If you’re wondering about self-managed HOA pros and cons, it’s probably because you’re thinking of switching to one or the other. Or maybe you’re thinking of buying a property in a self-managed HOA. Either way, making such a big decision is no piece of cake. That said, this article is here to help you weigh the pros and cons by laying out an honest picture of what a self-managed HOA is like. We also share some essential aspects needed to successfully run a self-managed HOA.

1. What is a self-managed HOA?

Let’s start with the basics. 

A self-managed HOA is a community association that is solely managed by an HOA board of directors elected by homeowners. This means that they don’t have any professional help from a management company. The HOA board is made up of volunteer members. 

2. What is an HOA management company?

An HOA management company works hand in hand with the HOA board of directors to handle the daily operations of the association. The management company, in general, takes care of maintenance, collects dues, and handles administrative and legal matters. HOA managers are paid professionals usually licensed who work in an HOA management company.

3. Self-managed HOA pros and cons

Many advantages and disadvantages come with managing an association without external help.  Here, we’ll focus on the three ones that cause the most impact.

The pros

Low costs and fees

HOA management companies’ services aren’t free. They charge quite a high amount to conduct HOA’s daily operations. Instead, board members are volunteers. That means they don’t receive any financial benefit for the work they do. So, getting rid of a management company can help reduce HOA fees. Besides, a manager needs to ensure the property value is maintained or increased. As a result, they may insist on conducting renovations and unnecessary maintenance.  

This can create extra costs and residents may feel annoyed to see their fees increase. 

Fewer conflicts between residents, board, and management

Conflicts are common in community associations. Issues between neighbors or even with the board of directors are frequent. It’s the board’s responsibility to find ways to reduce frustrations for all parties. This isn’t an easy task. However, it gets even more difficult when a third party enters the game. Board members can have a hard time finding a balance between unsatisfied residents and demanding managers. They may feel stuck in between. Disagreements between the board and the management company can also have a negative effect on residents.

In general, there are two main reasons why an HOA managed by a company decides to self-manage. 

1. There are conflicts between the board and the management team
2. The board is unhappy with the management company’s service

Without a management company, there should be less tension.

Higher focus on community’s needs

An HOA management company usually doesn’t deal directly with residents. As a result, an HOA manager may not be fully aware of what residents are concerned about. Some important issues could be overlooked which can negatively impact the community’s well-being. On the other hand, board members live in the HOA.

Plus, it’s the board that directly deals with residents’ requests and concerns. So they are better equipped to serve their community. When a management company isn’t around, the board has more autonomy. It means they can respond to residents’ needs quicker and implement changes more easily.

The cons

Lack of administrative and management expertise

A community association manager has experience in managing HOAs. It’s their profession for which they have studied. In some states, they need to have a license. Some states (for example Florida) also require them to follow continuing education (or CE) Classes each year. CE Classes are industry courses that allow you to gain insights and learn best practices. 

Most probably, the board will have little or no experience in management and administration. Besides, since they are volunteers they don’t receive any incentive to dedicate their time to learning about the industry. 

As a result, the board can get easily frustrated and become unmotivated. Worse, they can start feeling overwhelmed with tasks that a manager would easily master. This can end up with your HOA being badly managed, which is detrimental to the community as a whole. 

Use of outdated manual processes and heavier workload

Sometimes, some HOAs underestimate the number of activities a manager does to make sure everything works smoothly. One of the biggest risks is not considering the workload properly. Besides, the lack of experience in management may result in the use of outdated processes.  In that case, the workload will seem even heavier. Let’s imagine that an HOA manager takes half an hour to perform a task. He conducts this task using the right tools and knowing exactly what they are doing. Now, think about a board member doing the same task. It will probably take them twice as long. 

Scare potential home buyers or decrease property value

Homeowners associations have an infamous reputation. That’s why many people think twice when it comes to buying a property in an HOA. Moving into a self-managed HOA can sound even scarier. Having a company managing your community gives a good look to your HOA. It can convey more trust and professionalism. It gives the certainty that all legal aspects are taken care of. Besides, it can also reassure potential buyers about monthly fees. Knowing that the budget and the fees are managed by a professional third party gives more assurance. 

Without a management company, a home buyer may be more wary. They will want to know if the HOA is successful and well managed, even without a company. 

4. Basis of a successfully run self-managed HOA

A motivated and dedicated board of directors

The board of directors needs to be aware of what it takes to manage an association on its own. More than that, all members need to have enough motivation to take on this responsibility. They also need to commit to doing their best. Residents must be engaged and should elect the right candidates. 

Committing to continuous education

You need to compensate for the loss of a knowledgeable professional HOA manager. For that to happen, board members must commit to acquiring management skills. They also need to continuously learn about the industry and the best practices. They can do that by watching webinars, reading blog articles, or ebooks.  In Florida, new board members have to to do a course. 

Becoming tech-savvy

Usually, a management company has a lot of tools to perform daily tasks. Managers are in general comfortable with using different online tools that make processes more efficient and fast. If you want to tackle the heavy and tedious workload, you need to start using these tools. Besides, self-managed HOA software does exist.  The good part is that you’re never really alone when you use HOA software. The software’s customer success team is always available to help you. 

Keep in mind that:

Self-managed homeowners associations have a lot of upsides but they often come with tradeoffs. You should know that some excel without a management company to help them. While others just couldn’t make it without a manager to assist them. Every HOA is different. Here’s why it’s essential to understand what’s best for your community and yourself. Either way, embracing technology and utilizing the tools available to you can make a huge difference. 

If you’d like to learn more about software that helps self-managed HOAs thrive click here.