HOA homeowners in the U.S. pay an average HOA fee of $191 per month. However, the amount can range from $100 to more than $1,000 depending on the cost of living in the location and the amenities the HOA community offers.
The HOA board is tasked with the collection and management of HOA fees. It has a fiduciary duty, but effective management of HOA expenses comes down to financial prudence and accounting best practices.
In this article, we're sharing a few tips to help HOA managers bill, collect, budget, and spend HOA funds prudently.
Set the Right Fee Amount
One of the duties of an HOA board is to determine the fee HOA homeowners are going to pay every month. Several factors are put into consideration, but it's crucial to ensure the amount collected is enough to meet all the community's expenses.
If you set the amount too low, you won't collect enough money to pay the community's bills and have some left for the reserved fund. If you set the amount too high, you could encounter resistance from the homeowners, and some might even struggle to pay it consistently.
Develop an Efficient Billing and Collection System
Having a financial budget for your HOA expenses is a good start, but it won't be of any help if you don't have the means to fund it. An efficient billing and collection system for HOA fees goes a long way toward ensuring your community's budgetary goals are met.
Most HOAs have a simple policy such as requiring every homeowner to pay the fee to a designated bank account on the first day of the month. This works, but in today's digital age, you need to make the process more efficient.
If there's an owner's portal, for example, equip it with the capability to process electronic payments and send receipts and reminders to the homeowners. This way, homeowners can make payments at any time, and the management won't waste time following up on who has and hasn't paid.
Get the Best Deals on Services
Most of the HOA funds go into paying contractors and other service providers.
Like any budget, you want to ensure you're not only getting services at competitive prices but also getting the most value for money. Get quotes from multiple service providers and consider your HOA budget before making a pick. If you keep choosing the most expensive providers - even when cheaper providers are offering the same quality of service - you won't be acting in the best interests of the community.
Hire an Association Management Company
The smartest way to manage HOA fees is to outsource the job to an association management company. These companies have professional accountants on staff, so you can count on them to handle the community's financial management needs competently.
Make Good Use of HOA Fees
All successful planned communities have one thing in common: they budget for HOA fees prudently. These tips will help you make a budget that works for your community, but the most important thing is to work with an association management company.
PMI San Diego offers accounting and reporting services that can help your community prosper. We also have a full-service package that includes and maintenance, inspections, and vendor coordination.
Contact us for more information.
