Financial Risks of Choosing an Unproven Management Firm

Consider the financial risks of hiring unproven association management firm

With the recent changes in the U.S. housing market and the rise of online real estate platforms, many less experienced real estate agents and brokers have shifted their business from real estate sales to condominium and homeowners association management. While some smaller, unproven management firms may have a great sales pitch, there are potential risks associated with smaller, less experienced, and less financially secure management firms that could have a major impact on your community association, such as:

Impartial Manager Fiduciary: A small management company will have fewer HOA managers, and they may be overly reliant on one or two managers, who may also be principal owner(s) of the management firm. It is important for the community manager and firm to have an independent relationship for the continuity, transparency, and efficiency of the HOA operations. It can also take time and resources for less experienced managers to learn the specifics of the HOA and establish a reputation and rapport with the board and the homeowners. Does the smaller firm have the experience, financial backing, employee recruiting opportunities, and insurance coverage to survive and guide your association through any financial or disaster situation? If the smaller firm had a financial setback, would your association be impacted? It is important to understand the financial risk you are taking as a board member of your association.

Lack of Communication: An unproven management company may not have enough staff or advanced systems to respond to the HOA’s queries or concerns in a timely manner. This can lead to frustration, misunderstanding, legal issues, and mistrust between the HOA and the management company.

Low-Quality Vendor Services: A less experienced management company will not have a rigorous vendor selection process or a wide network of reliable and reputable insured and licensed vendors. This can result in low-quality or overpriced services for the HOA and a lack of independent financial oversight of the relationship between the management company and the vendor. The ethical issues can also carry over to the Board of Directors and affect the long-term maintenance and financial strength of the community and insurance coverage. All three items can have a detrimental impact on the resale value of homes within the association.

Inadequate Accounting and Reporting: A small management company may not have the expertise or the technology to handle the HOA’s accounting, reporting, and Human Resource needs. This can result in errors, discrepancies, or delays in the HOA’s financial statements, which can affect the transparency and accuracy of the HOA’s financial health.

Risk of Income Loss: A smaller management company may not have the skills or the tools to manage the HOA’s cash flow, collections, and reserve funds. This can result in a decrease in revenues or an increase in expenses, which can affect the HOA’s ability to fund its operations and capital projects.

Risk of Fraud, Theft, or Embezzlement: Last but certainly not least, a smaller, less experienced management company will likely not have the proper safeguards or controls to prevent or detect fraud, theft, or embezzlement of the HOA’s funds, including from online cyber security threats. This can result in a significant loss of money or assets, which can damage the HOA’s reputation and financial stability. We have helped many associations over our history that have had funds stolen from smaller management companies leaving the community in financial shambles. CMA has the experience and resources to help any association recover, but it can take years to fill the hole which will impact the resale values and insurability of the association.

These are just a few of the possible financial risks of an HOA going with an unproven management company. However, not all management companies are the same, and some may provide excellent service and meet the needs of your community. It is important for the board to do its due diligence and research before hiring any management company, regardless of its size. The board should also monitor and evaluate the performance of the management company and its insurance coverage and licensing regularly, and communicate any issues or concerns as soon as possible to reduce the financial impact on the association.

CMA has the expertise and resources to help guide your association through any crisis or loss. As the largest community association property management company in Atlanta, Alpharetta, Augusta, Dunwoody, Peachtree City, Roswell, Birmingham, Fairhope, Nashville, Destin, Santa Rosa Beach, and Naples, we are here to help your community thrive.

Fire Prevention Awareness

Fire Safety Tips for Your Home

As we head into cooler months and holidays, it is important to check the fire and CO2 alarms in your home to prevent emergencies, whether you live in a condominium or high-rise building. If you don’t have fire or CO2 alarms in your home, adding alarms can save lives and property. Check with your local fire department to conduct a free property evaluation survey.

Install the appropriate number of smoke alarms & CO2 alarms. Test alarms once a month and replace the batteries at least once a year.
Check the expiration dates on your alarms, most devices expire after ten years.
Teach children what smoke alarms sound like and what to do when they hear one.
Ensure that all household members know two ways to escape from every room of your home and know the family meeting spot outside of your home.
Establish a family emergency communications plan and ensure that all household members know who to contact if they cannot find one another.
Practice escaping from your home at least twice a year. Press the smoke alarm test button or yell “Fire“ to alert everyone that they must get out.
Make sure everyone knows how to call 9-1-1.
Teach household members to STOP, DROP, and ROLL if their clothes catch on fire.

(Source: From 7 Ways to Prepare for a Home Fire at RedCross.org)

For more helpful fire prevention tips for your home, condominium, or high-rise building, visit American Red Cross or National Fire Protection Association

See how a professional property management company can help your community better prepare for any emergency with Community Management Associates, Georgia’s leading condominium and HOA management company with offices in Atlanta, Augusta. We have solutions to meet the needs of every community. Community Association Board of Directors can also find CMA offices in Birmingham, Fairhope, Destin, Naples, Santa Rosa Beach, & Nashville.

