Without financial stability, your HOA’s future will always be in question. You’ll rarely - if ever - meet your goals, and your board members will always be under heavy scrutiny. You may also risk facing legal problems, and your property values could plummet due to lack of funding for maintenance and upgrades.
Below are some practical ways that you can maintain a more financially stable HOA in 2019:
1. Start With a Solid Budget
Take a close look at each line item cost in your HOA’s budget within the past three years. Pay attention and note any trends that you see, especially if you hadn’t previously noticed them. This will help in considering changes to make to your operating budget in the future. Make sure all board members understand the following basic equation for determining how much HOA fees should actually be. Take your Total Operating Expenses plus the Annual Reserve Contribution, then divide by the percentage of ownership.
2. Clearly and Consistently Communicate All Finances to Members
Information that directly affects all shareholders or association members should be freely and quickly provided to residents to maintain transparency. HOA boards that truly stand out communicate with their residents. They embrace transparency and use a newsletter and an annual budget as a means of divulging where every penny is spent and what items the association needs to consider in the future.
An open line of communication allows all members to have input into the finances to keep the board accountable. A system of checks and balances can have a positive lasting effect on maintaining a strong financial portfolio.
3. Find Ways to Save Money
In a homeowners association, every dollar you save could avoid higher assessments. And, that puts money back in your organization’s pocket. When assessing where you can save money, think outside the box instead of going with what’s been the norm for years, and you’ll probably find some ways to save a little here and a little there. It all adds up to make a substantial difference. Where are some areas you may discover savings?
● Insurance
● Vendor contracts
● Utilities
● Preventative property maintenance
● Legal costs
● Large group discounts
4. Consult Your Gassen Accountants
One of the most valuable services that Gassen offers HOAs is our accounting services. We can provide you with clear and precise data and help you make clear and precise financial decisions. We can work with you to create accountability, prepare for audits, and submit your annual tax statements. We can also help you find ways to save money, strengthen your reserve study, and hire the best vendors in the area.
5. Avoid Risky Reserve Fund Investments
With proper planning, risky reserve fund investment pitfalls can be avoided, and the reserve fund can be managed to minimize risk and maximize yield.
One of the most efficient methods of managing cash is through a cash management account which is available at several securities firms and can offer an automatic sweep of idle cash into a high-yielding money account. The least risky fixed-income investments are those issued by the federal government, such as treasury securities, or the ones insured by the FDIC, such as certificates of deposit (CDs).
6. Perform an Annual Audit
An annual audit protects both your board, you HOA members, and your local property management company. The audit is important because it’s an outside review that verifies everything is as it should be. It prevents anyone from making accusations against the board or management company. It is important for associations to follow the guidelines set out in their governing documents, most of which require an annual audit. Your Gassen accountant can analyze your documents and records to help you gain a clearer financial picture.
Local Property Management Services in Minneapolis
Gassen offers accounting and property management services for HOAs and commercial property owners in Minneapolis, Minnesota. We can help you with your real estate management and the maintenance & construction of your properties.
To find out more about how we can help you with your HOA and property management needs, call us today at 952-922-5575, or you can message us on our contact page.