Maintenance costs can eat up a significant slice of the overall operating budget – here’s how community association managers can keep them in check
- Community association managers (CAMs) can save considerable amounts of money by smartly managing maintenance costs.
- Bidding on vendor contracts and improving the collection strategy can help.
- Keeping up on preventive maintenance and offering community amenity rentals for outside membership are cost-saving strategies.
- Reenforcing the rules for homeowners and engaging in bulk negotiations is also helpful.
Community association managers (CAMs) have to be cautious when it comes to their expenditures for a community. Maintenance spending shouldn’t cause homeowners’ assessments to rise much, if at all. Unfortunately, CAMs often find themselves in dilemmas about how to keep maintenance costs to a minimum while simultaneously ensuring good standards for the community.
Community associations are frequently faced with various tasks involving financial transactions. Association managers must be proactive to avoid exceeding a monthly or annual budget.
Fortunately, there are different strategies that CAMs can use to keep expenses to a minimum. Choosing the right way to manage maintenance costs can be tricky, though, without some guidance. Here are six tips that can easily bring down overall costs and help CAMs stay within budget.
1. Improve collection strategy
CAMs are sometimes faced with the situation in which homeowners within the community falter on their dues. Usually, such situations are handled with notices and warning letters. In the worst-case scenario, the issue may have to be taken to court, but that can be costly.
There are less costly options that managers can use to collect late fees. Credit bureau reporting and specialized collection agencies can prove to be good options. Denying access to amenities and services can also be effective.
Automating the community’s accounting process can also encourage homeowners to promptly submit their fees. You can set up a bank lockbox allowing homeowners to mail their payments directly to the bank. The payment information will be automatically received by management software, and then it can be posted on the community’s web portal.
The community management board should always be ready to sit down and review their collection policy and fine-tune it to make it more effective.
2. Award vendor contracts after competitive bidding
When a community association is in a contract with a particular vendor, they tend to stick with it. Many vendors have clauses incorporated into their contracts that allow them to increase their service charges upon contract renewals. This is not a mutually beneficial way of doing business.
Whenever the contractor’s renewal time approaches, consider inviting other contractors to offer their bids in addition to your current vendor. This strategy can help you re-negotiate rates with your current vendor or choose a more economical one.
Competitive bidding allows you the opportunity to explore other vendor options. In case you are not getting the best possible services for the capital spent, competitive bidding is a way to choose the best package within a more economical price range.
VendorSmart has a dedicated bid desk that can help CAMs procure multiple bids.
3. Prioritize preventative maintenance
Money spent on increasing the lifespans of community assets is money well spent. Preventative expenditures will always pay off in the long run.
Many things that the community owns need regular maintenance, such as machinery, facilities, and other equipment. A maintenance calendar should be in place. Regular inspection of equipment and amenities for wear and tear will help you avoid replacement costs – making more revenue available to you.
Other maintenance tasks such as power washing, painting, and cleaning gutters should be regularly done to keep the community premises in order. HVAC systems also need to be regularly serviced to ensure they remain in good working condition. Regular care translates to less breakdown, which means fewer problems and fewer overall costs. CAMs can use VendorSmart’s online vendor directory to access a plethora of qualified vendors who can service these maintenance projects and more.
While prioritizing preventative maintenance is always a good strategy, you should try to do it smartly. The condition of the machinery or any other equipment owned by the community should be analyzed carefully to compare maintenance and replacement options. If repairs are not going to make the equipment last for long, it’s better to go for a replacement.
4. Have rules in place for homeowners
Community associations can have strict rules that help ensure that their premises and their amenities stay in top-notch condition.
Homeowners should be using machinery and equipment only as intended. If there is a problem with any item, it should be immediately reported to a community association representative.
Owners should also be told to be gentle with the landscaping. They should be cleaning up after themselves and their pets.
5. Use available resources to generate revenue
If the area you manage has amenities such as tennis courts, swimming pools, clubhouses, and gyms, you can use them to generate additional revenue. These amenities can either be rented out for private functions or amenity-specific memberships can be handed out to non-members willing to pay a monthly fee.
Make sure you do thorough homework before putting the amenities out for private functions and paid membership use. There should be appropriate rules laid out and proper mechanisms in place so that everything runs smoothly.
6. Negotiate in bulk
You can save considerable sums of money by negotiating various contracts for homeowners in bulk. For services like cable TV and broadband, bulk contracts often come into play, but that doesn’t mean they have to remain limited to specific items. Such contracts can also be exercised for other services such as lawn mowing and security.
VendorSmart connects CAMs with certified vendors
Maintenance of homes, condos, and communities can be a big part of the overall operating budget. But you can make smart choices to keep maintenance costs to a minimum and balance your budget every month. Use the tips above to keep maintenance costs low.
One way to keep maintenance costs low, as mentioned above, is to have access to the right vendors who are certified to do jobs at economical prices. VendorSmart is an online platform that connects CAMs with certified vendors across service categories.
We have over 70 years of property management experience and the resources and technology to provide the best possible business solutions for CAMs. To get started today, visit our website.