Even with the most well-organized budgets, HOAs and condo associations can still face surprise expenses. For example, emergency repairs or unexpected legal fees can arise suddenly. As a result, being unprepared may strain your reserve funds and negatively impact your community’s financial health.
Here’s how to plan ahead:
1. Build a Strong Reserve Fund
Your reserve fund is your first line of defense against surprise costs. Ideally, a healthy reserve should be based on a professional Reserve Study and reviewed every few years. In addition, it should cover major repairs and replacements such as roofs, HVAC systems, and pavement.
Check the link below to learn more about HOA Reserve Funds: How to Fund Reserves by Association Reserves Properly.
https://www.reservestudy.com/resources/article/hoa-reserve-funds-how-to-properly-fund-reserves
Furthermore, Reserve Advisors have a great article titled “What is a Reserve Study and Why is It Important?” It clearly explains long-term planning and funding strategies that help communities stay financially prepared.
www.reserveadvisors.com/resources/blog/what-is-a-reserve-study-and-why-is-it-important
2. Regularly Update Your Budget
Don’t wait for the annual meeting. Instead, revisit your budget quarterly to adjust for economic changes, vendor pricing, or new regulations. This way, you can spot trends early and reduce the impact of unexpected increases.
Refer to the budgeting best practices from the Foundation for Community Association Research for guidance.
https://foundation.caionline.org/wp-content/uploads/2017/06/bprs.pdf?
3. Plan for “What Ifs”
To begin with, think beyond the usual. For instance, natural disasters, insurance premium hikes, and costly litigation can hit without warning. Therefore, consider setting aside a contingency fund or adding insurance riders that offer extra protection.
The Florida Department of Business & Professional Regulation (DBPR) offers guidance for HOAs and condos on risk management and emergency preparedness.
Condominiums, Timeshares, and Mobile Homes – Homeowners’ Associations – MyFloridaLicense.com
4. Review Your Insurance Coverage
Above all, ensure your association’s insurance policies are up to date and appropriate for your property’s needs. In addition, consult a qualified insurance advisor annually to make sure coverage is adequate.
Explore insurance guidelines for associations from Community Association Underwriters (CAU).
Welcome | Community Association Underwriters of America, Inc.
5. Educate and Communicate
To illustrate, help homeowners understand the importance of strong financial planning. As a result, clear communication builds trust and reduces resistance if dues or assessments need to be adjusted due to unforeseen expenses.
Download free HOA education resources from HOALeader.com, a trusted resource for board members and managers.
HOAleader.com – Practical Advice on Homeowner Association Management
At Empire Management Group, we help communities plan wisely and act confidently. From budgeting support to reserve studies and vendor management, we’re here to ensure your community is ready for anything.
Ready to plan ahead? Visit us at empirehoa.com or reach out to speak with a property management expert.
Request Proposal – Empire Management Group
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