How Homeowners Association Managers are Adjusting
Covid 19 has impacted the real estate industry. From apartment landlords to retail/office property investors, all have had to be quick on their feet to save their investments.
Everyone is battling a troubled renter market. Yet the pandemic hasn’t hurt the HOA sector as much as it did the multifamily, retail, office and apartment rental sectors which are still reeling from losses in revenue, cash flow, asset values, and financing issues.
HOA management firms too are adjusting to the times, and may have changed permanently. But this upgrading of services and performance will bode well for their future business.
Is HOA management the best recession proof business to be in? New home construction will pick up pace this spring and summer. And HOA boards will be reopening facilities and property managers will be doing repairs as community life returns to normal.
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New Homeowners Associations Forming
Fortunately, HOA association’s business is often in the suburbs where middle income earners reside and who had sufficient financial capability to ride out this economic storm. And the types of properties that homeowner association managers manage tend to be houses, townhouses, and increasingly upscale units — profitable segments. Homeowners and renters also tend to be wealthier and immune to economic downturns.
And more real estate money is flowing into build to rent developments. Houses are too expensive to buy for most hopeful homebuyers and millennials are forming families and work at home residents want more space and amenities.
Real estate entrepreneurs are seeing the potential in build to rent developments with new amenities and services for residents. They’ll need to hire or organize a modern HOA management service.
Yet, Covid 19 has generated challenges for association budgets and reserves planning, for dues collection, and for HOA maintenance needs. Some costs have increased and this could impact HOA management company’s revenue in 2021. How are HOA managers dealing with it?
They’re being more proactive, cost effective, helping homeowners in many ways, and are adopting more technology.
How are HOA Management Companies Adjusting?
- taking great care of common areas (parks, recreation, community) to help beleaguered stay at home tenants relax and rejuvenate
- adhering more closely to user safety guidelines to avoid disease transmission and accidents
- using cloud-based property maintenance software to serve modern homeowners and demanding HOA boards
- communicating more effectively through virtual channels (homeowner portal on property management platform)
- hiring smarter to control a coming labor shortage and keep service levels high
- providing more direct assistance to homeowners to help them pay and find income sources
- doing more with less funding
- focus on maintenance and vigilance to avoid big expenses
- conducting virtual meetings with HOA board to improve transparency and become more efficient
- re-negotiated contracts during the Covid 19 recession while ensuring funding returns to normal when the economy picks up again
Homeowners Continue to Experience Financial Issues
While the financial situation of many homeowners is stable (retirees, wealthy, fixed income) HOA managers have been experiencing some troubles in dues collection. No communities are immune to such extended periods of income disruption. A few HOAs have dipped into their reserve funds.
Managers are reportedly waving convenience fees, late fees on late dues payments, creating payment plans for residents, allowing installment payment plans, enabling online payment, and helping residents find financial resources and even helping them apply for government assistance.
These activities are a departure from the official duties of a traditional HOA management company.
With amenities being shut down, the typical monthly expenses of an HOA management provider has fallen. On this note, many managers are looking to help their companies remain relevant and deserving of being paid by helping residents anyway they can during these difficult times.
In fact, HOA management companies feel residents value their services now more than ever. Since residents are spending more time at their homes, in their yards, and in their neighborhoods, they appreciate the amenities present.
Still, a good portion of HOA managers believe collecting fees has been more difficult and stressful.
Given the social distancing requirement to protect health, managers are taking their services online. The benefit of going all digital includes:
- easier dues collection
- improved communications with homeowners
- collecting info and satisfaction with amenities and services
- improved accounting and reporting
- staff safety
- reduced costs for administration, unnecessary maintenance calls, and faster responsiveness
- online maintenance requests helps service organization increasing service delivery
Homeowner Maintenance Requests
Since homeowners are at home and in their HOA communities much more, they’re making more maintenance requests. HOA managers must use caution and exercise safe maintenance call protocols, and this continues as Covid 19 virus variants increase in communities.
HOA teams have devised new service procedures such as online maintenance requests, using PPE masks, ensuring fresh air in work areas, cleaning affected work areas and common security access points.
This spring, as homeowners increasingly demand that pools, recreation and leisure facilities, and other public amenities open up, it creates a challenge in legality and operations for HOA managers. Enforcing limits on usage, and density, along with increased cleaning required will keep them busy through 2021.
HOA Staffers Also Work From Home
HOA managers and their own teams are working remotely just as they are in other sectors. The work from home mandate is actually being met with approval and HOA teams feel it has helped morale and performance and reduces costs.
Given most HOA management companies have 2 to 10 employees, efficiency from virtual management is the key to doing more work, cutting costs, keeping fees under control, and to retain their employees.
The advantages of going “big” have been reduced and this allows small HOA services firms to keep their businesses thriving as the economy returns. The pandemic could have wiped out homeowners management companies. The first few years of business are tough at any time, but 2020 was the ultimate test for most small businesses in the US, UK and Australia.
2021 will bring increased portfolio growth, new HOA rental development clients, and new ways to grow revenues with new services.
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* Survey data drawn from Buildium’s The 2021 State of the Property Management Industry Report. ManageCasa is not associated with Buildium and does not guarantee the accuracy of the report.
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