Self-Managed or not?

Hello,

Looking for some input on our 6 unit condo. We currently use a management company to do everything for us and it seems pretty expensive when you include all of the management fees, auditing, and tax prep that is covered in that. I am a licensed CPA in my state so I think I can handle the tax prep portion for the HOA and save some money there. Does anyone have any advice regarding going self-managed or not? Any places to read up on what it takes?

Thanks!

For most 6 units, a mgmt company would be unaffordable and many of the services your paying for are likely unnecessary. So I'm sure its costing you a small fortune each month.

You wont make up your savings in tax prep, its really easy. Our accountant only charges $50 each year. You can easily do it yourself.

We had a small accounting firm handling our accounts. We had 107 homes. Understand that you may not get paid for your work as much as reimbursed for your expenses. People may even depend on you for more than just the finances. So understand you will be undertaking a big task that can be 24 hours a day 365 days a year. However, I think it may be worth it in the end.

Some banks offer a ???lockbox??? service that collects dues, monitors them, and provides statements concerning them.

Anyone familiar with these type services?

My experience gives me the impression self-managed HOAs are ripe ground for trouble, secrecy and petty tyrants....not worth the cash "savings" at any value.

In 2005 I started a thread titled "Self-management vs. professional management". You can click the search and read this thread.

As a professional management company we do not manage condos due to the headaches involved with maintenance. The money management and taxes for 6 units is very simple. But how about other issues, such as:
1) who has the knowledge on legal issues and keeps updated on state statues added every year?
2) who will enforce violations of restrictions while maintaining a good relationship with neighbors?
3) who will answer the phone 24/7 on maintenance problems and all the other issues which will occur?
4) who has the knowledge and experience to hire good independent contractors?
5) who has the knowledge and experience dealing with a good HOA attorney and HOA insurance agent?

Most small HOAs are self managed but these do run a risk of major expenses when the Board runs amuck.

Hi, Travis:

We left a 10-unit community that became self-managed. Each management company resigned after a phone call from Unit #7. We went through three in about two years.

Unit #7 was the unit of the original president. She resigned in a huff. The board chose a replacement. Unit #7, now via the husband, demanded an election.

In the election the husband was elected to the board. He became treasurer, not immediately, but after convincing everyone that the previously elected treasurer, my husband, had committed some offenses against the HOA that cost the HOA about $2000. He did this by privately meeting with all the other units.

My husband was first refused entry into a meeting. When he explained the Open Meeting Act, the three board members refused to tell him the date of the meeting until after the meeting.

We were threatened and harassed and eventually called for a hearing. We did not appear because the board refused to produce documents. We were taken to court. The board lost. This is to say, the board's allegations were found to be untrue and the board was caught in attempted fraud. The board not only lost that case, but two other court appearances in less than six months. So we won all three cases.

Even then, because of the apathy, no one was willing to stand up for us in public. In private, yes. But not in public. So no one was willing to recall the board that had cost them money. We were labeled as trouble makers.

We had things stolen from our balcony by the husband in Unit #7 who was caught climbing on a ladder to our balcony. The police forced him to return the items.

The insurance settled with us out of court. We moved, selling at a loss. Since we left, three other units have attempted to sell without a loss, but have not been successful.

It is hard to get a management company to work with a small community, however, there is the potential for an aggressive board director to turn the board meetings and agendas into a private vendetta that could lead to legal problems. On the other hand, it was this very couple that made the management companies decide to drop us, most likely because they could foresee the problems ahead.

I have, however, heard of smaller HOAs that did just fine. In our case, the couple was also protecting themselves as they were in clear violation of the rules regarding pets since the kind they had were not allowed (rabbits) and the number of pets they had (eight--six rabbits and two cats) were against the CC&R. They were, in my opinion, animal hoarders at the beginning stages. Animal hoarders are not your ordinary homeowner/board member issue.