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Self Managed HOA vs HOA Management: What’s Better?

If you’re a part of a planned community, you may wonder if it’s better to have a self-managed HOA vs HOA management. Both options have their own merits and challenges, and the right choice may vary depending on your neighborhood’s needs and goals.

What is a Self-Managed HOA?

When you have a self-managed HOA, the board members and other volunteers oversee everything in your community. This means they will handle all administrative, financial, and operational responsibilities needed to run the neighborhood. This may range from collecting HOA dues to enforcing rules and community maintenance.

Typically, this way of running the HOA works for smaller communities with fewer people. The workload for such communities is more manageable, and usually, the residents are proactive.

What is HOA Management?

On the other hand, HOA management, or more specifically, professional HOA management, involves outsourcing administrative and operational duties to an HOA management company. These firms provide HOA managers with the expertise and resources to do daily operational tasks like accounting and scheduling. 

HOA management is best suited for larger communities or neighborhoods with complex needs. Having a management company helps achieve smoother operations without overwhelming the board members.

Self-Managed HOA vs HOA Management: What to Choose?

As an HOA board member, consider what suits your community best. When deciding, keep in mind the following factors.

Cost Considerations

One of the biggest concerns for many board members is the cost. If you have a self-managed HOA, you significantly lower your community’s expenses since no management professional is paid for their services. Instead, the board members are run by volunteers who provide their time for free. The HOA budget is then entirely allocated to operating expenses and reserves instead.

But keep in mind that self-management is not entirely free. The HOA board will still need to invest in the solutions and software needed for accounting and housekeeping. They may also choose to hire occasional specialist contractors for specific needs. Yes, this is still more affordable for small communities; it may have the opposite effect for larger neighborhoods.

Meanwhile, with professional HOA management, the HOA will need to allocate a regular fee that will be paid to the management company. The cost may vary, depending on the community’s size and the services provided. 

Although having a professional company manage your HOA calls for an additional expense, the association can save money in the long run. With professionals, you can ensure that your HOA reduces costly errors, ensures compliance with the law, and handles tasks correctly. If not, that can lead to HOA fines or disputes. 

Administrative Efficiency

If you have a self-managed HOA, your board will have direct control over all the operations in your community. This helps with faster decision-making and a personalized approach to addressing the concerns of your residents. Board members tend to be invested in the community and are usually more approachable to residents.

However, not all board members have the necessary skills for the complex tasks that the association has to do. Many may not know how to prepare financial statements, understand legal issues, or enforce rules without bias. Here’s where professional management companies enter. They provide management professionals with the skills, experience, and resources to do complex tasks for the HOA. Given their expertise, these professionals can also handle these tasks efficiently and properly. 

Legal and Regulatory Compliance

Other than the daily operations, rule enforcement, and maintenance duties of the HOA board, they also need to ensure that the community adheres to local, state, and federal laws.

When comparing a self-managed HOA vs HOA management regarding legal compliance, your association can benefit from having the latter.

In self-managed HOAs, the board of directors may find this daunting since many may not know how to do so. They must stay up-to-date on legislation that may apply to their community. They can make compliance mistakes if they don’t, resulting in legal disputes and fines. 

Meanwhile, professional HOA management companies have dedicated personnel who are legal and regulatory compliance experts. They must stay informed on relevant HOA laws to ensure your association runs within legal parameters. 

Time and Commitment

Managing a homeowners association consumes a lot of time from every board member on top of their professional and home lives. Tasks like organizing meetings, collecting and accounting for HOA dues, managing vendor relationships, and responding to resident complaints are time-consuming. Yes, this can still be manageable for small communities, but as it grows bigger, the board members may be overwhelmed.

HOA management companies, meanwhile, help lighten the load on the board members by taking on these responsibilities. They will assign dedicated staff members to handle the time-consuming tasks, letting the board members focus on decision-making instead of administrative duties.

Key Considerations for Making the Choice

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When deciding between a self-managed HOA vs. HOA management, board members should consider these factors:

  1. Size of the Community: A self-managed HOA can be more practical and cost-effective if you have a smaller community with limited needs. Larger and more complex communities usually benefit more from working with professional management companies.
  2. Board Member Expertise and Schedules: Not all HOA board members have the relevant skill sets or enough time to run the HOA effectively. Outsourcing may be a better option if the board lacks expertise in areas like accounting, legal compliance, or vendor management.
  3. Budget: Self-management will save money upfront, which is good for smaller communities. However, the bigger the community, the higher the potential for costly mistakes. To avoid such cases, consider hiring a professional management company.
  4. Community Dynamics: If you want a community where every resident is close, self-management may be the way to go. However, professional management offers a good alternative for communities prone to conflict and disputes or needing impartial enforcement of rules.

Which One is Best for Your HOA?

When deciding between having a self-managed HOA vs HOA management, there is no one-size-fits-all answer. It all depends on the needs and goals of your communities. Those seeking a close-knit community, a self-managed HOA can be a good option .Meanwhile, hiring a professional management company would be more beneficial to larger or more complex communities.

Freedom Community Management provides HOA management services in Florida, including administrative and financial tasks. Call us at 904-490-8191 or contact us online to learn more!