Fall Landscaping Ideas for HOAs

With fall’s agreeable temperatures enticing people to get outside, now is the perfect opportunity to refresh your neighborhood’s landscaping for a more visually appealing and welcoming atmosphere. Read on for information on what to do before tackling a project and a few simple fall landscaping ideas to boost the appearance of your community.

Any homeowners’ association (HOA) or condominium association (COA) strives to create a warm and welcoming environment where residents can make the most of community living. An inviting community encourages homeowners to take advantage of shared amenities, engage with neighbors, and enjoy the comforts of their neighborhood after a busy day.

What to Do Before Tackling a Landscaping Project

Before diving into these fall HOA landscaping ideas, review the landscaping rules in your governing documents for prior approval before making any changes to your landscape. Your community’s regulations will help you maintain your community’s consistency and avoid designs that disrupt the neighborhood’s aesthetic. For example, your HOA may require all landscaping to follow an approved color palette. This ensures that outdoor areas around the community are cohesive and complementary.

Because every community is unique and has its own style, following your HOA’s landscaping maintenance guidelines is vital. Remember, what works for a neighboring association may not be best for yours. Use your HOA rules to guide you as you look for new fall landscaping plants, flowers, and other ideas for community grounds.

Once written approval is obtained from your community, put the project out to bid with reputable and vetted licensed and insured service providers. Once a contractor is selected, make sure the contractor is aware and follows all community guidelines. Whether you are hiring a professional contractor, or tackling the project yourself, prior to starting any work, find out if your project needs a local county permit and call 811 to locate and mark all underground utilities prior to any digging.

Fall Landscaping Ideas for HOAs

By making small changes around the neighborhood, you can quickly—and easily—transform how your community looks and feels. Here are four ways you can take advantage of the season and enhance the community’s overall aesthetic.

1. Outdoor lighting.

When it comes to fall landscaping, simple lighting updates will make a big impact. Better outdoor lighting can have a dramatic effect on outdoor landscaping, help you save on energy costs, and make the community safer. Here are some ways to upgrade your exterior lighting:

Set lights to a photocell sensor or solar timer. These devices automatically turn lights on when it gets dark and off when extra light is unnecessary. They not only save energy, but also enhance safety and security—nothing looks more inviting than well-lit streets.
Stay on top of replacing bulbs. Changing a single bulb at a time can be costly, so have all bulbs inspected and replaced as needed this fall. This will typically allow you to purchase bulbs in bulk, providing a savings opportunity.
Switch to energy-efficient lighting. The pricing and quality of light-emitting diode (LED) and solar lighting have significantly developed over the last decade. To save on energy, consider migrating to LED lamps in your existing fixtures or replacing them with solar lighting.
Add uplights and spotlights in outdoor areas. Beautiful outdoor lighting highlighting community trees, fountains, and other landscaping features can instantly boost curb appeal and security.

According to the National Association of Home Builders (NAHB), a nationwide survey showed that homebuyers’ most-wanted outdoor feature was exterior lighting. With such an important emphasis on lighting, upgrading your HOA landscaping lighting may be worth the effort.

2. Plant trees.

You can easily add to your community’s ambiance and increase property values with trees. With fall’s mild temperatures and ripe soil, now is the perfect time to plant them. However, the placement and size of trees are crucial. Although you should incorporate a balance of plants and trees, confirm the species and types don’t grow so big that they overcrowd and block homes or buildings. Plant trees that offer minimal fall landscaping maintenance and draw attention to community structures and shared areas.

Depending on your location, popular tree types that may be a great addition to your community include:

Crabapple trees
Magnolia trees
Oak trees
Palms

In addition to improved community appearance, research shows that neighborhoods with thriving trees may also experience less crime than communities with no trees. While you should check your governing documents for restrictions and defer to your landscaping vendor on what trees work best in your community, it’s something to think about as you move forward.

3. Tidy up and clear out foliage.

Preserve community grounds and ensure that common areas don’t have overgrown grass and unkempt landscaping. A property that looks like it’s not taken care of can leave a bad impression on potential homebuyers and limit resident satisfaction. Make an effort to keep neighborhood grounds tidy by:

Trimming trees and bushes
Cutting grass and tending to garden beds
Clearing out broken or dead branches and rotted wood

4. Refresh mulch.

Maintain plants in common areas throughout the season with a thick layer of mulch. A three-inch layer can drastically reduce weed growth, which will save on the cost of fall landscaping services. Also, healthy mulch offers a crisp, clean, and refreshed look to your community landscaping, which helps create the beautiful environment you want for your HOA.

However, avoid piling mulch up against tree trunks and shrub stems. This allows pests to burrow under the mulch and gnaw on the plants and roots. Leave at least an inch gap between the stem or trunk and the mulch for optimal plant health.

Improve Community Living with Regular Fall Maintenance

Updating your landscaping this season is a great goal, but keeping your community’s buildings, grounds, and systems in good working order this time of year is crucial as we head into winter. If you have any questions about your community’s guidelines, please contact your association manager.