Creative strategies to reduce overall HOA costs without having to re-negotiatiate with your HOA Management company or major service providers.
As all good HOA board members do, they are always looking to help improve the financial situation of their HOA community. Everyone’s first reaction is always to look at the management costs or service provider (landscaper, pool servicing company,etc) and expect them to lower their costs. There is nothing wrong with this strategy, but don’t let it be the only tactic you use. Many times, even after going out for bids, you end up going with the same company and realizing that that is why you choose them in the first place. It’s hard to justify replacing a major service provider for something less than $50 dollars a month ,unless of course it is service related, then in that case, don’t hesitiate.
Reduce HOA Costs
There are many steps that a board of directors can take to help reduce or eliminate costs on certain HOA budget items. Here a few out of the box ideas that can help accomplish your goal of reducing costs without sacrificing services.
Media – Take advantage of their target audience, your community
One of the many reasons Facebook and Google have been so successful financially over the last 10 years is because they have been able to sell very targeted advertising on their sites. Google has Google Ad-Words while Facebook has targeted ads based on information they access from their member profiles. The same concept can be applied to your specific HOA community, targeted, geographic advertising.
- Website Ads – Many HOA communities have a website either via their HOA management company or independently run. Your community website is a potential extra revenue source that you can use to either offset or completely pay for the website costs. We have put together scenarios where a local realtor will sponsor a local community website for an entire year, in exchange for a top banner ad with his contact information. It’s a win, win for both parties. The HOA eliminates its website costs, while the realtor earns name recognition throughout the community and recoups all of his investment with just one home sale. Heck even we we do this too. check out our HOA management front page
- HOA statements and payment coupons – Every HOA has the association management company send out some form of HOA statement or payment coupon book for all of its homeowners. Here again is another opportunity to reach everyone in the community. We have had communities strike deals with local pizza restaurants and dry cleaners to have their special coupons printed on the backside of everyone’s statement. This is a very low cost of advertising to get into their specific area and they are doing it without littering the neighborhood with menus or flyers. Again another win win scenario. The local businesses benefit from the extra traffic in their specefic area and those paper statements and postage costs are again greatly reduced or eliminated
Maximizing your HOA community’s amenities
There are a lot of HOA’s out there they have amenities that are a drain on the budget, that could be used more effectively. Here’s a couple different ways to bring in additional revenue for your community.
- Amenity Private Party Rentals – If you have an Amenity Center or Community Pool, you know how expensive they can be to maintain. Offset these costs by renting out the facilities to private parties. Some associations have set aside specific times for such events and therefore can have a consistent schedule to offer groups for their events. Children’s parties are an obvious choice here, but depending on the facility, it could be great for adult aged events as well. Be sure you have good set of rules and regulations in which you make each party sign off on before allowing the private gathering.
- Sharing means….sharing the costs too – Does your HOA have a massive amenity area or have multiple swimming pools? Selling access membership to these amenities to neighboring communities could be a way to effectively use the facilities and also cover the maintenance expenses. We manage a community that initially was supposed to be 1125 homes when it began, but due to the economy the development stopped at 575 homes. Before the project came to a stop, the developer had already built two very large swimming pool areas, that were intended for the full 1125 homes. One of areas was being hardly utilized, although the HOA was still having to pay for it to be maintained. This HOA board decided it was in their best interest to sell pool passes to two different HOA’s nearby that did not have a community pool. They have done this for the last 3 summers and have enjoyed the thousands of dollars in savings in return.
Stop using the post office so much
In this day and age, it is very costly to inform your HOA community about all the news and events via mail outs. Today’s technology makes it much easier to distribute to the information you need without breaking the bank on postage.
- Encourage your homeowners to participate in E-statements – This is really self-explanatory. Any tech savvy HOA Management company should have an option for their homeowners to opt-in to have all of their statements to be sent via email instead of regular mail Of course the more homeowners you have on this option, the less the postage costs for the HOA.
- Inquire about automatic bill payments – This option may depend on the accounting system that your HOA Management company runs. Turning any monthly bill for the HOA into a monthly automatic debit can defiantly decrease the overall cost of paying bills for your association. We have a community that has 25 different water bills that come from the city on a monthly basis. Doesn’t seem like a big deal, but let’s break it down. That’s 25 seperate bills, with 25 different account numbers, that require 25 different checks and 25 different stamps.
25 x $.44 per stamp = $11.00 + 25 x $.42 per check printed = $ 10.50 for a total of $21.50
That ends up in a total savings of $21.50 per month for the association by just making that one small accounting adjustment. Now obviously your HOA needs adequate money in main operating account to be able to do this to insure there is no risk of making the account overdrawn. This scenario may not work for all of the HOA community’s bills. There are situations of course regarding certain monthly expenses that it would probably be best to pay as received via check.
A good HOA manager will always be looking for opportunities to help save their properties money, although it always help to have, some good insightful eyes from the board of directors. With the real estate market still recovering across the country, many HOA’s are experiencing financial hardships as are the homeowners that live within the community. Any money that your HOA can save, will ultimately save your homeowners money and help prevent against future assessment increases.