5 Effective Ways to Properly Budget and Save Your HOA Money
Saving money is an admirable goal and one that many of us try to accomplish, but when you are running an HOA, it can be challenging to know the best way to cut costs without sacrificing your community's well-being. No HOA wants to increase its assessments, and owners would be happier if that never needed to happen. Still, as the community ages and the amenities require more and more repairs, it can be crucial that the board evaluates its budgets and reserves funds to ensure that the community is handling its finances to the best of its ability. Knowing that your goal is to retain the most value for your community, how do you help your community association save money?
There are a few things that you can do right now as an association to ensure that you are saving as much money as possible and that you are keeping costs low for future owners as you continue to maintain the same level of quality and comfort that owners have come to expect.
1. Invest in Preventive Maintenance
Not many Homeowners Associations understand why they have to spend money to save money. But it's not as complicated as you may find it. Don't ignore the benefits of long-term savings that come with preventive maintenance.
When you use high-quality materials and do regular maintenance, you prevent quick and unrepairable damage that may cost more to replace. For instance, if your asphalt driveway has holes, taking too long before repairing it can mean replacing the entire driveway once the cracks get too big (and ugly) to fix.
2. Review your Insurance Policy
One necessary but dreadfully considerable expense is insurance. You can review your insurance policy regularly and stay in touch with your agent to find ways of saving money. For instance, since insurance is ever-changing, you can easily find areas where you can reduce your premiums and adjust your policy. Or you can raise deductibles to reduce premiums.
Additionally, you can contact other insurance companies to check out their coverage and premiums, and rates. You may find one that offers a better deal than your current company.
3. Request additional Vendor Bids
There's no rule binding the board to a single vendor. You can always make a switch anytime. But first, you need to do adequate research for the best vendors in your area. Only settle for the less costly ones, with great discounts but still offer the same level of service or better. If the board can't find one that offers a reasonable price, do not hesitate to ask your community management company to help find one from their connections.
Your management company might also have relationships with some vendors that could equal more savings for you. Ask your community manager about the potential for savings and using one of their preferred vendors.
4. Control Utility Costs
Utility costs are one expense that you can save a lot from if only you regulate it. For instance, you should consider reviewing your electrical bill and find ways of reducing the cost. These ways include setting timers to HVAC appliances so they don't run all the time, switching to LED lighting, or considering a solar installation.
That can significantly cut your energy costs. Besides, you can contact other electricity provider companies to find one with better discounts and promotions that your HOA can benefit from at any time.
Another utility includes water usage. You can save more water if you install a rain gauge and use the collected water for irrigation, among other things. Plus, if your sprinkler systems increase your water costs, you can adjust it to run fewer times a week but for longer than setting it to run more often for short periods. It will surprise you how effective that method is in saving costs.
5. Review your Budget Frequently
There's always a thing or two you add to your budget that may not be necessary at the moment. By reviewing your account, you can prioritize what's essential from what's not. Some plans on your HOA's budget can wait another year or two. For instance, if you have quite a tight budget this year, you can put off renovating the club since it's not a necessity at the moment.
Please speak to your management company about the best way to review the budget, whether that's monthly or quarterly. It can be a lot easier to save money when looking at it more than once a year to determine what items can be saved on and what needs additional funding.
If your association struggles to continue services, pay vendors because of a tight budget, you should consider using these five simple tips. That way, you can manage to accommodate all your expenses without compromising the quality of service you offer your residents.