Annual HOA Budget

Setting an annual budget is a crucial part of the Homeowners Association.  The members on the board are in charge reviewing costs, gathering data and projecting expenses for the coming year. Communities, businesses, individuals, families, and organizations of all kinds must have a budget in place in order to navigate both everyday expenses and unexpected costs, while maintaining a certain life or business style. Preparing the budget is by no means an easy task. A well-defined, well-written budget is a powerful financial tool allowing funds to be saved and/or allocated for specific costs and projects; budgeting is a way to estimate expenses and allow for those funds to be available when needed.

Here are some helpful tips when setting your HOA Budget:

1. PREPARE A BUSINESS PLAN 
What do the board and residents want to accomplish, as a whole? Adding Amenities (e.g. playground or security gate) can be costly, or a luxury. Residents may instead want a budget that enhances the current property at this time.

2. DEVELOP PROCESSES & ASSIGN TASKS 
The goal and objective of the association have to be reviewed, numbers must crunched, resident input should be sought and budget reviews meetings need to be scheduled. All of this takes time and effort. Put an organized process in place.

3. REVIEW FINANCIAL HISTORY 
Examine budgets and financial statements, from at least the past several years to help determine a starting point. Compare this year’s actual expenditure to date against the original budget, so adjustments can be made as well as in next year’s budget.
 
4. PROJECT UTILITY COSTS 
Do you provide water and/or heater to your residents and the common areas? Utility rates are soaring in many cities nationwide. Find out what the trends are in your community. Some increases, should always be built in for utility costs regardless.

5. REVIEW VENDOR CONTRACTS 
Do Landscaper or maintenance company contracts call for a price increase in the coming year? Are any contracts expiring? Review all contracts and seeks bids.
 
6. DO A MAINTENANCE REVIEW 
Inspect the entire property. Are the playground or the pool repairs pressing? Any driveways or lots need repairing? Hallways due to be repainted? Preventive maintenance can prevent costlier problems.

7. EVALUATE INSURANCE POLICIES 
Like your personal policies, your community’s policies should be reviewed yearly. Are limits and types of coverage sufficient? Do your reserves cover any deductibles that might be needed? Would a lower-premium, higher-deductible plan make sense?
 
8. INCLUDE LEGAL AND COLLECTION COSTS 
Few associations can translate 100 percent of their fees due into actual revenue. Referring to previous legal or collection actions might provide valuable insights into expectations for your future costs.

9. CREATE A WORKSHEET 
When you determine known expenses, start inserting the numbers into a spreadsheet and compare them with expected revenue. At least you’ll know how much above or below your projected operating costs you are.
 
10. PRIORITIZE PROJECTS 
Something will need upkeep or change every year. Make sure needs – especially those that expose the association to liability (e.g. stairwell, repairs) – are budgeted for before wants (e.g. beautification projects).

11. EXPECT THE UNEXPECTED 
Set aside funding for some “emergencies” that cannot be identified in advance. One year, mosquito abatement might be necessary; another year, vandalism might present a problem, or a storm might destroy landscaping. Being prepared is a good plan. 

12. PLAN OUT RESERVES 
Over a long enough period, projects such as replacing a building’s roofs are as inevitable as they are expensive. Experts suggest a good reserve study should tell  you how to fund your expenses.

13. BE TRANSPARENT 
It’s not possible to keep every resident happy, but keeping the budgeting process open and transparent at least gives residents a chance to have their opinions heard.

14. DISTRIBUTE THE BUDGET 
Distribute the processed budget to the homeowners for their review and comment. Then, once the association board has approved the new budget, get it into the hands of all homeowners.

15. FOLLOW THE BUDGET 
Except for emergencies that have not been budgeted for, follow your plan. The budgeting tool keeps the community operations on track.

Our Address

11075 Carmel Mountain Road,
Suite 200

  • San Diego CA 92129-1600

  • (858) 672-3100

HOA MAINT. REQUEST

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If it is an emergency please call the main number: (858) 672-3100.

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Apt. Maint. Request

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