Unforeseen expenses can crop up anytime throughout the year, and these can make you start looking for ways to tighten your homeowners association’s belt. You need to stay on budget to keep the community running smoothly, but you must make changes to do that. If your Board is looking for ways to stretch the budget, there are several areas to look at closely. Here are a few ideas.
1. Discuss Options with Your Insurance Agent. Insurance is usually a Community’s largest expense, and it’s important that you have the right coverage in place. But, there are a lot of changes in the insurance world, so it makes sense to keep the lines of communication open with your insurance agent. Do at least an annual review of your insurance to make sure that the Association has the right coverage at the right price.
2. Examine your utilities. Water and electricity are usually the second largest expense. Is your Board watching for major hikes that can indicate a problem? Have you switched to light bulbs that use less electricity in all your commons areas. The savings you can realize from catching routine problems is worth a little research time.
3. Negotiate lower contract rates. If your Board oversees contract workers, ask about lower prices. There’s a lot to be said for staying with the same vendor because you know the quality of their work. But, don’t forget that competition can impact pricing, so explore bids from multiple companies.
4. Reduce contractors/staff. Analyze where you are using staff and contractors in common areas such as clubhouse, pool, or grounds. Can you reduce operational hours to save money? Are there automation products that can offer a savings to the Association such as motion sensors instead of guards? Look to balance your cost with what’s best for the community as a whole.
5. Focus on necessities. The board can find ways to cut back such as less landscaping or refurbishing the clubhouse. However, you have to separate the wants from the necessities. While you may not have to renovate some of the commons areas, you need to continue regular maintenance. Some Associations cut back on funding reserves when faced with tightening the budget. However, we don’t suggest doing that because it isn’t good for fiscal responsibility, current owners or for potential buyers who will pay for this decision in the future.
There’s a lot more to budgeting that just these few tips. Your property management company is familiar with your budget, so discuss your options with them. They know how to keep your assessment fees low while maintaining the quality of your services and properties.