I’m a new HOA board member, working on next year’s budget. We’re trying to balance our budget, and, in addition, our reserves are quite low. I’d like to increase the amount of money we put in our reserve fund.
The obvious way is to raise the monthly assessment. However, I’m looking for additional ways to raise income.
What additional ways can you think of to increase our income?
Thanks,
J.
You can do a one time special assessment:
Does your HOA have a party room or swimming pool? They could charge for people to use them for private functions. It would probably annoy anyone who formerly used these things for free, but then again, others probably didn’t use those things at all. You could even rent these things to people outside the HOA.
Bake sale?
If they have a pool, they could try renting a dunking chair and sell chances to dunk the HOA Grand High Muckitimuck at $5 for 3 throws. That ought to do it.
If allowed under local law, maybe a raffle or silent auction? Bachelor/Bachelorette auction?
Spend less.
Thanks for the suggestions. I wanted to get some ideas before putting out the ideas we had heard or thought of already.
We do have a clubhouse and pool. We can’t charge admission for the pool (various reasons). We’ve thought of charging for exclusive use of the clubhouse. This could work for residents who want to use the clubhouse for non-commercial use. Renting it to outside groups or for commercial use, however, comes with many legal ramifications, including increased insurance costs, liability, excess wear and tear, etc.
Raffles raise issues with gambling laws. Bachelor / bachelorette auctions won’t work because 1) commercial issues if users aren’t residents, or 2) most residents are retired married couples.
We know about special assessments. These are for much more serious situations than we are currently in.
We’ve also considered:
We’re looking for creative ideas to increase our income that won’t cause a resident uprising, and that don’t raise our costs substantially.
Please keep the ideas coming! Thanks!
J.
I think you also have to consider fairness.
Being “creative” is not a virtue if you end up charging disproportionate amounts for certain things that place an unfair burden on some members. If there are real administrative costs associated with new renters, then $75 sounds fine. Similarly, if there are real admin costs associated with sale of a unit, then charge an amount that is commensurate with that - but 1% sounds excessive, and might be subject to legal challenge.
If there is an overall budget deficit that is due to spending that benefits all members equally, then the fair solution (if you can’t reduce spending or raise money from external sources) is simply to increase the assessment.
Require the sale of advertising on everyone’s garage door.
(In a tasteful format, predominantly of earth tones, positioned on the center 1/3 of the door panel, with no less than 4 inches of space to the left and right, employing no sounds or flashing lights).
Be more efficient on what you are spending on, or curtail offerings. The pool surely costs money, it could be scuttled.
It’s pretty rare for condos to get less than 95% of their budgets from assessments. It would be even more rare for a HOA.
The only other two categories in most budgets are fees and outside income. Fees can come from the pool, parking spaces, laundry charges, workout facility, party room, move-in fees, paperwork fees (for leases to renters), pet fees, returned check fees, markup on keys, etc. Many of these become nuisances to enforce, create resentment, are unfair to new residents or pet owners, etc. To comply with state law, you have to take care not to create two classes of owners. Sometimes the cost of enforcement and administering the fees is greater than the revenue.
Outside income can come from leasing land, leasing space for antennas, leasing space to retailers, letting outsiders use the pool or party room or laundry, etc. Again, be careful that administration doesn’t cost more than revenue.
My local District Council — no doubt like many councils ---- in Britain has put solar panels on the roofs of their properties, including Council Houses ( somewhat as social housing in the USA without the stigma — although the present Tories hate it ), and sell off the generated electricity. The tenants have cheaper power during the day, but there’s only so much they can use and the rest is purchased by the utilities.
Of course there was a governmental subsidy system for installation at the time: the whole thing seemed inspired by the Germans whose Energiewende covers the land with solar.
More than 90 percent of solar panels installed in Germany are on homeowner’s roofs
Have entertainment events at the clubhouse/pool. We have monthly movies by the pool and entertainment shows for the kids - reasonable charge. Have a food fair - food trucks restaurants set up or have booths - space rentals. Craft fair / local product fair. Farmer’s market monthly/weekly at HOA sites - space rentals. Get with schools for events - pep rallies/ theater/ clubs. Have classes - swimming, finance for beginners, yoga, exercise, computers for idiots, dance, other interests - rental income. As you suggested - private rental of clubhouse/pool for residents for weddings, birthday parties, retirements, etc… Our community HOA does all these things.
Have a charity 3k run style event, making it clear your intention is two fold, raising the balance on your emerg fund AND supporting a local cause. Some cause that’s NOT gender specific or controversial, like a children’s hospital!
But you need to carefully watch costs to promote and run the event or you won’t gain by it.
Good Luck!
Sell advertising space in your newsletter.
What is the HOA spending money on, if not for essentials like clearing roads of snow?
These basically shift the cost of raising extra money to newcomers, giving the existing residents a free ride.
They’re basically the equivalent of a hotel tax, which is paid by visitors to your city and not the local residents. So the residents have less reason to oppose such things.
You ready? Take a deep breath …
tax prep fees
insurance
legal fees
property management company fees
office supplies / postage
clubhouse supplies
janitorial services
landscape maintenance
pest control
pool maintenance / repairs / supplies
repairs and maintenance of lighting / plumbing / irrigation / signage / streets
bad debts
corporation commission fees
taxes
electricity
gas
sewer
trash collection
water (our biggest expense other than transfers to reserves)
And those are just the operating expenses. Then there are a whole list of capital expenses (which the reserves are meant to cover) that I won’t list here.
J.