4 Cost-Saving Strategies to Keep HOA Assessments Stable
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It’s a universal appeal we all hear: stop raising assessments. This request rings true whether you live in a high-rise in Phoenix, a single-family home community in Tucson or a master-planned community in Scottsdale. However, there are often valid reasons to raise your assessments. And if you continue to keep assessments low despite maintenance needs that come up, you run the risk of letting your property values decline or causing your community’s relevance to suffer.
But no board wants to be the “bad guy” or consistently raise assessments because they are not able to cope with rising utilities, maintenance or staffing costs – in other words, poor planning or stewardship. So before you raise assessments, take a look at these four cost-saving strategies.
To get an in-depth look at these cost savings, read the full article.
Cost-Savings Opportunity #1: Energy
Across the country, energy costs are rising. That’s why it’s crucial that you and your board partner with your community management company to look for ways to boost energy efficiency. For example, you may want to install light switches on motion detectors so that no lights can be left on when the room is unoccupied. Other updates, like changing from traditional to LED lighting, may require a larger upfront investment but will likely pay off in the long term.
Cost-Savings Opportunity #2: Reserve Fund Investments
In our 2018 HOA budget survey, 72% of board members admitted that they weren’t full confident in the returns they are getting on reserve funds and/or operating funds (download the 2018 survey results here). To make sure you’re getting the most out of your reserve funds, partner with your association management company and review your current investment plan. To learn more, read the article, “HOA Reserve Funds: 6 Ways to Improve Returns.”
One condominium association in Scottsdale partnered with FirstService Financial and increased their portfolio’s average yield by 30%.
Cost-Savings Opportunity #3: HOA Insurance
Association insurance is dynamic and complex. If you haven’t taken a close look at your coverage recently, you may be paying a higher price than needed (either in your premiums or deductibles). It’s crucial to work with a trusted insurance broker or agent that has experience with community associations. To learn more about HOA insurance, download our complimentary white paper, 4 Things You May Not Know About Community Insurance.
Cost-Savings Opportunity #4: Vendor Contracts
In our 2018 Budget Survey, more than 57% of board members said they weren’t sure if their management company asks vendors whether there will be increases in costs in next year’s budget. A regular review of contracts and consistent communication with vendors can help reveal areas where your association can save money.
Other HOA Cost-Saving Opportunities – Investment Policy
Keep in mind that while these four cost-saving strategies are a good starting place, this is not an exhaustive list. One of the ways you can do this is by developing an HOA Investment Policy. An HOA Investment Policy is a guide you can you utilize to help you uncover better returns on your reserve funds and subsequently, save money. To learn more, download How to Create an HOA Investment Policy.