As a board member, your first responsibility to your association is to keep it fiscally fit. Wouldn’t it be nice to find some extra sources of revenue, to be able to make a little more of your operating budget? Take a look around – you might be able to generate some cash flow from your existing amenities. You may not find a huge windfall, but you also might be able to cover the costs of running a new activity or expanding a project, improving your residents’ lives and enhancing your property values at the same time.
“It’s important to remember that this is not about making money, but rather about providing the best resident lifestyle and experience possible,” said Judy Julison, senior vice president of lifestyle programming at FirstService Residential. “There’s a limit to what can be done with association funds, and sometimes the entire community is asked to fund the cost of what a small portion of the community might use. If you ask participants to contribute or find other ways to defray the costs to the community as a whole, it saves the general assessment funding for greater good.”
This is an exciting proposition, but some groundwork needs to be done first. Before you rush out and start renting spaces to the community or talking to vendors, take a breath and make a plan. Always check your governing documents so that you know what you may or may not be allowed to do. Know what your restrictions are. Do a cost-benefit analysis on any existing programs you have that charge a fee or otherwise generate revenue. When you start digging, you may find a program that looks successful on the surface is losing money overall. That will help you determine the next steps to take or not to take.
Always check with both your insurance broker and your association attorney before taking on any program that will generate revenue, especially if it brings people from outside the community onto the property, whether as vendors or clients. Ensure that revenue brought in by any proposed project doesn’t fall under the category of “non-related income” for the community. That may trigger an audit or have tax implications that will affect your operating budget.
So how can you generate revenue from your property and amenities? Read on for some creative ways to create cash from your community’s existing resources.
1. Your natural environment might provide community revenue opportunities.
Sherman Britton, vice president of lifestyle operations for FirstService Residential, said that he knows of several large homeowner associations (HOAs) which turn their recreational areas into fee-use spaces, some open to the public and some for community members only. He cited sledding and ski hills, tubing or rafting on rivers, golf courses and more. One important distinction to make: if the golf course, for example, is open to the public, it is a business operating on the property. If it is open to residents only, even if there’s a fee for usage, it is an amenity.
Frank Peditto, senior vice president of lifestyle operations at FirstService Residential, said he’s also seen creative approaches to finance amenities or generate cash from existing natural features. “At Smokerise in New Jersey, they stock the lake with fish each spring. Then they issue a permit to anyone who wants to use the lake for fishing in order to cover the cost of the stocking,” he said. “They are also adding electric outlets to their docks to accommodate electric boats and sump pumps. Anyone who wants to use them will pay an annual access fee to do so.”
2. Outside vendors add programming and cash flow for your HOA
Katie Ward, executive vice president of community management for FirstService Residential, said that, in some cases, outside instructors for fitness programs or vendors like mobile pet groomers will pay a fee to use the association’s facilities. Some very large communities even bring in an outside vendor which handles all fitness programming in the community so that the association doesn’t have to deal with multiple individual instructors.
Julison recommended vendor fairs as a possible money maker. Companies will pay for access to your community, and your residents will benefit from learning about valuable, local service providers. Personal financial planners, healthcare providers, wellness practitioners and insurance companies are good possibilities for vendor fairs. Consider incorporating lectures with the vendor fairs as a premium vendor opportunity.
3. Under-utilized community spaces deserve a second look.
Often, older buildings have unused basement space that can be converted to storage lockers.
“The Morton Square Condominium in New York recently leased a vacant commercial space in the building and turned it into storage lockers for its residents, which they rent out for $80 to $90 a month,” Marc Kotler, senior vice president and team leader at FirstService Residential, explained. “The residents had no storage space before that. The income from leasing the lockers pays for the lease on the overall space and more. Because they didn’t utilize all of the space for storage lockers, the association is turning the rest of it into a lounge area. So the condo is increasing its revenue and enhancing resident’s lives all in one swoop!”
Look up! Cell towers on unused rooftop space can generate between $2,000 to $3,000 a month for your high-rise building, Kotler said. He also suggested high-rises investigate selling their excess air rights. In areas where limited land is available for development, going vertical is the only option, but there are limits. If your high-rise is below the limit, there may be a project nearby in need of the space your building didn’t use. In New York City, that can mean $500 to $1000 per square foot!
4. Renting out event spaces might be an option.
If your governing documents allow and your association agrees, consider renting spaces to people in your community. “If you have kitchens, board rooms and meeting rooms available, people will pay to rent them,” Kotler said. “It makes more use of the space and generates income for the association at the same time. There’s nothing worse than an unused space – it gets stale!”
Depending on your association’s governing documents, you may be able to rent space to people outside the community as well. Though, before investing time on a plan to rent space or amenities to the public, check with your association’s attorney, insurance broker and survey your residents.
Imagine what can be done with what’s already on your property. Not only can you create a new revenue stream for your association, but you could also improve your residents’ satisfaction and their property values, too. Our ideas above are just a few possibilities! Don’t forget to check with your association attorney, insurance broker, local ordinances and governing documents before plunging head-first into a big project.