Investing Prepaid Dues

Started by CandyB • 4 replies • 1774 views

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CandyB (Pennsylvania)
Posts: 11

Posted:

Has anyone offered the ability for residents to prepay annual dues, in order to invest the funds? The gain would be used to help fund purchases for new gym equipment, pool equipment, etc. We have a sufficiently funded operating budget and adequate reserve accounts. This would simply allow us to purchase "wish list" items. Thanks.

RogerB (Colorado)
Posts: 5,067

Posted:

Candy, if you have sufficient operating and reserve funds why is there a "wish list"? Anyone can prepay assessments. This is not "extra money" to be spent just because it was paid earlier than necessary.

HaroldS (Arizona)
Posts: 906

Posted:

Candy - Your wish list for pool and gym equipment should be funded by current budget or reserves. Why are you needing to look for other income to fund these items? Your assessments should be increased if you need this equipment to provide your owners with what they were promised.
You don't say how much your monthly or yearly dues are, but are they that much so that a few prepaying could generate enough $ to be invested for a significant return? If you are doing your accounting properly, any prepayments should be kept separate until the year they were paid for. It's not funny, but most writers here bemoan not being able to collect current dues much less significant prepaid dues that can be invested! Harold

CandyB (Pennsylvania)
Posts: 11

Posted:

Thanks for your replies. Currently, if we receive prepayments, they are kept separate and are included as a liability until posted for the appropriate quarter. As I reviewed my question I realized that I failed to include the option of offering residents a discount if they do in fact prepay. We offered that with out pool memberships, and many took advantage of it. However, not all 436 homes "joined" the pool so it wasn't a matter of investing to make money. We have sufficient reserves and sufficient operating budget to maintain our community as well as provide more than enough amenities (believe me, no one is complaining), but its always nice to make a little extra to say reduce the price of admission to some of our many community events,ie, Annual Pig Roast, Lobster and Crab Party, etc. Or to purchase a kid's blow-up slide instead of renting one each time we have a party at the pool (of which we have many). Its just an idea, and am wondering if its ever been done.....out there.

And no we really have very little problem collecting dues and feel the community is running much smoother with far fewer problems than most I've read about. I feel extremely fortunate!

BradP (Kansas)
Posts: 2,640

Posted:

I think the idea of a wish list is something that you would like to see happen, but is not vital to the operation or success of your association. Would it be nice to have all brand new weight room equipment? Sure...but is it necessary to have...probably not. I agree your assessments should take care of what you need to have, and everything should have a replacement schedule. But to me it isn't reasonable to raise assessments continually to be on the cutting edge of luxury. However, if Candy is able to do that through being creative with investments that is a bonus, homeowners reap the benefits of a discount of paying early and new things. I like the thinking, good luck.

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