How does a management company help an HOA manage costs?
When assessing your planned community’s cost management plans, you may find that the community is overpaying for services it receives, having difficulty knowing how much money to delegate to the annual reserve fund, and encountering other financial difficulties that HOA management companies could help you resolve. There are several ways that HOA management providers assist planned communities with managing costs, including the four important items listed below.
1. Managing Expense Accounts
Well-established HOA communities often have several expense accounts, the management of which financial professionals should ideally perform. Volunteer board members often lack the time and training to properly manage multiple expense accounts. Outsourcing expense account management to a management company will give board members more time to dialogue with residents in the community and help ensure that expense accounts remain in good standing.
2. Performing Vendor Oversight
Some planned communities attempt to perform vendor oversight without requesting professional assistance. However, vendor oversight consists of more than just examining the work a vendor performs. It also includes handling the vendor bidding process, negotiating profitable contracts with vendors, and ensuring that vendors adhere to the terms of the contracts. Outsourcing vendor oversight to HOA management companies helps ensure that it is performed properly.
3. Conducting Reserve Fund Studies
Financial advisors typically recommend that planned communities have a reserve fund study performed annually. The reserve fund is used to pay for expenses that crop up suddenly, such as HVAC repair, and to cover costs for upcoming planned expenses, such as roof replacement.