With a booming housing market, York’s Association Management team has been busy advising developers on drafting strong, realistic HOA budgets.
You might notice that there are actually 6 takeaways below. No one says “top 6” though….so we went with 5 and you can consider that last one a bonus!
- Get Multiple Vendor Estimates. Increasing labor and material costs mean higher prices for everything from landscaping to pressure washing, maintenance and more. Make sure to get several estimates and carefully consider the level of service your development will need. Working with a management company like York can allow you to save on items such as insurance or waste removal by using their bulk purchasing discounts.
- Set the Assessment to Cover Operating Expenses: It’s very common for new developments to set the assessment at a low rate with the developer funding expense shortfalls while building is ongoing. While the low rate is attractive to new buyers, it will eventually mean a large increase in the operating budget. As you can imagine, increased assessments mean unhappy homeowners, particularly if the increase is substantially higher than the original amount listed in the initial public offering.
- Fund the Reserve Account: Funding the Reserve Account for future expenses in the first and future budgets helps buyers recognize that the association is in good financial standing. We recommend a minimum reserve fund transfer annually equal 10% of the projected assessments, thereby protecting you and the homeowners from underfunded future capital expenses.
- Don’t defer Maintenance. Don’t try to keep your homeowner fees low by deferring maintenance. We recommend routine maintenance inspections are scheduled for your roofs, gutters, common area mechanical systems, lighting, fencing, parking and building exteriors. In fact, most warranties require some type of inspection to keep the warranty validate.
- Expect the unexpected. Even though your development will be new, unforeseen issues will arise. Try to anticipate what might need attention within the first years. In our experience, new developments generally have issues arise around landscaping and pond maintenance Weather related issues that do not warrant an insurance claim can also add up.
- Engage an association attorney to review your documents and budgets. Association Management attorneys are worth every penny to ensure you don’t overlook any items specific to your development.