Should Your HOA Manage Itself or Hire a Professional Manager?

Midsize neighborhoods often contract with an outside company to manage the homeowners association. Image: Mats Hallgren /Getty Images

A well-run homeowners association is key to maintaining property values. That’s because smart homebuyers will avoid buying into associations where common areas aren’t spiffy and community budgets show cost overruns and special assessments for unplanned repairs.

A thoughtful examination of whether your fellow owners can operate the property themselves, or if you need to hire a professional management company, can take about 20 hours and is well worth the effort.

Size is usually a factor in the decision. “Associations that don’t have managers are either too small or too big,” says Edward Taylor of The Law Office of Edward M. Taylor in Smithtown, N.Y., who represents community associations. “Those that are too small have minimal billing needs, correspondence, and complaints, so a few board members handle those things.”

Those that are too large—500 to 1,000 units—often have enough of a budget that they hire an on-site professional who is an HOA employee. Midsize communities often contract with an outside, off-site management company that runs several associations.

There’s no minimum number of units that should trigger the hiring of a manager. David Regenbaum, CEO of Association Management Inc. in Houston, manages a cozy, six-unit condo association.

Yet Robert White, managing director of KW Property Management & Consulting in Miami, says he’s seen 100-unit condo associations and large single-family homeowners associations—which typically don’t oversee as many building systems as condo associations—operate well without professional management.

What skills do the owners bring?

It’s not just size that dictates whether a community needs professional management. The homeowners’ time and expertise are also important factors. Generally, your association could benefit from professional management if owners don’t have enough time to devote to managing the association, or if they lack expertise in critical areas, White says.

Before you spend money on a professional manager, make sure your community association has made a solid effort to find homeowners with needed skills and recruit them to fill board and committee positions. Make a list of the skills the HOA needs and advertise for volunteers to do those tasks. Your list might include know-how in finance, operations, law, public relations, and vendor management.

If you don’t have CPAs, attorneys, or people who’ve run a business, it may be wise to seek outside expertise.

Consider whether a management firm can help you save money. Some firms negotiate discounts from contractors and service providers, such as insurers, which they pass along to their client communities.

A happy mix of DIY and pro

Can your HOA can get by with hiring professionals to handle some tasks, while keeping others with in-house volunteers? Some HOAs have an accounting firm handle billing, deposits, and audits, while board members manage contractors and tackle correspondence, complaints, and inquiries from owners.

Either way, a professional management company should never be running the whole show, and should take its direction from the board, says Taylor. Nor would it be fiscally wise to let an outside firm have full control over your finances.

G.M. Filisko is an attorney and award-winning writer who has served on the board of directors for her self-managed, six-unit brownstone condo community in Chicago for nearly 15 years.