Now is the time of year that many HOA boards begin talking about their annual budget. If you’re looking at the numbers for 2020 and trying to plan out an appropriate budget for 2021, there are some steps you can take to make preparing an HOA budget easier.
Assemble a Finance Committee
One of the most important roles of an HOA Board is to come up with an annual budget, but that doesn’t mean you can’t get a little help from others in the community. Your task force will need to include the board president, treasurer, and community manager, but look for volunteers or people with a financial background to join the committee and weigh in on the budget.
Give Yourself Time to Plan and Budget
Do not try to rush through a budget planning meeting or schedule it before/after another meeting. You will want a whole day or at least an afternoon to consider all possible factors that can affect the finances. Be open-minded and ready to discuss the shortcomings and successes of the past year as well as goals for the new year.
Outline Your Goals
When you have the finance committee gathered together, you’ll want to start the meeting by talking through the goals for the community in the next few years. Where do you see the community in 3-5 years? Take into account everyone’s opinions, and consider surveying other homeowners in the area, so their opinions are discussed in the meeting. Getting a good vision for the future will help the committee understand how to start saving and planning for the future. Planning for the year starts with understanding where you want to go.
Look at the Current Finances
Now that you know where you want to be, you need to look at where you currently stand. Look through your records for the past two years. Make a note of where you spent more than you originally planned to and the areas where you didn’t spend enough. This gives you a better look at where your money is going and how to better allocate money in next year’s budget.
Objectively Look at Repair Projects
A well-maintained property is crucial in keeping homeowners happy and attracting new home buyers to join your community. Repairs and replacements can’t be ignored if you hope to keep property values up. You won’t be able to take care of all the repair and replacement projects at once, so prioritize which projects need to be tackled first and how to manage the other projects.
We’ve just begun to cover the important factors to consider when preparing an HOA budget. We’re here to make the process easier, so be sure to check out part two of preparing an HOA budget here. If you have questions on how to manage your HOA or set up a new budget, contact Prism Realty Management. Learn about who we are, the services we offer, and our process, then give us a call at 512-676-5842.