Cost of management company service

Our latest budget contains a pie chart which shows the services of the management company are about 20% of our budget. I’m wondering if other HOAs spent a similar amount on management services? More? Less?
Jane

In our area N. Ohio, they charge about 10.50 per unit and ten $ an hour when they are on the property! But why have one? You still have to have a BOD to tell the MC what to do. If you have a large HOA then maybe I could see a MC but not for a small one (150 or less). Let the BOD do the work, Delegate, Delegate is the name. The President needs to tell a Board member you are in charge of the landscaping, and you are in charge of the maintenance etc. Have them form committees to help them get the job done, get the owners involved. Yes, it will take a lot of effort on the part of the President but it can be done and when get more people involved you will find a much happier and smooth running HOA. The more owners you get involved the more people will understand what it takes to run an Association. I know, I'v been there done that and it works!

RogerB: Thanks for a reply from a professional source; however, could you explain what you mean by..."for all those which we provide full services we often save them more than our total cost."

For those who may be looking for the positives in contracting with a manangement company vs. the Board/volunteers assuming the tasks...what would be considered full services and how would that translate into saving more than "our total cost?"

I have posted on this several times; also click on DARCO and read our ad. Following are some of the savings realized:
1) Most significantly for most HOAs is lower expenses for contractors and vendors - for one HOA we secured a bid which was less than half of that which the Board had signed a contract with another contractor. We got them out of the contract. This alone paid our expenses the next 50 months.
2) Lower legal fees - for one small HOA the legal fees after we took over management immediately went from over $8000 to $0. This savings paid our fee for 20 months. Seldom, and for some HOAs never, is an attorney required. We have always require each HOA to have a collection policy and a covenant enforcement policy which we help them draft. I have posted examples of these two Rules and Regulations several times on this board. This is provided to every member and the homeowner always has the right of appeal and arbitration. With the procedures we use compliance is obtained. Again see our ad.
3) Lower cost of insurance - for two HOAs we took over management duties we were able to lower their cost 74% and 56% while increasing their coverage and putting them with a better insurance company. This alone paid our expenses for the next 6 months.
4) Greater yield on investment of reserve funds. We provide investment guidance and manage transfer between accounts to maximize yield at no cost. The increased yield usually is about equivalent to two months of our management cost.
5) Tax preparation using IRS form 1120-H and Colorado form 112 at no cost. Minor savings, but it all adds up.
6) Providing newsletters, annual directories, meeting site, and other items often provide other minor savings.
7) There are also several advantages which can be provided by a good management company other than cost savings. Not the least of which are:
a) neighbor is not pitted against neighbor when there are violations to restrictions;
b) decreased burnout by Board members;
c) a MA provides greater continuity to the Board from year to year;
d) and IMO most important is that a managing Agent is (or should be) a highly trained professional who can provide guidance to help keep volunteer Board members, who usually are not educated in all the ramifications involved in managing an HOA, from getting into troubled waters.

Of course not all Board's always follow our suggestions. That is their right and they have paid accordingly. We do not count those extra costs in our savings