HOA Management

Which is Better? A Professionally Managed or a Community Managed HOA?

One of the most important things to consider when buying a condo is the management of the Home Owner’s Association (HOA). An association that is well managed will protect the investment in your property and contribute to your quality of living there, while a HOA that is poorly managed will cost you money (especially in the long-term) and headaches all around.

What Does HOA Management Include? 

The management of a HOA typically includes the following services:

• Preparing an annual budget
• Collecting homeowner dues
• Hiring contractors to repair and maintain common areas
• 24-hour emergency response
• Corresponding with owners
• Handling insurance claims
• All administrative tasks regarding legal, financial and real estate management and reporting

The Two Types of HOA Management

Condominium complexes can either be managed by a professional firm or by the community, represented by a board of volunteers. Which is better? Below is a list of the pros and cons typically of each:

Professionally Managed HOAs

Pros:

• Experienced, full-time staff dedicated to managing the property
• Knowledge of industry, including legal requirements
• Relationships with vendors, which may result in better service and rates than one association could receive on its own
• 24-hour emergency service team
• Preservation of good neighbor relations by handling difficult issues such as collecting overdue fees, issuing violations or billing for fines

Cons:

• Higher HOA dues, since management fees are passed on to homeowners
• Quality of service is dependent on the individual management company
• Once a company is selected, it is hard to switch management companies if they do a poor job
• Less connection each individual HOA; less personalized service

Community Managed HOAs

Pros:

• Lower HOA dues since management by a volunteer board means that HOAs don’t have to pay professional management expenses
• May be more attentive and committed to the best management of the property since the board has a personal and financial stake
• Provides the opportunity for issues to be flexibly resolved by neighbors

Cons:

• The volunteer board may not have the knowledge, skills or time to properly manage the HOA
• One association may not receive the same service or rates from vendors of a professionally managed HOA with many associations
• Possibility of fraud and mismanagement
• Management of difficult issues may cause hard feelings among neighbors

To sum it up, professional management is more expensive, but provides lots of benefits, especially for a large complex. For smaller HOAs (under 20 units) it might be cost-prohibitive and difficult to find professional management.

I am a condo expert for associations on the Peninsula. If you are interested in buying a condo, call me and I’d be happy to sit down with you and go through all of the pros and cons, including management types, of any condos you are considering.

05040