Self-Management vs. Professional HOA Management

Handling the day-to-day operations of a homeowners association can require a lot of work, to say nothing of subject-matter expertise. While most HOAs start off managing things themselves, most of them reach an inflection point, forced to choose whether they want to continue with self-management or enlist a professional HOA management company.

Before making this decision, it’s helpful to know a little bit more about the distinctions between self-managed HOAs and professionally managed ones. That’s what we’re covering in this post.

With any questions about pursuing professional management in the Carolinas, you can always reach out to Kuester Management Group directly. We are proud to provide HOA management in Charlotte NC, Huntersville NC, Wilmington NC, Myrtle Beach SC, and Fort Mill SC.

What are Self-Managed HOAs?

To begin with, what are the defining characteristics of an HOA that’s self-managed?

Basically, in these HOAs, the Board does everything. The Board of Directors handles not only big-picture strategy and governance, along with their fiduciary responsibilities, but they also directly handle administration and rules enforcement. To put it differently, self-managed HOAs are really Board-managed, or volunteer-managed.

Needless to say, this is a cheap approach. The Board basically acts as the on-site manager and works completely for free. As such, self-managed HOAs can realize a lot of front-end savings.

But there are also some problems with the self-management route. For one thing, it’s a lot of work, especially as the association grows. Given that most Board members are going to have full-time jobs, they may not have the time or resources needed to manage the HOA well. This can lead to a high degree of burnout and may make it hard to retain Board members.

It should also be noted that certain aspects of HOA management, including legal affairs, require a lot of expertise. Volunteers may not have this expertise. As such, one of the primary benefits of hiring a professional management company is the wealth of knowledge that comes with it.

What is Professional HOA Management?

That brings us to the notion of a professional community association management company.

With these HOAs, the Board retains authority and still does a lot of decision-making, but they outsource a lot of day-to-day tasks and general community maintenance to a team of professionals. Of course, this makes the Board’s life easier and can also improve the quality of services and amenities for the entire community. But the management team has to be paid, which typically means each resident pays slightly higher assessments.

What Does a Professional HOA Management Company Do?

All of this raises the question: What types of support services will an HOA management company offer? The short answer is, it depends. Every community is different, and a good management team will provide services that are tailored to the HOA’s specific needs (to say nothing of their budget). In this section, we’ll provide some examples of the general types of work that an HOA management team might offer.

Administrative Services

Much of the HOA’s day-to-day work involves fairly tedious and repetitive administrative work. These are just the types of tasks that are well-suited for a professional management team.

Some of the administrative tasks associated with an HOA’s daily operations include:

• Answering emails and phone calls from homeowners and from vendors.
• Following up with questions submitted by homeowners.
• Sending out invoices to vendors and/or to homeowners.
• Sending out homeowner newsletters and other communications.
• Keeping the community’s website and social media presence up to date.
• Processing fees and violation charges.
• Receiving applications to the architectural review committee, then passing them on to the relevant Board members.

Assisting Members of the Board

Even in a professionally managed association, members of the Board still have a number of important responsibilities. A professional management team can provide support and guidance. Some examples of these types of tasks include:

• Scheduling Board meetings, sending out meeting reminders, and ensuring the agendas are set.
• Preparing and then distributing the minutes following a meeting.
• Attending a meeting to provide subject-matter expertise, as needed.
• Providing Board members with any documents they need, including financial reports.
• Training new Board members.
• Helping to regulate HOA elections.
• Providing Board members with guidance on complex issues related to finance, insurance, or HOA law.

Financial Services

Speaking of finances, the HOA Board has a fiduciary duty, which basically means they are legally required to manage the HOA’s funds in a way that is advantageous to the community as a whole (not just advantageous to Board members). Self-managed associations often need to bring in accountants or tax prep experts to help with these tasks. A management company can also provide a number of services, including:

• Maintaining ledger sheets and other financial records.
• Managing bank accounts and HOA reserve funds.
• Preparing the annual HOA budget.
• Scheduling and coordinating reserve studies.
• Monitoring the influx of dues and also keeping an eye on delinquencies.

Maintenance Services

Ultimately, the HOA Board is tasked with the maintenance and upkeep of shared properties and common areas. Again, enlisting a property management company can be advantageous, providing a leg-up on self-managed communities.

Some examples of how a professional company can help with HOA maintenance include:

• Creating maintenance plans and ensuring they are being adhered to.
• Receiving, managing, and processing maintenance requests from homeowners.
• Finding vendors and negotiating contracts.
• Providing supervision and quality control to vendors.
• Assessing vendors to make sure they meet all licensing and insurance requirements.
• Conducting regular inspections of common areas, from pools to sidewalks to clubhouses.

Misc. Services

There’s really no limit to how a professional management team can assist Board members. Some examples of additional services include:

• Handling conflicts that come up between residents (or even Board members), providing mediation services.
• Developing disaster preparedness and risk management plans for the HOA.
• Planning community-building events or recreational activities.
• Providing legal representation to the HOA, should it become involved in a lawsuit of any kind.

The bottom line: Enlisting a management company with HOA industry experience can be an essential way for the Board to work effectively, and to handle community matters as judiciously as can be.

Different Types of HOA Management

Something else to keep in mind is that there are different types of HOA management available. A Board must do its due diligence to determine which type of community management service is most appropriate to the community’s needs and goals.

The basic options include:

• Financial-only management, which is just what it sounds like: Expert counsel to help the Board with complex financial management questions.
• Full-service management, which can include not only financial management but also all the other services mentioned above … help with legal matters, processing homeowner requests, etc.
• In-house management, wherein the community actually hires a manager as a full-time employee.

Self-Management vs. Professional Management: Weighing the Pros and Cons

As your Board seeks to determine which route to go, it’s worth pondering the pros and cons of self-management as opposed to enlisting a professional HOA management company.

Self-Management

Pros:

• There are a lot of short-term cost savings.
• The Board maintains total control over all decisions and activities.

Cons:

• A much higher chance of Board member burnout.
• Board members will not necessarily have the skills or expertise they need.
• Not as many resources or connections to local vendors.

Professional HOA Management

Pros:

• Your Board will have a chance to learn the very best management principles, directly from the pros!
• Your Board members will have more time for strategy and vision, to say nothing of personal balance.
• Highly skilled experts are on hand to help with complicated administrative, financial, or legal duties.
• There’s greater access to skilled attorneys, accountants, etc.
• An unbiased third-party is available to help mediate disputes that arise.

Cons:

• It’s more expensive, at least at first.
• The HOA Board may not feel like it has quite as much control over every single action or decision.

The Bottom Line

Most HOAs start off self-managed, and there’s nothing wrong with that. As your community grows, however, its needs become more complex, and demands on the Board more onerous. Keep an open mind about the benefits of bringing in a professional management company.

With any questions, don’t hesitate to contact Kuester Management Group today.

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