A self-managed HOA is a homeowners’ association where the board members who oversee the happenings in your community are homeowners within it. Enacting an HOA like this can be time consuming, and in order for it to work, committee members need to invest substantial time and effort. It’s important to weigh the benefits and downsides of this kind of HOA before deciding on it, since an HOA company may prove to be a better option for some neighborhoods.
Benefits
What benefits can you expect from a self-managed HOA?
Tighter Community
When community members come together to work through tough problems, they naturally bond and grow closer as a group. Self-managed HOAs focus on what’s best for the community rather than what will lead to more profit, which tends to be what HOA companies value.
Greater Autonomy
Since communities with their own HOA tend to be tighter knit, they are more likely to create rules and regulations that work best for homeowners since they are more aware of what each group’s wants and needs are. Profit is not the main goal, so rules tend to be laxer and more nuanced, allowing for exceptions when needed.
When HOA management companies are in charge, demanding managers and upset residents tend to create conflict that is difficult to resolve since the two parties have conflicting interests. When board members are community members, residents and leadership have the same goals and can often understand without much tension.
Community-run HOAs also have fewer rules than HOAs run by management organizations. The seemingly picky rules set forth by professional management companies are there to drive property prices, so they usually favor more traditional practices like restrictive rules around subletting, landscaping, or which breeds you’re allowed to keep as pets. These strict rules sometimes lower community morale, especially if they’re enforced in a rigid fashion.
Savings
One of the most important things to consider when contemplating self-managed vs. professionally managed HOAs is the cost savings aspect. Homeowners usually have to pay higher fees to cover the costs of a management company.
HOAs run by the community usually prioritize breaking even and only need a reserve fund that’s large enough to complete future goals. Managers are usually volunteers, so their labor is free, and the operating expense is much less.
Potential Downsides
Now that self-managed HOAs sound like a great idea, what are the potential downsides to having this type of management style?
Management Difficulties
The biggest issue with self-managed HOAs is that they lack the management experience that professional HOA companies have. While professional organizations bring expertise and a variety of tools to keep things running smoothly, community-run HOAs usually rely on volunteers who have other obligations and responsibilities. Because of this, this type of HOA management can fall victim to disorganization and leadership issues.
It’s important that self-managed HOAs have good HOA management software to complete their day-to-day tasks. Professional management companies have full-time employees who know how to keep detailed records and use the technology that makes management a breeze. Self-managed communities may not have this knowledge up-front, so taking the time to figure out what software works best for your organization is a great way to ensure you don’t start to suffer from disorganization.
Also, since self-managed HOAs lack experience in most cases, remaining compliant with state laws and regulations can become an issue. There are laws that require certain documentation and formulation practices, so it can be helpful for these groups to keep a lawyer on retainer to keep them on the right track. HOA management company employees are specifically trained in how to navigate these legal waters, so they usually don’t have an issue in this field.
Keep in mind that although enhanced community and leadership bonding can be a good thing, it can also become a flaw. We’re all human, and humans have emotions that can get in the way of what’s professional and fair. Board members who have power over their neighbors can become an issue, so it’s important that HOAs remain well-managed despite any interpersonal conflict that may occur.
Decreased Property Value
Due to the issues discussed above, self-managed HOAs can develop a bad rap. Some potential buyers do not trust this kind of HOA management style and can be scared away from buying in that area. HOAs that are poorly run can make a homeowner’s life much more difficult than it needs to be, so maintaining a self-managed HOA that is well managed and fair should always be top-of-mind. Otherwise, communities can deal with decreased property value as a result.
Conclusion
Weigh the information above with the knowledge you have about what’s best for your interests and what you look for in a community. Continue to research the potential pros and cons of each management style and look for homes within HOAs that match what you decide.
