Homeowners Associations (HOAs), condominium associations, and townhome associations play a crucial role in managing and enforcing community rules. Typically, these organizations are self-run, meaning the community elects a board of volunteers who oversee all of the day-to-day administrative and financial tasks.
However, recently, some community associations have decided to use property management companies for some or all of their management needs. There is no right choice either way. Instead, you should look at the pros and cons of both options before deciding whether property management or self-management is the right choice for your HOA.
The rest of this guide will provide you with all the information you need to make an informed decision.
Pros and Cons of Property Management
Property management companies, such as Community Property Management (CPM) in the St. Louis Metropolitan Area, are made up of professional financial experts and property managers. They will work with a community to determine the correct management plan based on your board’s wants and needs.
Here are a few pros and cons to consider before hiring a property management company.
Pros
Expertise: The professionals at a property management company will have years of experience in the field. They will have a deep understanding of laws governing community associations and best practices, which can help streamline operations and minimize your legal risks.
Time savings: Having a third party take care of most of the management tasks in your HOA will save your board a lot of time, freeing up your board to focus on the big decisions affecting your community.
Vendor relationships: Most established property management companies will have established relationships with vendors and contractors. They may be able to get a better rate or contract terms than a self-managed community would receive.
Cons
Cost: Hiring a property management company will cost your community money. Depending on the package and company you use, the expense could add up quickly. This cost is typically passed on to homeowners through higher HOA fees, which may create conflict in the community.
Loss of control: Property management companies are meant to support the board, not take over the community. However, outsourcing management will require you to relinquish some control over the HOA's day-to-day operations.
Pros and Cons of Self-Management
Now that you know the pros and cons of property management, let’s look at the pros and cons of self-management. This scenario occurs when the community manages itself and does not hire a third party to help.
Pros
Cost savings: Self-managing your community can result in significant cost savings, which typically show up in lower HOA fees for homeowners.
Community engagement: A self-run community may be more engaged as it encourages greater community involvement and volunteerism.
Direct control: In self-managed community associations, the board has direct control over all aspects of the community’s management. This option is ideal for boards that prefer total control.
Cons
Lack of expertise: Because the board is comprised of volunteers, it may not have the experience or expertise needed to manage complex issues effectively, which can lead to mistakes or oversights.
Limited resources: Self-managed communities will not have the same industry connections or resources as property management companies, which can compromise the quality of the services they offer their community.
Still wondering if a property management company is right for your community? Contact CPM today. We are happy to help guide you through the decision-making process.