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HOAs: What to Look For in a Property Management Company

Educational, Oct 14, 2020 by Editorial Team

Helping to manage a homeowners association can be a lot of work, even in a limited capacity. If you are a member of the board of directors charged to help govern your organization and maintain its financial health, you will certainly have your work cut out for you. Layering operational tasks can make it extremely cumbersome, complicated, and outside the scope of some people’s experience or ability.

Since managing a homeowners association can be challenging, it certainly isn’t for everyone. Even if you can operationally handle the day-to-day duties necessary to keep your organization afloat, that doesn’t mean operating at optimal efficiency.

For many homeowners associations, the burden of maintaining a budget, enforcing rules, and delegating routine maintenance is too much, so they choose to bring in a property management company to take over some of the duties that usually would fall on the board members of the organization.

There are roughly 281,000 property management companies within the United States¹. While not all companies specifically handle HOAs, thousands of companies do specialize in HOA property management.

But with so many firms to choose from, how do you determine which firm aligns best with your community’s interests? What are some of the tasks that can be delegated to a property management company, and what remains on the shoulders of the HOA itself?

Here are some of the qualities to look for when considering a property management company to help manage your community’s homeowners association.

Self-Managed vs. Property Management Company

It may seem obvious, but it is important to note that you do have a choice in terms of how your homeowners association is managed. Many HOAs decide not to go with a management company because it burdens community owners with an additional expense and instead electing to self-manage the day-to-day operations itself.

Conversely, some organizations choose to hire an outside third-party, an HOA property management firm, to delegate and take care of ongoing needs it may have. It’s important to note that a management company doesn’t govern the HOA. That is left to the board of directors, owners, and governing charters (such as the bylaws and CC&Rs). However, it performs various tasks based on the contractual agreement ranging from bookkeeping to vendor and maintenance order management.

If you do decide to switch to a management company, it doesn’t have to be permanent. There are usually provisions on how to terminate a relationship with a management company, or you could even wait until your agreement matures, electing not to renew it.

Before you begin a relationship with an HOA property management company, make sure to note any applicable initiation fees for them to take over the day to day operations, ongoing fees that may be incurred monthly or annually for services rendered, and exit fees should you decide to switch firms or even revert back to being a self-managed organization. To better understand all HOA fees, not just property management related ones, click here.

Considerations For Evaluating HOA Property Management Companies

Just like you would research a product before making a large purchase, there are things you should evaluate when you begin the search for a new HOA property manager.

Do Their References Check Out?

Much like interviewing a new employee, you want to do your due diligence before contracting with a new management company that may end up not being the right fit or having your association’s best interests at heart. Part of your selection process should involve asking for and reviewing a management company’s references.

When reviewing references, consider reaching out to past or present clients to gauge their satisfaction level with the management firm. Understand what these clients feel the firm does well and what they could improve on.

You want to partner with a reputable firm, so stringently research to see if there have been any past litigation or action that the firm was involved in within the public record. Any company worth considering should also meet specific knowledge and skill requisites as they will have to work within written rules and regulations, laws, and procedures.

Will You Have a Dedicated Manager or Representative?

Being assigned a go-to manager or representative from the management company is crucial because it speaks to its customer service level. If any issues or concerns arise, you want to reach out to a dedicated person who already understands your organization and relationship.

Furthermore, you may want to consider how any particular representative’s personality or management style aligns with your association’s goals. Do you want someone more hands-on (ex. frequent updates on processes and tasks), or do you want them to take a more relaxed and passive approach (ex. trust they are getting it done and only burden you with need-to-know information).

Either model, make sure to find a company that will pick up a phone or answers an email promptly. If they cannot respond immediately or it takes them more than 24-hours to answer an inquiry, their reliability may be in question². Customer service is always key, and you want to partner with a company that will get you the answers you need promptly and professionally.

What Preferred Contractors Does the HOA Management Company Partner With?

Many management companies have extensive tenure in the industry, meaning they have had the opportunity to establish key relationships with vendors they know and trust. One reason to hire an HOA management company is to trust they know the right people to get the job done.

But you shouldn’t just take the company’s word for it. It’s essential to inquire about what contractors they prefer to work with for specific issues such as plumbing, cleaning, or even HVAC repair. Are they partnering with locally-owned businesses or franchises with much larger market footprints?

Furthermore, while they may have vetted local, reputable tradespeople, this doesn’t necessarily translate to tangible value for your organization. For example, some vendors may have a higher rate or even add extra fees for trip charges and diagnostics than equally reputable and competent competitors at lower price points.

You have to walk a fine line when vetting contractors because, as the saying goes, you get what you pay for.

Does the Company Tend to Be Reactive or Proactive?

There are many benefits to using an HOA property management company, but one of the biggest is delegating maintenance related tasks. It takes a lot of time and effort to order, coordinate, and follow-up with maintenance requests, especially if you live in an older community with more deferred and ongoing maintenance or a broader community where you advocate for hundreds of unit owners.

But even good management companies may not always be proactive about addressing work orders. They may fix the immediate issue, but they may not forecast future maintenance problems or needs. This approach can sometimes work out to be budget-friendly for cost-focused organizations, but a lot of the time, addressing future needs in the present can save time, money, and future headaches.

It may be in your association’s best interest to partner with a property manager that is more proactive at seeking out and remedying potential problems in addition to any existing ones.

Suppose you need help reviewing the candidacy of potential HOA property managers. In that case, InspectHOA might be a great first step to figuring out your HOA’s budget and needs before you jump into a new management contract.

Sources

1 Jaleesa Bustamante. (2020, August 14). Property Management Industry Statistics & Trends [2020]. Retrieved October 12, 2020, from https://ipropertymanagement.com/research/property-management-industry-statistics#:~:text=There are roughly 281,345 property management companies in the United States.

2 Top Qualities To Look For In An HOA Management Company. (2017, November). Retrieved October 12, 2020, from https://www.excelam.com/qualities-to-look-for-in-an-hoa-management-company/

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