Traveling around the country, talking with groups of people interested in getting into the sphere of management of an HOA, I am often asked: “How does someone make money in this industry?”
For several years it seemed that the more I explained this process (especially to people outside the small 12-millionth niche of the management community of HOAs), the more I worried when I gave details about the details, the more their glazing became. I hope that lately I will explain the explanation a little better, but just in case I will not underestimate the script using numbers for those of you analytical types!
There are several basic facts that you need to know first.
1) The management companies of the HOAs monthly charge management fees to perform basic management functions (for example, to meet at Council meetings) and keep records (for example, to receive contributions from HOAs and cut checks to the HOA suppliers). These fees usually correspond to 50% of the revenue of the management company.
2) the monthly management fee of the HOA can be easily broken into revenue for the door.
3) Homeowners' management companies have numerous additional (read: additional) fees for additional work. These additional fees correspond to the remaining 50% of the revenue of the management company.
So now that you have the basics, let's take a look at how much the average HOA pays to its management company:
Average units of HOA (t. E. Number of houses in the HOA): 150
Unit type (for this example): condominiums
HOA Amenities: Club, swimming pool, automatic gate, covered parking, playground and barbecue areas
Number of meetings of the HOA Council: 7 times a year (Council meetings every two months and 1 annual meeting of owners)
Management fee: $ 3,000 (note: $ 20 per door)
Auxiliary fees:
Office Supplies: 450 USD
Postage: 100 USD
Collection Services (i.e. Pursue Overdue Homeowners to Pay Home Ownership Payments): $ 1,000
Processing of the transaction: 1250 US dollars
HOA website: $ 50
Compliance checks: $ 150
The total amount of additional fees: 3000 USD
Total amount paid to the HOA management company: US $ 6,000.
Interestingly, I recently reviewed some of the budgets of HOAs created in the mid-1980s, and their “management fees” have not increased over the past 20 years! Because of core inflation, companies that manage Homeowners' Associations have had to find new ways to attract revenue to stay in business, so the extension of additional fees is now standard practice.
