucky you might have a Board that is doing the best job they know how to do. Perhaps, with time you might work to help them maintain and improve your property.

I wish you the best of luck glad we here could offer some advice and Happy Holidays to you and yours. (including your HOA!)

I think your fees sound reasonable. Mowing and trash removal in common areas can easily eat up $11,000, especially if periodic landscaping is also being done. Get the wrong contract and both costs can skyrocket. Likewise the management fee presumably covers just one employee's salary or that of a few part timers who visit/inspect every week. Like was said, that is a low ball amount.