The pros and cons of self-managed HOAs

Tuesday January 21, 2025
Homeowners associations (HOAs) play a critical role in maintaining shared spaces, encouraging community connections, and preserving property values. While many HOAs opt to partner with professional property management companies, some associations choose self-management, relying on volunteer board members to oversee operations.
 

What is a self-managed HOA?

Self-managed HOAA self-managed HOA is run entirely by its board of directors, volunteers who take on the responsibilities that are normally handled by a professional management company. This includes finances, maintenance, and conflict resolution. Self-management may seem like a simpler or more cost-effective option at first glance, but it can also come with a fair share of challenges.
 

Pros of self-managed HOAs

  • Cost savings: Some homeowners feel that a self-managed HOA will save money. However, long-term savings in residential communities require careful budgeting and financial planning, so self-managed HOA boards must have the expertise to manage these responsibilities effectively.

    Without the expert guidance and trusted vendor network of a professional property management partner, it’s possible to overlook critical expenses or opportunities to save in other areas, and self-managed HOAs often end up paying more in the long run.
     
  • Enhanced sense of community: Some homeowners believe that managing the HOA themselves can help the community flourish. If residents are able to meet the significant time commitments required to participate in decision-making and community projects, this can encourage collaboration and connection between neighbors.

    However, achieving this level of engagement may depend on having enough dedicated volunteers to distribute responsibilities fairly. Otherwise, self-management can leave a few people with the burden of shouldering most responsibilities.
     
  • Flexibility: In a self-managed HOA, the board retains full control, which means they can make decisions without seeking guidance from a management partner. This level of flexibility requires significant trust from residents, who must rely on the board to consistently make well-informed choices without professional oversight.

    However, inconsistencies could leave residents confused about community standards or expectations. The lack of a standardized approach to rules and guidelines may lead to disputes and uneven application of regulations, eroding trust in the community’s leadership.

Cons of self-managed HOAs

Without professional support, many boards find that the challenges of self-management outweigh the benefits. Some common drawbacks for board members and residents in a self-managed HOA include:
  • A lack of expertise: To effectively manage their HOA, board members need expertise in finance, compliance, local regulations, and property maintenance. Even a well-intentioned board member might incur fines or secure inadequate coverage for their HOA if they take on tax filings or insurance renewals without consulting a professional. We leverage best-in-class expertise through our affiliates, FirstService Financial, FirstService Energy, and FirstService Development Advisors. Their specialized knowledge and subject matter experts can help prevent these costly mistakes.
     
  • Legal and compliance risks: Reviewing local, state, and federal laws can be particularly challenging without professional guidance. Staying up to date requires proactive effort and expertise, and missteps could result in fines, lawsuits, or other liabilities.
     
  • Impact on property values: Buyers may view self-managed HOAs as less reliable, especially if the board struggles to consistently uphold rules or meet deadlines. This can deter potential buyers and reduce property values over time.
     
  • Conflicts: Without a neutral third party, disagreements over policies may create tension. A professional management company can act as an impartial facilitator to help resolve conflicts before they escalate.
     
  • Time constraints: Self-management demands a significant commitment of time and effort from board members. Many volunteers already juggle full-time jobs and families, and can be easily overwhelmed by the volume of day-to-day responsibilities. Responding to resident complaints, coordinating maintenance, and preparing financial reports leaves little time for long-term planning. FirstService Residential has the expertise to anticipate the needs of board members and residents in your HOA community while keeping an eye on the big picture.

Why many HOAs choose professional management

The benefits of self-management require significant effort and expertise to fully realize. Boards must carefully consider whether they have the resources, knowledge, and time to meet the demands of self-management. Partnering with a professional property management company can provide the support needed to overcome challenges and enhance resident life without sacrificing any of the benefits associated with living in an HOA community.
  • Subject matter experts: Property management companies bring specialized knowledge in financial planning, reserve funds, legal compliance, vendor negotiations, and maintenance oversight.
     
  • Time savings: With day-to-day operations taken care of, board members can focus on strategic decisions without having to worry about routine tasks.
     
  • Stronger vendor relationships: Management companies have established partnerships with trusted vendors and can secure better rates and service quality. These cost savings can outweigh the fees associated with their services.
     
  • Risk mitigation: Professional managers help HOAs avoid legal and compliance issues by staying up to date on the latest changes to laws and regulations, and overseeing policy implementation. A good property management company can also connect you with a network of trusted attorneys and financial professionals to serve your community.
     
  • Enhanced community satisfaction: With professional managers overseeing operations, residents can expect well-maintained amenities, and prompt responses to concerns. This improves overall satisfaction and fosters a sense of pride in the community.
     
  • Emergency preparedness: Property management companies often have robust emergency plans in place, allowing for communities to be fully equipped to handle unexpected events like natural disasters or urgent repairs. Their ability to act quickly and effectively can prevent minor issues from escalating into major problems.
     
  • Customized solutions: Professional managers work closely with boards to create tailored solutions that meet the unique needs of the community.
By weighing the pros and cons of self-management and exploring hybrid approaches — where specific tasks are outsourced while the board retains control — board members can find a solution for their community that balances independence with professional expertise. Self-managed HOAs require a significant investment of time, effort, and expertise. Making the right choice for your neighborhood should involve a thorough assessment of your HOA's capabilities, priorities, and long-term goals.

To learn more about how property management services can benefit your HOA, contact FirstService Residential today.
 
Tuesday January 21, 2025