Homeowners associations or HOAs collect fees from its members to have funds for its operations. But regardless of the size of the HOA and the total amount of fees collected each month, there will be occasions when the association will fall short on funds, especially funds for unforeseen and unplanned expenses. So how can your HOA save money? So Cal Enterprises shares some tips:

Conserve energy

The bulk of expenses for HOAs goes to utility bills, which are primarily electricity and water bills. Here are ways to conserve energy:

1. Turn off and unplug equipment

Even if you’re not using a piece of equipment, it is still using up power by simply being plugged in. Make a checklist of all the equipment in common areas and evaluate their usage. You can create a schedule for usage of specific equipment, too, so they all don’t need to be simultaneously plugged in.

2. Discuss energy conservation programs and options with your provider

If you haven’t yet asked your energy provider about their conservation programs and options, now’s the time to do. The government usually gives incentives or credits to energy providers that help conserve energy, which means there’s a good chance that your provider has one or several. If they don’t, find out if you can switch providers. If you can, shop around for one in your area that has such credits or incentives.

Conserve water

Another huge expense for HOAs is its water bill. Here, you have several ways to conserve water:

3. Schedule your sprinkler system

There is a common misconception about sprinklers: that if you set them to automatically turn on and water the lawn for short periods at small intervals several times per week, you’ll be saving more. Truth is, the more often you turn on the sprinkler system, the more water it uses up even if you did set it to work only for short periods at a time. The more cost-efficient system would be to turn it on fewer times fewer week but working for longer intervals.

4. Utilize a rain gauge

If you haven’t installed a rain gauge, it’s high time that you do. Rain gauges save water that you can be used for the HOA’s irrigation system. Utilizing these water conservation gadgets can significantly cut your water usage.

Re-evaluate service contracts

5. Update your contract with vendors

If your HOA has been around for a good number of years, you may have forged a good working relationship with select vendors. Check your current contract with each one and discuss new terms you can both agree on that can help you save on professional fees and supply costs.

These money saving tips can help you get started on your campaign to lower your HOA expenses for a more efficient HOA management and operations.

For multi-family housing, which is usually an apartment building or a condominium, may be regulated by a homeowner’s association (HOA) and managed by a property manager or a building administrator. The HOA itself may be managed by an HOA management company. The setup varies; and it is usually upon the discretion of the unit owners, real estate developer, and the HOA.

Assuming the condo community is managed by an HOA, which in turn is managed by an HOA management company, the most common question that unit owners and tenants ask is if an HOA management company is necessary, thinking that hiring such services means higher association dues. The answer is “yes,” and here’s why: the association’s finances are better managed.

HOA finances

Budgeting

One of the biggest challenges that HOAs deal with on a regular basis has to do with finances; specifically, budgeting and reserves. How do they ensure that there is always enough for emergencies, from unforeseen equipment breakdowns to natural disasters, for instance? How can they make sure, too, that they have enough money for daily operations? From landscape to building maintenance, and other services needed to ensure the safety, comfort, and security of the community

States generally have specific regulations regarding HOA or association budgets. For instance, the HOA may be required by local regulations to update their budgets annually, taking into account financial challenges experienced the previous year.

Fundraising

For emergencies, HOAs should have a reserve fund. Unforeseen circumstances that may require funding include emergency equipment repairs or replacement, unscheduled facility and utility upgrades, and disasters and accidents (such as flooding, and fires).

Usually, association dues only cover operational costs and money that goes into the reserve fund is usually “charged” as an additional expense or fee. This additional burden isn’t usually welcomed “with open arms,” as one could imagine. The better alternative is to hold a fundraiser.

The challenge here isn’t the type of fundraising to hold but rather, the amount of money that the reserve must have at all times. Financial forecasting is needed here.

Professional assistance may be called for

Understand that homeowners/condo associations are run by volunteer residents, which means they have a life outside of the association. They have day jobs, families, and other responsibilities to take care of. What this translates to is basically overlooking and neglecting association duties without meaning to. And the HOA aspect that usually takes the brunt is finances.

An HOA management company usually has an accounting/financial expert that oversees the HOA’s finances. In general, HOA management companies ensure that the association is fully functional, serving the interest of both the community and its members.

Homeowners associations or HOAs are there to serve the homeowners and the community. Unfortunately, they have gotten a bad reputation because of misconceptions and misinformation. And the most common (and reputation damaging) misconceptions about HOAs is that they are too restrictive; too strict to the point of being “dictatorial.”

