Finances can be a sensitive subject in homeowners associations (HOAs), yet a very important one to discuss honestly. Without proper funding, HOAs are unable to maintain communities and basic upkeep let alone make improvements. And when unexpected expenses arise and funds are not available, it can mean levying special assessments for homeowners. Kuester Management Group has released a statement to the press regarding ways HOAs can reduce their risk of needing special assessments to cover costs.
“Special assessments can be a burden for everyone and cause controversy in the HOA,” says Bryan Kuester, President of Kuester Management Group. “Though in some cases they may be unavoidable, often HOAs can reduce their risk by putting proactive strategies in place to maintain adequate funding.”
While the HOA may be hesitant to raise dues for fear of pushback from members, it is essential that they keep up with the economy, says Kuester. If the cost of services is rising, it only makes sense to raise fees in order to keep up with inflation. The HOA may be able to have a slightly higher increase initially in order to keep dues stable for a longer time, but they want to ensure that the income is enough to cover the budget and reserve funding. Explain to homeowners why increases are necessary and how it helps in the long run.
“To help plan for major expenses, the HOA should conduct regular reserve studies,” notes Kuester. “This creates a formal plan that takes into account all of the association’s assets, the cost to repair or replace major elements, and a time frame for when these projects may be necessary. A reserve study shows the HOA how much it should be putting aside each year to meet anticipated costs. Having a fully funded reserve can decrease risk of special assessments when repairs are needed.”
It is also essential for the board to review its insurance coverage annually. Some repairs may be covered if the HOA has the right policies in place. This can be huge help in offsetting costs. However, if coverage isn’t adequate to meet the needs of the HOA, the association may end up footing a larger part of the bill. Compare options and work with a professional to establish the right level of coverage for an affordable price.
The HOA should also ensure that it is keeping up with regular preventive maintenance and checking for potential problems. By keeping equipment and amenities in good working order, it can reduce risk for major repairs or replacements. Rather than ignoring small problems, fix them now to prevent them from becoming more serious further down the line. This can also give the HOA more time to save up for costlier maintenance.
“Effective financial management is critical for HOAs,” says Kuester. “Though it’s impossible to mitigate all possible risk, with the right plans and processes in place, the impact can be minimized.” A property management company like Kuester can help HOAs to review financial operations, properly fund reserves, and determine if and when special assessments are needed and how to convey this information to homeowners.
For more information, contact Kuester today at www.kuester.com.
ABOUT:
Kuester Management Group, a division of Kuester Companies, works to protect property values and enhance the quality of life in each of its managed communities. Providing a full range of association management services, Kuester Management Group has worked to foster strong, resilient, and unified communities across North and South Carolina. The company is proud to offer on-site property managers, all zealous for building strong communities meant to stand the test of time. More information is available at www.kuester.com or @KuesterCompany.
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Company Name: Kuester Management Group
Contact Person: Bryan Kuester
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Phone: 704-973-9019
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Website: www.kuester.com