The Advantages and Disadvantages of Self-Managed HOAs
Neighborhood HOAs come in two different variations: either they are self-managed or run by a HOA management company. Below are some of the pros and cons of self-managed HOAs, and what you can expect as a homeowner living within one.
Living in a neighborhood with a self-managed HOA has many advantages that you should consider when deciding whether you’d like to invest in a home there.
The typical HOA stereotype is the nagging neighbor who has constant criticism about your home’s new mailbox or other seemingly unimportant details. This stereotype is most aligned with the values of an outside HOA management company, since they tend to enforce their rules more strictly and focus on increasing property value at all costs.
Some examples of the policies an outside HOA management company would be picky about are landscaping and paint rules, which dog breeds you can and cannot have in your home, how many cars can be parked in your driveway or on the street, and who can sublet from you. If your HOA is particularly strict, community morale can suffer, and there may be an increase in turnover within the community.
If your neighborhood has a self-managed HOA, they are usually more understanding and flexible since they interact much more closely with the homeowners and know their needs and wants.
Building on the point above, with a self-managed HOA, community members tend to be able to work together more closely and bond over neighborhood happenings. Outside HOA companies tend to be more focused on numbers and profits, so community morale is not at the top of their priority list. But when neighbors come together to clean up debris, vote on new rules, and resolve community issues, it’s easy to grow closer to those around you.
An important thing to consider when debating between third-party or self-run HOAs is the difference in cost.
Self-managed HOAs prioritize breaking even and having a fund that’s large enough for future community projects and enhancements. The managers are usually people who are volunteering their time and energy, so turning a profit and getting paid is not a focus for them.
The opposite is true for an HOA company. They prioritize making money for the community, so they charge fees for their services. They can be quite costly, so the difference in price between these two management methods is certainly something to think about.
Although the advantages above may seem great, it’s important to weigh those with the potential downsides of having a self-managed HOA as well so you can get the full picture.
Property Value May Decrease
Since self-managed HOAs are not as strict as HOA management companies, potential homebuyers may not trust a self-managed HOA. The board is run by inexperienced volunteers who come to have a lot of power, so some may see it as a risk to be managed by this kind of HOA. And it is somewhat of a risk. Disorganized HOAs can be unhelpful and slow to return calls or emails, which means that sometimes things take a lot longer to get approved than needed.
Depending on what state and county you’re in, you will have different laws that dictate what HOAs can and cannot do. When people purchase property under an HOA’s jurisdiction, they’re made aware of these laws and should expect their HOA to follow them.
It can be hard for non-professional HOA members to navigate these tricky legal waters. Professional management companies, on the other hand, are very in tune with what’s expected of them and are much less likely to make legal missteps.
Professional management companies charge so much because they bring a lot of knowledge and expertise to the table. When you run your own HOA, you don’t benefit from professionals with this kind of information or time to devote to learning it.
Comparatively, self-managed HOAs are run by people who oftentimes have full time jobs and other obligations that come first. This is where the potential for slow-moving decisions and callbacks comes in. A professional management company hires people whose only job is to work within the HOA full-time, so having more accessibility is an aspect of having a HOA company that some people prefer.
If your self-managed HOA is having issues with organization, try to find HOA management software that works for your board. HOA management software can streamline many of the day-to-day tasks that take up valuable time and effort.
Now that you have a good grasp on what you can expect from a self-managed HOA and an HOA management company, take the time to weigh the pros and cons to decide on whether investing in a home with either of these management styles would work for you and what you value.