A self-managed HOA may offer more control over operations, but board members often experience burnout at a much faster rate. Whether or not self-management is the way to go for a particular community depends on its needs, the board’s capabilities, and what options are available to them.
What is a Self-Managed HOA?
A self-managed HOA is simply one that relies primarily on its board members to manage and operate the community. It does not have professional management to oversee the day-to-day tasks that keep the association running.
Many associations start out with self-management, but some inherit management from developers. If the developer hires a professional firm to help with establishing the community, setting up financials, and transitioning control, that firm typically continues on as a partner after unit owners take over.
Self-Management: HOAs vs Condo Associations
Single-family developments and condominiums face different challenges when it comes to management. While boards typically juggle similar responsibilities, the approach is often distinct, as these communities have differing needs.
Structure is the chief separating factor. In single-family HOAs, boards only need to worry about common areas and amenities. Attention is exclusive to these spaces, so staying on top of maintenance isn’t as difficult as in condominiums.
On the other hand, condo associations have more maintenance obligations. Aside from amenities, condo boards must oversee hallways, elevators, stairwells, lobbies, and the like. The exterior and roof of the building is also shared, as well as other elements such as windows, walls, and balconies.
Because of the difference in structure, a self-managed condo association encounters more hardships. Maintenance is only the tip of the iceberg. Condo boards must also consider insurance, reserve planning, and budgetary constraints. Condo fees also tend to be higher to keep up with more demanding needs, making collection a challenge.
For these reasons, most condo associations opt for professional management. By hiring a firm, condo boards can delegate most of their duties to an experienced team. This leaves the board with more time to focus on decision-making and other endeavors.
The Advantages of a Self-Managed HOA
To know if self-management is the right approach, it is important to consider the self managed HOA pros and cons. A DIY approach allows the board to save on expenses, exercise more autonomy over operations, customize controls, promote better transparency, and add a personal touch.
1. Saves on Expenses
A self-managed association can save money on management fees. Professional firms charge money for their services. By not hiring one, the association can lower dues or allocate that money for something else.
Of course, some may argue that an HOA can save more money in the long run if it is professionally managed. Many companies secure discounts from vendors, implement cost-saving strategies, and cut the budget by streamlining processes.
2. More Autonomy on Operations
Association boards retain more control over decisions and operations when they don’t have professional help. Instead of going through several channels or filing more paperwork, board members can make choices in a more direct way. There’s less waiting involved.
3. Customized Controls
With more autonomy comes more tailored management. Board members can adjust their procedures according to the specific needs of their community instead of trying to fit a mold set by someone else. This results in fewer bottlenecks, too.
4. Better Transparency
When boards have more control over decisions, they can ensure records are kept where they want and in the way they want. This allows for greater transparency, as it is easier to make documents available to unit owners. Residents don’t have to go through a management company’s request process.
5. A Personal Touch
When there’s no middleman, board members can communicate directly with residents. They get emails, newsletters, and text messages straight from the source. This cultivates the relationship between the board and the unit owners, allowing trust to develop in a more meaningful way.
The Disadvantages of a Self-Managed HOA
Self-management does not come without its pitfalls. When associations opt for this approach, they must invest more time in operations, experience, and skill. Self-managing an HOA also involves more personal feelings, leaves room for inconsistencies, comes with more challenging responsibilities, and makes boards feel more fatigued.
1. Takes More Time
Self-management requires a significant time commitment. It’s an everyday job that requires constant attention. Board members may not always have the bandwidth to allocate to their duties, as personal and professional endeavors take up their headspace.
2. Requires Skill and Experience
Association management demands expertise in many areas, including accounting and legal compliance. Most of the time, board members don’t have the necessary skills to accomplish their roles in an effective manner. They might flounder on decisions or cause delays in operations because they’re still trying to find their footing.
3. More Personal Feelings Involved
Board members are tasked with conflict resolution, but this isn’t always easy when they know the people involved. Boards must govern their neighbors and friends, so personal feelings may get in the way of consistent and objective decisions. In comparison, an HOA manager acts as a neutral third party, ensuring that problems are tackled with an impartial mind.
4. Room for Inconsistency
Boards are in charge of enforcing the rules. Just like with conflict resolution, rule enforcement may turn inconsistent or arbitrary due to personal vendettas or a lack of experience. Selective enforcement not only damages the association’s reputation but also exposes the community to legal risks.
5. More Challenging Responsibilities
Board members must handle a plethora of tasks to ensure the association stays operational. Collecting dues, overseeing projects, managing vendors, and ensuring proper maintenance can all start to become burdens. Mistakes can be costly, and whatever money the association would have saved on professional management may become moot.
6. Fatigue
Given the often-monotonous nature of the job, self-management could lead to board fatigue. Board members who try to do everything themselves may experience burnout, leading to a loss of interest and delayed decisions. In the end, the community suffers the consequences.
Alternatives to a Self-Managed HOA
Self-management is not the only option available. Association boards can obtain help by outsourcing certain services, relying on technology, or going for full-service professional management.
1. Outsource Certain Services
Many companies offer their services on an à la carte basis, with HOAs picking and choosing which ones to secure. Most also offer a financial-only tier, which addresses the accounting and financial management needs of the association. Other than that, associations can hire engineers, accountants, and lawyers separately.
2. Rely on Technology
Associations can purchase or subscribe to online platforms or software to help streamline processes. There’s a solution for virtually everything nowadays, from work order management and request tracking to dues collection and calendar management. Out of all the options, this may be the most economical, but it is still only a step above self-management.
3. Opt for Full-Service Management
The final, and arguably, best option is full-service management. This comes with on-site management support, project oversight, accounting and financial services, administrative support, and even emergency services. It’s a top-to-bottom approach that reduces the workload of the board immensely.
A Suitable Option
A self-managed HOA faces several challenges, and there’s only so much the board can do to address them. While the final decision rests with the board, most communities flourish from hiring a professional management company.
Forth Group provides HOA management services to communities in Chicago and the surrounding areas. Call us today at (312) 379-0400 or contact us online to get started!
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