What are typical management fees ?

Started by JeffK11 • 14 replies • 4860 views

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JeffK11 (Maryland)
Posts: 4

Posted:

Hi Everyone,

We have a small community of only 15 homes with an HOA. The management company charges a yearly fee of $2,400.00 does this sound like a normal fee?

Also, what is a typical breakdown for a HOA budget?

Thanks

GlenL (Ohio)
Posts: 5,491

Posted:

Jeff, rates vary from HOA to HOA and from state to state, not to mention the more hands on the MC is expected to be, the more the costs go up. You are paying $13 and change per month per home which considering your small size seems very on point depending on what they do. For instance, if they collect assessments and generate the checks for payment, how much do you think an accountant would charge for just those services?

Now there are plenty of HOA's even larger than yours that have no MC but that requires dedicated volunteers willing to put in the time and effort to do the job. Unfortunately after a couple of years these gung-ho volunteers burn out unless others are willing to step in and help.

Studies show that 5 out of 4 people have problems with fractions

JeffK11 (Maryland)
Posts: 4

Posted:

Thanks Glen, just trying to get a best estimate.

BillH10 (Texas)
Posts: 1,217

Posted:

Jeff, could you clarify what you mean when you say "typical breakdown for HOA budget"?

Are you talking about level of detail or something else? For example, we prepare a very detailed budget for the boards of our client associations, it includes all of the QuickBooks Item Lists to which we book revenues and expenses.

We prepare a less detailed consolidated version for distribution to existing property owners, this higher level budget is also included with the Resale Agreement package which, under the Texas Property Code, must be provided to prospective buyers who have executed a purchase contract (opened escrow for my friends in other states).

So, what information are you seeking?

JeffK11 (Maryland)
Posts: 4

Posted:

Bill,

I am looking to compare other breakdowns, such as admin fees, postage, legal defense, social committee etc.

NpS (Pennsylvania)
Posts: 4,216

Posted:

Our target breakdowns are:
< 9% for Admin
15% for Reserves
> 75% for Current Year Common Area Expenses

Sikubali jukumu. Read all posts at your own risk.

NpS (Pennsylvania)
Posts: 4,216

Posted:

Quote:

Posted By NpS on 12/18/2014 2:30 PM
Our target breakdowns are:
< 9% for Admin
15% for Reserves
> 75% for Current Year Common Area Expenses

Admin includes mgt fees, professional fees, office expense, postage, etc.

Sikubali jukumu. Read all posts at your own risk.

TimB4 (Tennessee)
Posts: 21,062

Posted:

Jeff,

We have 130 homes and are self managed. However, we have paid an independent contractor for bookkeeping duties that equated to $4,200 a year.

Keep in mind, those duties were not to manage the Association but to only collect the mail, maintain the account ledgers and make deposits.

$2,400 sounds pretty reasonable compared to that.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

We are 112 standalone homes and we pay $600.00 per month. We recently had 3 locally based HOA Property Management Companies quote us and all came in at about this rate. Our PM Company provides:

Billing and collection of all fees (includes online banking, account drafting, payment books). Pays the bills (receivables). Delinquent account collection. Monthly financial statements Emailed to BOD (ability to tailor reports as wanted). Monthly delinquent report. Covenant violation correspondence/tracking with the BOD initiating the complaint. Secure vendors for various services and advise BOD on vendor selection. Oversee vendor contracts. Obtain insurance quotes and aid the BOD in vendor selection. Provide necessary closing information. Mailing of Annual Meeting notice. Conduct the Annual Meeting. Draft Annual Meeting Minutes.

No onsite inspections are included. If we wanted onsite inspections it raised the fee about $150.00 per month.

The main reason we chose the company we did was they manage about 30 HOA's with the majority of them being local and similar to our association. We visited a few and talked to some of their BOD Members.

Hope this helps.

JerryD5 (Colorado)
Posts: 218

Posted:

Jeff,

We are a 63 association of single family homes around small parklike courtyards. We pay $700 ($675 for the management fee plus $25 for website management). That is about 12% of our annual budget. Our previous MC charged us for $950 per month. We went from 118 homes to 63 this past year. The MC said they would still charge us $800 regardless of our new size because that is their fee minimum. We quickly went searching for a new company and we are very happy with our new company.

I highly recommend that you get a few proposals from different companies in your area. You will see a variety of prices offered.

KellyM3 (North Carolina)
Posts: 2,239

Posted:

Jeff,

We have 236 properties under a master association and our management contract comprises 12% of our total budget.

BonnieG1 (Nebraska)
Posts: 1,186

Posted:

Quote:

Posted By GlenL on 12/18/2014 12:36 PM
Jeff, rates vary from HOA to HOA and from state to state, not to mention the more hands on the MC is expected to be, the more the costs go up. You are paying $13 and change per month per home which considering your small size seems very on point depending on what they do. For instance, if they collect assessments and generate the checks for payment, how much do you think an accountant would charge for just those services?

Now there are plenty of HOA's even larger than yours that have no MC but that requires dedicated volunteers willing to put in the time and effort to do the job. Unfortunately after a couple of years these gung-ho volunteers burn out unless others are willing to step in and help.

Or the make up of the Board changes and the new members are not gung-ho to take on the responsibilities but do so out of necessity. That was our situation. I am so glad we have a property manager now.
When we took bids for a PM the bids ranged from $400.00 per month to $800.00 per month. We took the highest bid because they were not as many add ons to the base price.
Our PM comes once a week to our coffee informative hour and to every Board Meeting. He comes for emergencies.
Eastor weekend he came about midnight Saturday evening and stayed until about 2:00 P.M. Sunday morning without charging us a penny for his time. (However, if one of his employees would have come, we would have been charger up to $35.00 and hour the employees time.)

SteveM9 (Massachusetts)
Posts: 3,699

Posted:

Typically an HOA with only 15 homes would be self managed. No mgmt company. If you wanted a 3rd party, you could hire a retired bookkeeper for $200 to look over the books once or twice a year.

SteveM9 (Massachusetts)
Posts: 3,699

Posted:

That said....... $2,400 per year sounds reasonable to handle a small HOA. Its barely worth thier time to handle your HOA for that price. If you want to put it in perspective, think of everything thing they do, think of how much time it takes to do it, divide that by the $2,400 and you will have an idea of what your paying them as an hourly rate.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Quote:

Posted By JohnC46 on 12/18/2014 3:27 PM
We are 112 standalone homes and we pay $600.00 per month. We recently had 3 locally based HOA Property Management Companies quote us and all came in at about this rate. Our PM Company provides:

Billing and collection of all fees (includes online banking, account drafting, payment books). Pays the bills (receivables). Delinquent account collection. Monthly financial statements Emailed to BOD (ability to tailor reports as wanted). Monthly delinquent report. Covenant violation correspondence/tracking with the BOD initiating the complaint. Secure vendors for various services and advise BOD on vendor selection. Oversee vendor contracts. Obtain insurance quotes and aid the BOD in vendor selection. Provide necessary closing information. Mailing of Annual Meeting notice. Conduct the Annual Meeting. Draft Annual Meeting Minutes.

No onsite inspections are included. If we wanted onsite inspections it raised the fee about $150.00 per month.

The main reason we chose the company we did was they manage about 30 HOA's with the majority of them being local and similar to our association. We visited a few and talked to some of their BOD Members.

Hope this helps.

EDIT

Our cost is 11% of our budget.

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