But if one were to shift their perspective and truly see HOAs from the point of view of an entity tasked to take care of the community and its homeowners, you’d probably gain a better understanding of why rules and regulations are imposed in the first place.

Here are a few things to know about :

Do you have more questions regarding homeowners associations? Please feel free to send your questions online or call So Cal Property Enterprises, Inc. at 951-270-3700; we’d be glad to hear from you.

Property owners can earn a good income from their property provided they have the right property manager looking out for their best interest. One of the biggest and most common mistakes that property owners make is hiring a property management company in haste. In their desire to earn from their investment as soon as possible, they fail to realize that entrusting their investment to the wrong property management company can turn their asset into a liability in a matter of months.

Protect your investment; choose your property management company wisely. Here are a few red flags to watch out for:

1. The company has a real estate “side business”

The company’s primary business may be property management but they have a side business: selling real estate. Why is this a red flag? First off, property owners think that a property management company that also sells real estate is the perfect entity to oversee their property because they have a deeper understanding of the business, both from the perspective of the owner and the seller. Unfortunately, it’s not as black and white as it appears.

Usually, property management companies like this offer to manage your property so they can have first dibs on it if you decide to put it on the market. So really, their interest is more on getting their hands on your property solely to earn from it, both as the property manager and broker. It’s a win-win for them, not so much for you.

2. They don’t have a *good* network of vendors and suppliers

When your property gets damaged by the renters or it needs emergency repairs, who do they turn to? If they only know one or two vendors, suppliers, and contractors to do maintenance jobs, you could be looking at long delays caused by emergency repairs. Also, you have to wonder why they don’t have a good network of contractors ready and willing to take on jobs at a drop of a hat. Could it be a lack in business ethics? Or perhaps they also try to get a commission for every commissioned job? There could be a number of reasons but one thing’s for sure: your property could end up more damaged than managed if you hire this type of property management company.

3. Frequency of tenant eviction

This red flag isn’t something that property owners even consider asking about, but not doing so could mean having long periods of vacancy on your property, which means potential income lost. In a word, a property management company that seems to be in the habit of evicting tenants mean only one thing: they do not screen applicants thoroughly.

Take your time choosing your property management company. A little bit of effort could save you future stresses and headaches.

Before you purchase or move into a new home, you should check first if your house is part of a community that belongs to a homeowners association (HOA) because this will spare you from surprise dues or fees that you’ll be asked to pay monthly (or at regular intervals), and you’ll also know things that you’re allowed to do and what you shouldn’t do if you want to avoid trouble.

To help you get started, here are five things you should know about homeowners associations, with a particular focus on the one thing that could affect your lifestyle: fees.

1. Fees vary from HOA to HOA

HOA fees or dues largely depend on two things: location and services. As with real estate, the location of the HOA greatly affects how much each HOA member will be charged for their regular dues. Suffice it to say that the more expensive the location, the higher the fee.

Additionally, the amenities and services that the HOA provides dictate the amount of HOA dues. Fees could be anywhere “between $100 and $700 per month.”

2. Special assessment fees may be required from time to time

Depending on the HOA’s financial structure, homeowners may be charged an additional assessment fee from time to time. Essentially, these charges may be due to major repairs that need to be done on the community’s common areas or facilities and the HOA doesn’t have enough funds to cover the expenses. Check your HOA’s financials for such emergency expenses to see if these are already covered in the monthly dues.

3. Mortgage lenders consider HOA fees

Believe it or not, mortgage lenders (banks, generally) will look into the HOA and your fees before approving your mortgage application. Mortgage lenders consider how the HOA dues could affect your finances overall, seeing these as critical factors that could affect your ability to pay your mortgage dues. In general, the higher the HOA dues, the lower your mortgage loan (so you’ll have a lower monthly mortgage due).

4. Covenants, Conditions & Restrictions

One of the most crucial factors about HOAs that homeowners neglect to check before moving in is the Covenants, Conditions & Restrictions (CC&Rs) document. The CC&Rs basically dictate what you can and can’t do on your property, and the community. Some HOAs have exaggerated restrictions like dictating the accepted paint on your home’s exterior walls. Be sure to check every condition and restriction to avoid being penalized or worse, kicked out of the community.

5. Conflict resolution

In relation to the above, check to see how the HOA resolves disputes or conflicts between neighbors, as well as the fines or penalties given for violations of the rules. As mentioned above, homeowners may be charged a fine or, in extreme scenarios, kicked out. Some HOAs even attach a lien on, or foreclose, the property.

Feel free to send your questions online or call 951-270-3700 for questions or inquiries.