Proper budgeting is a crucial part of running an effective homeowners association. The HOA wants to ensure that it has the funds necessary to not only keep up with daily operating expenses, but also to deal with unexpected or emergency costs. With the right research, planning, negotiation, and analysis, HOAs can reduce the frequency and amount of which they raise association fees. In a new statement to the press, Kuester Management Group details areas the HOA should consider in budgeting:
“One of the first things the board should do is review its current financial standing,” says Bryan Kuester, President of Kuester Management Group. “How well have you stayed on track with the current budget? How much money has been put into the reserve fund versus the operating fund? Evaluating how well you’ve done over the course of the year can help you better plan for next year.”
Another area to assess is what is being spent on utilities and services for the community. Contact vendors to see if their rates will be changing for the new year or if it’s possible to negotiate a better price, advises Kuester. Explore other options to find the best value for the service provided. It may be beneficial to switch service providers. Once average utility and service costs are known, it’s easier to budget accordingly.
Kuester also notes that it can be helpful to look at financial statements and budgets from the past several years to get a clearer picture of how and where funds are being spent. If every year the board goes over in one area, it may be necessary to reassess how finances are distributed. Budgeting for more money to be spent on landscaping and less on office expenses can make a difference.
Reserve studies should be used accordingly as well to budget for upcoming projects or repairs that are needed. “Calculate how much income will be generated from homeowner fees versus how much you anticipate being needed for overall expenses,” says Kuester. “As much as you try to avoid it, you may have to increase fees to account for changes in taxes, utility costs, and other expenses. Keep increases as reasonable and affordable as possible while still ensuring there is enough revenue to meet budgetary needs, including upcoming projects.”
Raising homeowner fees a little bit more now can mean keeping them more stable over the next few years, adds Kuester. Thoroughly evaluating how the HOA spends its money – and where it can save – can help with budget planning for the new year. If the HOA is struggling to keep finances in check, partnering with a property management company like Kuester Management Group can provide valuable guidance and support.
Kuester Management Group, a division of Kuester Companies, works to protect property values and enhance the quality of life in each of its managed communities. Providing a full range of association management services, Kuester Management Group has worked to foster strong, resilient, and unified communities across North and South Carolina. The company is proud to offer on-site property managers, all zealous for building strong communities meant to stand the test of time.
More information is available at www.kuester.com or @KuesterCompany