Being on the board of an Aurora, CO HOA is a big responsibility, and one of the largest and trickiest responsibilities to manage is community association budgeting. Calculating your budget for the year has a direct impact on homeowners: estimate too high, and you’ll have to raise monthly dues, frustrating your residents – but estimate too low, and you’ll have to impose special assessments for important projects down the road, also frustrating your residents.
Building a responsible and, most importantly, accurate community management budget can be a tricky task, but it’s doable with the right tools. If you want to make sure you can achieve balance between keeping fees low and covering all projected costs, consider these three tips for successful HOA financial management.
Identify your board’s budgeting philosophy
HOA boards tend to approach budgeting in one of two ways: they either choose a fixed amount for monthly dues and calculate how to manage within that budget, or they choose the management and service style they most desire and discover what that will cost in monthly dues.
While both of these styles can work if handled properly, setting a fixed value for monthly dues can cause more significant issues down the road. Keeping dues low will keep residents happy in the short term, but it may not align with the realities of your HOA management needs and can lead to higher special assessments.
The recommended pathway is to envision the type of community that you want to maintain and the service level you strive for. Then, determine the cost of achieving that objective. While this may cause dues to increase initially, it will guarantee higher resident satisfaction in the long-term and will set up your HOA management for success.
Prioritize protecting property values
The main purpose of a community association is to protect and increase property values within that community. With that in mind, protecting property values should be the top priority when setting your annual budget.
To achieve this, set aside numbers at the outset and ask your board what aspects of the HOA drive property values. While the benefits of every community association are slightly different, common considerations include landscaping, amenities, perimeter fencing, street maintenance, community events and exterior home appearances.
Focus on these unique benefits, consider how you can implement or improve them to drive property values, and then calculate what these maintenance projects are projected to cost. This will allow you to optimize your budget, prioritizing the items that will earn the most immediate return on investment.
Evaluate your budget line-by-line
Your budget should be evaluated with a fine-toothed comb to ensure that every expense is necessary and justified. Recurring costs that no longer serve residents’ needs can add up to substantial amounts that unnecessarily drive up monthly dues.
Review your budget line-by-line and discuss the cost of services. Consider which amenities need a complete overhaul or replacement, and consider which vendors you can negotiate fees with. Just because you’ve paid a certain amount in the past for specific services doesn’t mean you need to continue paying that same amount. You may be able to eliminate the service altogether, depending on resident needs, or you may be able to renegotiate a price with a long-term vendor.
Whether you need full-service community management services or only HOA financial management, The Management Trust is here to help. We’re proud to be the country’s premier HOA management company, providing more than 1,500 communities nationwide with 24/7 community management. If your board members are overwhelmed and need assistance with the day-to-day responsibilities of community association management, we can help you handle everything from vendors to bookkeeping. To learn more about how The Management Trust can help your Aurora, CO community thrive, give us a call at (303) 750-0994 or fill out our online contact form today.