MANAGEMENT: or High Touch?

It is inevitable that software will take over a big part of HOA management. The economics and demographics, notably younger, tech-savvy owners, are moving in that direction. This reality is the only solution available to management firms.

Boards (and even communities) should be looking for technology solutions too. Software keeps getting better, easier to use, and cheaper. It can easily and efficiently handle most routine and mundane tasks, ultimately providing happier homeowners and a better-managed association. Even the in-person things, like reserve planning and property inspections, can be significantly improved with software that helps boards and management companies make decisions, schedule meetings, and provide information.

Small HOAs are at particular risk. The costs of repairs, maintenance, and replacement of common assets is spread over a smaller pool of owners. The cost of the manager is usually fixed plus a variable component. The minimum price to hire a person, as mentioned above, is necessarily high, especially in urban California. All these factors lead to higher costs for those with the hightouch method.

David Levy (retired cofounder of Levy, Erlanger & Co.) conservatively estimates that the market share of so-called “selfmanaged” associations, those without a hired management firm, is about 40% of California HOAs. Other information validates this estimate, and the reality is likely higher and climbing as HOAs struggle to afford management.

Nowhere is change needed more than in self-managed associations. An eight-unit townhome in the San Francisco Bay Area was having serious problems. The situation was typical: a small building with an annual budget of $34,560 ($360/ month per unit) with a volunteer board that knew very little about running a community association. The volunteer president found himself in a role for which he was ill-prepared and out of his depth. During the day, he was a successful marketing manager at a Silicon Valley technology firm.

The association president found himself in a particularly troubling quandary. He didn’t know how to run an HOA and had no experience with community management. They wanted help but knew that at roughly onethird of the entire current budget,

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Continued from page 29 the community wouldn’t tolerate the expense of professional management.

It is unfortunate that so many common interest developments suffer from similar problems. These concerns are only heightened by increasing government requirements, inflation, and a tight labor supply. In many cases boards are unaware of the Davis-Stirling Act and don’t have industry connections to check prices or find the competent service providers they need.

In the end, unskilled management of an association is extremely inefficient, and the homeowners pay the price. It is not uncommon to find that a small self-managed association has no reserves and can’t remember the last time a reserve study was performed. Often, mandatory information sharing with the community and annual disclosure packets are nonexistent. A hightech approach can resolve many of these concerns. A high-touch approach is simply a legacy of the past for smaller HOAs and many larger ones too. For HOA boards, the time is right to search for a new high-tech future.

David Albrecht is the founder of Dials (www.dials.com), providers of softwarepowered automation for California HOAs (payments and compliance). David got the idea for Dials when serving as treasurer of City Center Plaza, a 348-unit residential/ commercial high-rise in Oakland.