Hiring a real estate management company for your HOA is a big decision, but it will likely be your best decision regarding your property. It is a common misconception that an HOA has to be above a certain size or have a certain number of members to justify the cost of hiring a real estate management firm, but this couldn’t be further from the truth.
Often, smaller HOAs decide to self-manage the property to save money, but in exchange, they give up a significant portion of their time as it can quickly become a full-time job (iPropertyManagement.com reports that “80% of property managers are involved in the coordination or performance of maintenance/repairs as well as rent and fee collection.”) They may even end up paying more in the long run.
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Are you wondering if you should hire a professional or what to expect from a property management company? Here are just a few reasons why hiring a real estate management company, regardless of the size of your property, can improve every area of your property:
Real Estate Management Companies Have Tons of Resources and Experience in the Field
Unless you already work for or have previously worked for a real estate management company, you are unlikely to have experience managing an HOA’s day-to-day responsibilities. On the outside, this may seem like something easy to learn. In reality, there are a lot of pieces to the puzzle, and conflicting priorities can mount quickly. The property manager’s job is to ensure that the pieces fit together and clashes don’t occur.
What do property managers do? Do property managers find tenants for investment properties? Yes, but they also maintain the property, provide repairs when needed, ensure that the property remains connected to various service and utility providers, collect rent, file appropriate financial forms and communicate with state and local authorities. If you don’t want to deal with that level of detail, you’d best say, “I need to look for rental property management companies near me.”
A Real Estate Management Company Can Save Your HOA Money
Sometimes, HOAs balk at a property manager’s fee, but as most real estate management companies support multiple properties, service vendors often give them discounted rates because they bring in a lot of business. This means lower annual maintenance costs for your HOA.
Also, real estate management companies typically have well-established relationships with vendors, meaning your HOA won’t have to spend time researching to find the best vendor to fit your needs. Finally, in some cases, property management services may cover more than tenant management and maintenance, such as security, which can help buffer your bottom line.
Additional Benefits for Your HOA of Hiring a Property Management Company
One compelling reason to hire a real estate management company that often gets overlooked is the potential for increased benefits. This may seem counterintuitive, given that property management companies charge fees for their services. However, when you delve into the many ways a property management company can enhance your community, you’ll quickly realize that the investment is more than worth it.
- Better Community Appeal – A property management company can implement effective marketing strategies and maintain a strong online presence, which can greatly increase visibility for your HOA community, which is important for investor owners. All owners benefit, however, because the higher the demand for homes within your community, the higher your property values might be, leading to a more desirable community.
- Setting Assessment Rates – Establishing the optimal assessment rate requires a thorough understanding of the local market, knowledge of comparable HOA fees, and a keen sense of how potential residents value different amenities. Property management companies have the resources and expertise to conduct comprehensive market studies that determine the appropriate assessment rate, balancing necessary income for community maintenance without deterring potential owners.
- Reducing Resident Turnover – High resident turnover can seriously disrupt community continuity. Frequent unit sales can disrupt community cohesion and impact property valuations. A competent property management company will provide excellent customer service to keep both owners and residents happy, minimizing sales and turnover. Satisfied residents are more likely to remain in the community, saving owners the cost of dealing with changes in occupancy.
Property Managers Save Owners Time and Headaches
Managing an HOA can be demanding. Here are ways a property management company can help save the HOA board time and avoid stress.
- Resolving Homeowner Issues – Issues related to homeowners can be time-consuming. Property managers can handle disputes, emergency calls and property damage, saving the board both time and the stress of navigating personal conflicts between neighbors.
- Navigating Legalities – Homeowners associations come with legal complexities, from compliance with HOA laws to managing delinquent assessments. Property management companies handle these matters, saving the board time and providing peace of mind.
- Screening Potential Homeowners – While the ultimate decision of who buys within the community is not within the purview of the HOA or the property management company, they can provide necessary information regarding HOA rules and regulations to potential buyers, ensuring only informed and agreeable residents join the community.
- Overseeing Maintenance and Repairs – The HOA board doesn’t have to worry about coordinating maintenance and repairs for common areas with a property management company. They handle these tasks, saving the board from dealing with owner and resident concerns at inconvenient times.
- Managing Finances – From collecting assessments to managing reserve funds and producing financial reports, property management companies manage the financial aspects of the HOA, enabling the board to develop and approve annual budgets efficiently.
