Managing an HOA community effectively in a manner that works best for its residents doesn’t just require having enough money in your coffers; it also requires knowing how to best budget that money for the most effective, efficient, and beneficial results. By properly budgeting your HOA’s funds, you can set your community up for success in keeping property values high, steadily increasing, and ensuring your residents’ continued well-being.
1. Get Your Priorities in Order
One of the first and foremost budgeting tips for HOA communities is prioritizing your projects. Not every HOA project is as vital or value-adding as every other; not everyone needs to be accomplished now. Certain financial constraints limit every HOA, so you must apply your funds to where it will do the best first, such as by installing magnesite flooring.
Make a list of all your HOA projects and place them in order of importance. Start with the ones you’ve already accounted for in your current budget. Then, look at the ones you want to accomplish by the month's end, quarter, or year. This allows you to plan better moving forward, setting you up to complete more of the projects on your list more promptly.
2. Form a Budgeting Task Force
One of the most effective budgeting tips for HOA communities is to dedicate a certain segment of your HOA board to developing, analyzing, and, as necessary, adjusting your community’s budget. By having a dedicated team focused on the task, you can accelerate the budgeting process and better steer your course.
Your HOA budgeting task force will likely be most effective by scheduling regular planning meetings. Be sure to include the HOA community manager, president, treasurer and heads of the budget and finance committees on the task force and in the planning meetings.
3. Include Reserve Funds
It’s tempting to want to spend all the money you have available for you to spend, given there’s always more work to be done and never enough money to do it all. Nonetheless, it’s critical that you include a reserve fund in your budget; that’s money you set aside for sudden, necessary and urgent or time-sensitive replacements, upgrades, and major repairs. A hit to the economy could make vendors raise their prices; some of your members could stop paying their dues or be late with them; a natural disaster could occur. This is why it’s imperative to keep an emergency fund in your community’s budget and commit to avoiding depleting it to cover budgeting shortfalls or oversights.
4. Survey Homeowners
One of the best ways to help determine the priorities of your HOA is to hear out what the homeowners in your community have to say on the matter. What repairs, upgrades, or improvements matter most to them? If you’re a homeowner in the community, make sure your voice is heard in the planning for your community’s future. You may not be able to please all the homeowners all the time, but you can get a fairly good idea of how your expenditures can do the most good for your community’s members.
5. Negotiate With Vendors
Just because you’re currently working with a particular vendor, it doesn’t mean you need to stick with that vendor, nor if you do, you need to continue paying the same price for their products or services. Within the terms of your contract, you’re free to solicit other offers from other vendors at any time you like, and you should either exercise that freedom or at least use it as leverage to negotiate better rates and terms with your existing vendors.
6. Anticipate Cost Increases
Prices tend to increase over time. Even though periods exist when the economy or other factors cause certain expenses to drop, the trend has been, is, and will likely continue to be for prices to rise over the longer term. For your budget to continue working effectively for your HOA, it must account for these increases. Your budget should reflect an awareness and preparedness for a steady increase in the cost of the various line items, including utilities and legal, accounting insurance, and vendor services.
7. Audit Your Budget
One of the most important budgeting tips for HOA communities is to regularly audit your community to see how the HOA is allocating funds. Creating a practical, efficient, and effective budget is not a task you perform and complete; it’s an ongoing process. Circumstances change prices, membership, and the economy. You must constantly adjust your budget to better account for those changing circumstances.
You also need to audit your HOA to ensure no errors are slipping unnoticed. HOAs are ultimately run by people, and people can make mistakes. You need to make sure no mistakes negatively impact your funds or your budget, and you need to ensure your HOA employees know their work is being checked for accuracy.
Start budgeting your HOA community for success and making your residence an even more desirable place to live. Call us to discuss affordable deck waterproofing in Los Angeles.