If you are looking for a reliable association management company (AMC), you may run into certain challenges along the way. It's just like choosing the best company for any project you have, in fact. There are always so many things to consider, and you need to be prepared to avoid mistakes.
You don't want to waste your time and money, that's why doing research is a must. We can help you with that by sharing our list of useful tips you should consider to make your choosing process truly effective. Read on to find out an easier way to pick the best association management company for your community.
What Is an Association Management Company
Association management is similar to corporate management but is used in an association, i.e. a special kind of business. Association management services are often provided by management companies (AMCs). Association management responsibilities include managing staff and finances, as well as setting and achieving goals for the development of the association. Some AMCs also perform public relations and marketing functions for associations.
In business, an association is a membership organization that charges dues to its members in exchange for services that promote its members' business interests. Associations come in all sizes, from a few members to several thousand members. Their budgets also vary greatly, depending on the size and scope of the organization, its services, and its members.
Monitoring an association's behavior means supervising the association's staff to make sure they are behaving ethically in line with the association's goals. Ethical rules for association employees include restrictions on gifts received by association staff, considering workplace conduct, and preventing conflicts of interest. The latter typically arise from employment or business relationships, maintained by association staff. If the association handles confidential information, the association's management is also responsible for ensuring the confidentiality of sensitive information.
One of the main parts of association management is planning the progress of the organization so that it can grow and perform its functions successfully. Association managers set goals, plan activities, and create services to keep the organization running smoothly and improving. It's also the job of the AMC to develop effective plans to accomplish the association's growth objectives and the means to measure the association's success under management . Part of this responsibility includes completing the project on time and within the allocated budget.
Because members pay dues to participate in the association, they are important in funding the association. Marketing and public relations are a big part of member acquisition. Most AMCs also do promotion and marketing while managing the association. Although some associations have dedicated marketing teams that do not perform management tasks. A larger association is more likely to have a dedicated marketing department for public relations than a smaller company.
Marketing tasks that can be useful in managing an organization include managing advertising, press, and reputation. The association's staff handles the marketing of advertisements, buys advertising space, and communicates with the press to make important announcements. When the association has an online presence , marketing may also include an online reputation manager who can handle online complaints that affect the overall reputation of the company.
By the way, if you are going to start a new company, we recommend paying attention to LLC (Limited Liability Company). This corporate structure has a number of advantages, including, for example, no personal responsibility for the company's debts or obligations. In addition, all the paperwork is reduced greatly. A key advantage of an LLC is its flexibility, especially with regard to profit distribution and management. LLCs have much more flexibility than, say, corporations.
Top 12 Tips to Consider When Choosing an AMC
Hiring an association management company is not as easy as it seems. There are many moving parts, and it requires a certain level of preparation and research to accomplish smoothly. If your association is looking to hire an HOA management company soon, there are a handful of tips you should adopt to ensure a seamless and effective selection process.
What services does your association need? Your community needs are the key element in the process of hiring an AMC. Thus, before doing your research, you need to make a list of services you want your perfect management company to have. It's good if you have ever been or still are an Homeowners' Association board director with fellow board members beside you. This means that you can plan a special meeting to discuss every service required. You can also ask your community for member feedback.
Communicating with other homeowners and the association's decision-making board of directors is easiest at public meetings. Many associations require only one annual meeting to elect a board of directors open to members. Many, however, will hold various meetings open to the board or board plus members. In some states, members can only talk about items on a prepared board meeting agenda. However, in states like Florida, the new laws allow residents to discuss whatever they want, although their time and manner are controlled.
One of the biggest advantages of living in a neighborhood with a homeowners’ association is the bonds you can establish with your neighbors. You may never talk to some of them, but they pay the same monthly dues and work to adhere to the same rules. So you have a lot in common and that can come in handy.
If your HOA suddenly starts assessing violations and charging large fees, you won't be the only resident who suddenly feels harassed and forced to pay.
Knowing your neighbors can also have protective benefits. Sometimes, it's not the association but the person next door that draws attention to the homeowner's violation. If you hang clothes to dry on a rope in an upscale finished section, a member of your HOA can turn you in, and that can result in hundreds of dollars in fines. But if you make friends with your neighbors, they are more likely to approach you before the association, and you can completely avoid an unpleasant scenario.
Certificates and Licenses
In the U.S., certain states require AMCs to have a license. Thus, you want to check if your state is one of those and if that rule applies to your community. If that's the case, you don't want to hire an illegal AMC. Moreover, even if your home state does not require a license/certificate from an association management company, it's still better that your chosen AMC has it. Why? Simply because licensed companies are more reliable and have an obvious advantage against unlicensed ones.
You want to opt for an association management company that's accredited by Community Associations Institute (CAI). This is a reputable establishment in the industry that provides insights and educates community associations and professionals supporting them.
