How to Future-Proof Your Association’s Finances
Whether your HOA is an amenity-driven active adult community or an emerging single-family home community, future financial stability is always a top-of-mind concern. And while it may seem like your everyday operating budget is the ultimate priority, a well-funded reserve is the key to helping your community thrive well into the future. Additionally, it’s important to make sure your community has the right insurance coverage and is ideally getting the best rates. To help you maximize your budget and plan for unforeseen events, we’ve compiled a few practical tips:
- Complete your reserve analysis on an annual basis. It’s important to prioritize your reserve study and plan for ongoing maintenance. Make repairs according to the accurate “remaining life” associated with each common element (e.g., a common area roof).
- Hire a reliable reserve analyst. Your reserve analyst should be following basic reserve study guidelines and taking each common element’s lifespan into account on an ongoing basis (e.g., if a roof has a 25-year lifespan, they should be subtracting time after each reserve study update). Your reserve analyst plays an important role in planning for the future. An experienced community management company can refer you to a qualified reserve analyst who will help you evaluate your current funds and determine what major expenses you need to account for in the future.
- Enforce your association’s delinquency policy. By regularly enforcing delinquencies and collecting fees as needed, you’ll help ensure that operating and reserve accounts are fully funded. Communities that have a well-funded reserve will be less likely to defer maintenance, which helps enhance property values and ultimately increase quality of life now and in the future.
- Make sure you have great insurance coverage. Planning for the future means taking stock of your insurance and making sure your association is covered for any and every scenario. By working with an experienced community management company, you’ll be able to obtain the right insurance coverage at the best premiums. The best community management companies will have a great relationship with insurance companies based on their insurable assets. Hallie Kirkingburg, business development manager at FirstService Residential said, “Given that we manage 7,700 communities, we have $174 billion of insurable assets. That makes us very appealing to insurance companies, and in turn, allows us to help our clients obtain incredibly competitive rates.”