- Marketing the Community – Property management companies can help to enhance the community’s reputation and desirability, which indirectly helps maintain or increase property values, saving the HOA board the time and effort it takes to promote the community’s benefits.
Better Residents Thanks to Screening and Wider Reach
For HOAs representing large numbers of investor owners (where tenants occupy most units), property management companies can attract high-quality residents through extensive marketing and thorough screening. Property management companies have the resources to market your HOA community widely, attracting a larger pool of potential renters. More applicants increase the odds of finding residents who are respectful, reliable, and likely to adhere to community rules in the long term.
Good property management companies also excel in providing potential buyers or renters with comprehensive information about the HOA’s rules and regulations, helping to ensure that those who choose to move in are well-prepared to comply. Their experience in following fair housing laws also protects your HOA from potential legal issues.
In short, a property management company increases the likelihood of securing high-quality residents due to a wider reach and track record of success in attracting potential home buyers or renters and their meticulous, law-compliant information dissemination processes.
Staying Current on Local Laws & Regulations Regarding HOAs in the State
A real estate management company can ensure your property doesn’t violate regulations. Established property managers have the training and practical knowledge of landlord-tenant laws and other applicable regulations. In the long run, this can save your HOA from paying costly legal fees associated with non-compliance.
Consider the legal trouble your HOA could find itself in if you ask for too large of a deposit or appear to engage in discrimination when renting to new tenants, both violating established laws. In addition to the hassle of dealing with a lawsuit, you might find yourself on the hook for substantial damages.
HOA Rules and Regulations Enforcement
Self-managing an HOA will often put you in a difficult position with your neighbors, who may also be your friends. Enforcing HOA rules and regulations means acting when the rules are violated and managing the inevitable homeowner complaints and disputes. The larger the community, the bigger the headache, but a real estate management company could handle all this for you. In addition, they also take care of the finances, meaning you won’t have to have any uncomfortable conversations with your neighbors about a late payment on HOA dues.
DIY Management Can Backfire on You
When considering the advantages and disadvantages of using a property management company, HOAs often acknowledge the time-management and expertise benefits of employing a third party but balk at the perceived cost. But many times, trying to do everything on your own can backfire on you. Just consider the following scenarios for individual investor owner:
- You don’t live near your property. Out-of-town or out-of-state landlords can quickly lose control of their properties, defer maintenance, fail to promptly collect rent, and get taken advantage of by unscrupulous tenants.
- You aren’t familiar with landlord-tenant law. We’ve already touched upon this risk in a previous section, but let us emphasize it again: Not having a good grasp on the legal aspects of managing property can set you on the road to ruin very quickly.
- You have multiple properties. Management tasks expand exponentially with every new property you acquire. At some point, you will need outside help to keep everything running.
- You want to expand the number of properties in your portfolio. The previous point holds true when you want to acquire more real estate. Managers can take the minutia of property management off the owners’ plates, allowing them to focus on expansion plans.
- You don’t enjoy dealing with tenants. When tenants fail to live up to their end of the bargain (and they too often do), you’ll have to interact with them to receive your contractually obligated rent. If you don’t like doing that, you ought to get a property manager who does.
Property Managers Serve as a Buffer Between Owners and Tenants
Property managers often serve as an important buffer between owners and tenants, alleviating potential stresses and improving relations.
- Addressing Difficult Issues – Property managers handle difficult conversations, such as rent increases, rule enforcement or responding to complaints. They ensure these matters are dealt with professionally and impartially, eliminating potential personal conflict.
- Handling Tenant Problems – From late-night emergencies to disputes between neighbors, property managers take the burden off owners by dealing with tenant issues. This can save owners from stress and keep relations with tenants cordial.
- Ensuring Privacy – Having a property manager can provide privacy for both parties. Tenants can reside without the owner’s direct involvement, and owners can maintain a professional distance while still benefiting from their investment.
Time is Money
The benefits of hiring a property management company for an HOA are numerous. However, they all boil down to ensuring an efficiently managed community that is desirable to owners and renters. Common area maintenance, financial record-keeping and regulatory compliance issues are transferred from board members to a professional property management company, giving the HOA peace of mind. Managing an HOA takes enormous time and is best left to real estate management professionals!
