Understanding HOA Dues: Too Low? Too High? What’s Covered?

One of the biggest concerns many homeowners have when moving into an HOA community is what the cost of dues are. This can vary greatly from one association to the next depending on the number of homes, types of services provided, amenities available, and more. While low fees are preferred, they’re not always the most practical or effective for the HOA. Homeowners are paying less now, but it may result in paying more later when repairs are necessary but funds aren’t there.

Too low? Too high?

There is a balance that must be struck when determining HOA fees. If dues are too low, it often means that the reserve isn’t fully funded and maintenance on the property may not be the best quality. If there isn’t money to pay for repairs, they’re likely not happening or short-term fixes are being used instead of truly addressing the problem. Furthermore, lack of funding could result in special assessments.

On the other hand, high fees aren’t always a good sign either. This could mean that the HOA is trying to make up for poor financial management in the past, or that they’re paying more than necessary for services.

Evaluating What is Included

Before jumping to conclusions about an HOA based on its fees, take a closer look at what you’re getting in return. HOA fees are used to cover expenses such as:

  • Installation, maintenance, repair, and improvement for community amenities.
  • Upkeep of the community such as landscaping, exterior painting, or snow removal.
  • Community services such as trash removal or recycling.
  • Insurance coverage and legal services for the HOA.
  • Funding of reserves to cover capital projects or emergency repairs.
  • Inspections and pest control.

Look at what amenities are offered in the community and what services are available to members. Keep this in mind when comparing one community to the next. You may be paying more (or less) but consider what you’re getting in return. Also, ask questions about the community’s finances such as what percentage of funding the reserve has, any history of special assessments, and how fees have changed over the past several years – or anticipated rate hikes for the future.

The board should be transparent when it comes to financial management and how HOA fees are calculated and used. Clear, consistent communication with homeowners about finances is essential as well so members have a better idea of where their money is going and how they benefit. The HOA should also be continually reviewing expenses and identifying opportunities to reduce costs without sacrificing quality.

Partnering with a property management group like Kuester can help HOAs to get a better handle on their finances and budgeting. With professional guidance and insight, HOAs can set appropriate dues, ensure reserves are funded, and reduce risk of special assessments while providing a safe, enjoyable community for members. Contact Kuester today to learn more about how we can help.

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Bryan Kuester

Bryan Kuester

Bryan is the CEO of Kuester Management Group. He has over 15 years of managing community associations throughout North and South Carolina.

His specialties include Community Association Management - maintenance, budgeting for operational and reserve funding, long-range planning, covenant enforcement, amenity management, onsite management, large scale management.

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