Business Plan

Victor, ask that Board member what else besides an annual operating budget, an annual reserve budget, and a 20 year capital investment plan do they recommend in for their business plan for your HOA.

Victor, Roger has mentoned the budget, reserves and capital operating plan.

Just to break some of that down a bit, the person may be asking to have an annual maintenance plan where certain work is scheduled to be performed in a given month and shown in the budget, so cash flow can be closely monitored.

He could also be asking for an investment plan of the reserve funds so as to have sufficient liquidity with maximum interest and safety of principal (usually Certificates of Deposits with quartely staggared maturity dates.)

The reserve repair/replacements planned during the year would need to coincide with the maturity dates of the CD's so as to have the cash available without having to make an early withdrawal and lose some acquire interest in the form of a penalty.

RoberB

Can you share your chart with me as well as others on this site? I'm in the process of developing something along those lines of what you described for my community. I certainly could benefit from other's already developed.

Thanks!

JoyceS1

VictorW,

How do you currently account for the allocation of maintenance fees you collect? Are portions of the maintenance fees allocated to day to day operations such as drainage, fence repairs, erosion repair, mowing, etc.? Do you create and provide budgets to the HOA detailing where the money is applied? Do you create or provide owners access to financial information detailing what's currently in your reserves to repair and replace items as they age. These things are SOP for HOA's.

Does the HOA consist of 11 homes sitting on large parcels of land?

GeraldT1
NNJ

We just had our 6th annual board meeting. During the meeting I always review the previous year's budget and actual expenditures and project this on the wall for all to see as well as the balance sheets from that year. I also have a slide that explains the coming year's proposed budget including the items that need purchased, maintained, repaired, replaced, and expenses and the show the current balance. The complete budget is shown and explained to all board members and I email a copy of the PowerPoint to members.

This is the first year they let me charge higher dues so we can start a reserve. Before they wanted a zero balance at the end of the year so dues were kept at a minumum. I presented we needed reserves to repair the fence or repair any erosion that rain water may cause as it flows into the lake or if a nearby creek floods. This year we may have $600 to put in reserves.

The 11 homes are on half-acre lots that are not subject to HOA restrictions. We have 17 empty lots that are owned by the HOA and a 54 acre lake that is our common area. We have no structures on the property. We have a two boat ramps and a 3/4 mile long 6' chain link around two sides of the lake that separate the homes from the lake. The lots are mowed by a professional mower in exchange for a fishing/boating membership, so we have no mowing expenses. A couple of board members volunteer to mow around the lake and harrow the beach.

JulieS,

Excellent advise on the need for a reserve study. $600.00 may not be enough to set aside given replacement of the boat ramps, 3/4 mile long 6' chain link on two sides of a 54 acre lake, possible beach replenishment, and erosion matters.

Sounds like VictorW was lucky to get $54.55 per unit owner per year. IMO, the money collected really isn't a reportable gain since it goes towards the replacement of the elements at the end of their life-span at construction costs projected in the future.

Keep up the good work Victor, sounds like your headed in the right direction!!

Best of success!!
GeraldT1
NNJ