Associations can greatly benefit from the services of an HOA management company. Since board members don’t always have the time or expertise, it’s good to have a professional handling essential managerial functions on a full-time basis. But, how much do property management companies charge to manage HOAs? Here’s a closer look at HOA management fees and how much your association can expect to pay each month.
How Much Do Typical HOA Management Fees Cost?
How much should an HOA pay a management company? The cost of management services will vary dramatically. Associations must understand that the cost of HOA and property managers will depend on several factors. This includes the HOA management company itself, the scope of its services, and the size of the community.
For example, a large HOA community may have numerous communal areas and amenities that require regular attention. The community may have hundreds of homes, as well. This means a large volume of work for management when it comes to enforcing homeowners association rules, collecting dues, and so on.
An association of this magnitude can most likely expect to pay a higher HOA management fee compared to a smaller community with fewer amenities, services, and homes.
Some HOA or condominium property managers may also charge extra for additional services, such as organizing and planning community events, preparing and distributing newsletters, setting up and maintaining the HOA website, and so on. For these services, typical HOA or condo association management fees may be on a cost per unit basis.
What Is the Average HOA Management Fee?
When looking for new HOA management, it’s important for associations to have an idea of typical HOA management fees to see if it will fit their budget.
On average, management services typically range from $10-20 per unit, per month. These per-door rates still vary drastically, though, depending on the scale of your community.
It’s also important to consider property management laws in your state, city, or municipality. Some states regulate property management activities, and this may have some bearing on your HOA management fees.
What are the Different Types of HOA Management?
How much do HOA management companies charge? The cost of an HOA management company will also depend on the type of services you receive.
Depending on the needs of your community, you may opt for one of the following:
Full-Service HOA Management
A full-service HOA management company provides all the services that your community needs. An on-site manager will handle the day-to-day operations of the HOA, which includes maintenance, financial management, and homeowner communications.
This type of HOA management is ideal for larger associations or communities with struggling board members. Communities can greatly benefit from the expertise of an HOA manager, combined with the vast resources of an HOA management company. Accordingly, HOA management fees will be higher.
Remote HOA Management
There are HOAs that can handle the overall operations but may need some help with administrative duties or financial management. A remote HOA management company can provide the support that these HOAs need.
The HOA board still handles on-site operations but they receive virtual assistance when it comes to tasks like contract reviews, reserve planning, maintenance tracking, violation notifications, and so on. This is a cost-effective solution because HOAs receive crucial support but can save on HOA management fees.
HOA Consulting Services
Even a well-functioning HOA needs some help from time to time. If your association needs assistance on certain projects, the board can opt for HOA consulting services.
An HOA consultant will come in and advise the board on what needs to be done. After the project is done, the HOA contract also terminates. Thus, HOAs won’t have to keep paying for HOA management fees in times when they don’t need it.
What is the Difference Between HOA Management and Property Management?
When choosing a management company, another important distinction that should be made would be HOA management vs property management. They provide very similar services but still have unique differences. Keep the distinction in mind as you consider the costs of HOA management.
What do property managers do? If the HOA owns and rents properties in the community, the property manager will be in charge of managing these properties. Property management duties include rent collection, accounting, maintenance, and so on.
These services are very similar to HOA management. However, an HOA manager’s role is all-encompassing. They are responsible for the entire community, ensuring that it is functioning smoothly on a daily basis.
What’s Included in the HOA Management Fee?
Upon choosing an HOA company and the type of HOA management, the association will have to sign a management contract. This should clearly detail the management services they will provide as well as the HOA property management fees to be paid.
Here is a sample breakdown of the HOA management fee:
1. Initiation Fees
The initiation fee is what an HOA management company may charge to handle the day-to-day management of your community. This can range from a couple of thousand dollars up to $30,000 depending on the size and need of your HOA.
2. Monthly Management Fees
HOAs may also pay an HOA management fee each month. This amount will be clearly stated in the HOA contract.
3. Extra Services and Charges
An HOA manager can still provide services that are not initially stated in the contract, but it will come at an additional cost. Make sure to clarify this with your HOA management company so that the association won’t be surprised by hidden costs.
4. Termination and Transition Fees
A typical HOA contract lasts for one year. It’s not usually recommended to sign a multi-year management contract unless the association is already familiar with the quality of service of the company. It’s also easier to renegotiate terms with a yearly contract.
If for some reason, the association wants to terminate the management company’s services before the end of the contract, or vice versa, a termination fee will be imposed.
Then, at the end of the year, if the association wishes to transfer to change their management company, there may also be transition fees. Your former company can orient the new management but they will have to be compensated for it.
Services You Can Expect With Your HOA Management Fee
Once your association has signed with an HOA management company, the board can expect assistance with the following aspects:
- Accounting and financial management services
- HOA collections and vendor payments
- Rule enforcement and sending violation notices
- HOA communications (answering phones, responding to emails, homeowner inquiries)
- Scheduling maintenance services and overseeing contractors
- Insurance and tax returns
- Drafting and/or amending governing documents
- Board meeting agendas
Again, the scope of work provided by your management company should be clearly outlined in the HOA contract. This is to set expectations and avoid disappointments for both parties involved.
Does the HOA Management Fee Matter?
When choosing an HOA management company, of course, it is important to look at the HOA management fee. However, it shouldn’t be your only consideration.
It’s important to stick to your HOA budget. But considering the invaluable services of a management company, HOA management fees may be greatly justified. It can be a worthy investment that leads to HOA growth and success. So, make sure to spend time looking at different companies to find the one that best suits your community.