After getting a proposal from your chosen company, you still want to go deeper and do your research. The task is to make sure the company's values and culture in general suit your community. These two elements are quite enough to understand if the company is right for you or not. The culture also includes how fair the company is towards their clients, what is the main mission, and how attentive the company is regarding your requests. All this will help you figure out how your future as an association looks like.
Get approval before you make changes
It's advisable to get approval in advance to ensure that your HOA will not have a problem after you build a wall or add an extension to your home. You may also buy a vehicle that can be considered "commercial" or, otherwise, prohibited, or take any other potentially unacceptable/destructive action.
Not all of these actions will show up as items listed under your association's rules. However, just because the behavior is not clearly restricted, it does not mean that your HOA will find it acceptable.
Complaints from other neighbors may draw attention to your actions. So, if you anticipate that the change you want to make to your home might somehow bother one or more neighbors, approach them and talk to them before initiating the change. Anticipate what they might be objecting to. Finding out that they have legitimate concerns or, conversely, will not complain about your project, is invaluable.
You don't want to prioritize quality over price, even if the latter is a top priority for your association. During the choosing process, you should first focus on your chosen company's services and evaluate them. Separate them from the given fees and make your unbiased review before you make your overall review. Trust us, this will do you good in the end.
To avoid spending more in the long run, you want to ask your chosen AMC about their tenant screening process.
Tenant screening is a process used primarily by landlords and property managers to evaluate potential tenants. The goal is to assess the likelihood that the tenant in question will comply with the terms of the lease (or rental agreement) and take care of the rental of the property in question.
Communities do the process for a reason, and you want to ask your chosen HOA management company about the screening process or if they have one at all.
Maintenance Management Services
One of the advantages of hiring an association management company is receiving help with maintenance management. After all, the main job of an HOA is to maintain the community.
Obviously, if you are looking for a company that will take care of all the maintenance-related processes, you shouldn't hire one that doesn't offer such services. And if your chosen association management company does that, then you should ask the association about how the process goes exactly.
Ask about copies of an association management company's insurance certificates. An HOA management company must have more than satisfactory coverage in this matter. This also includes liability insurance and workers’ compensation for the company's employees.
This should go without saying, however, not every association pays due attention to how skillful HOA managers are when choosing an association management company. Such employees are in fact linkers between you, as an association, and your chosen management company. This means that managers of your AMC should be available 24/7, have excellent communication skills, be responsible, polite, and experienced, with the perfect background. You want to talk to reputable HOA managers only, and you can find them only in a trusted association management company.
If your chosen association management company wants you to enter a three-year contract, don't rush to sign it. The reason is that you may end up stuck with a subpar management company (alas, there's no guarantee), and three years will turn into an eternity. Thus, you should insist on a one-year contract with your chosen company. Also, if they agree, make sure that the price does not change due to the shorter period.
Hire a Lawyer
And let him/her review the contract before sealing the deal with your signature. It's never a good idea to rush with signing a contract, especially if it's the first one offered by your chosen company. You may simply don't know certain details (which are usually quite small and go unnoticed). A professional HOA lawyer will consider everything and change details that seem suspicious. Also, mind the company's termination clause. Look for at least 60 days' notice to have enough time to begin the choosing process again.
If You Are Fined, Pay Your Fine
You have three options for getting fined. In the first scenario, you simply pay your fines. The situation will be over. However, if you commit the same violation in the future and will (obviously) have to pay again, your argument against the fine will be weaker because you have already paid it once and, thus, admitted your guilt.
The second option is to try to request a dismissal, which is an exception to the case or contract/agreement, under which your HOA operates. Sometimes, especially if the HOA doesn't want a trial, a dismissal will be granted.
In many cases, an HOA will hold a hearing to which other homeowners are invited to discuss whether to grant or deny the dismissal.
Your last option is to sue your HOA, but this is the very last resort. You can win a lawsuit, and at some point, the HOA will have to pay your legal fees. However, homeowners have sued associations for hundreds of dollars only to come back owing to the HOA the original fines or assessments, plus thousands of dollars in attorney's fees.
The worst thing you can do is simply refuse to pay the fines without telling the reasons for your HOA. You could risk foreclosure, and given the HOA's complicated reputation, it's best not to tempt fate.
Recruiting an AMC can be challenging and exhausting. But don't despair - considering each tip on our list will help your community to succeed. Even if you have chosen cheating or simply a bad company, your chances to succeed are still high. Not without consequences and losses, of course. Our tips should help you choose the best AMC to grow productive and healthy relationships. Good luck!
Dmytro Sokhach is an entrepreneur and the 6-Figure Flipper Club member. Founded Admix Global that builds websites, makes them profitable, and sells them as business.