HOAs – Cut your costs in 2013

By January 10, 2013Blog, Uncategorized

Happy New Year from Barrera and Company!

Cut Costs in 2013This year, resolve to cut your costs and properly fund your reserves.

Oftentimes delinquent dues and bad debt will create cash-flow problems for your Homeowners Association (HOA). Collections and liens can be costly and hard to retrieve as well. As board members and property managers, you are expected to consistently look for ways to cut expenses – especially in these hard-hitting economic times.

In the past, we’ve looked at some “outside-the-box” ways to cut costs – such as leasing common area space for cell phone antennas.

Here are a few areas in which every HOA can gain more control resulting in cost savings for the community and possibly lower monthly assessments. This will make adhering to your reserve study more attainable this year.

Contract Negotiation

Rather than getting stuck in long-term agreements, think about shifting to annual renewals. This gives you the chance to renegotiate pricing each year, and to opt out of contracts whose quality of service has fallen. Vendors will pay more attention to the account if they know renewal is not guaranteed and tied directly to their performance.

Landscaping and Water

Add a requirement in your contract to have the landscape vendor turn on all water stations after mowing and edging to check for leaks. Post signs reminding owners to report water leaks and broken sprinklers immediately; make certain sprinklers aren’t aiming onto pathways, parking areas and walls. Update old irrigation lines and sprinklers to cut down on water usage, and use bubblers for decorative plants and ground cover. Make sure you are using the correct lawn seeds for your climate and traffic pattern; choose grass types that are tolerant to higher temperatures and lower water levels.

Green areas have many benefits over using rock landscaping; contrary to popular belief that you should landscape with rocks to save money on water. Lawns cut down on pollen, filter toxins in the air, cool the air temperature (while rocks give off heat into the evening – called the “radiator effect”), and help to prevent rainwater runoff into sewer systems, waterways and even your parking lots.

Pools and Jacuzzis

If you have multiple pools, choose only one to heat in the cooler months. Solar systems are quite costly and may only increase your swimming timeframe by a few weeks. Propane or natural gas heaters are becoming more and more efficient, and updating them is probably better money spent then a solar system. Consider switching from chlorine-treated filtration to salt water – not that it will decrease the pool service fee, but the chemicals are harsher on the pool, as well as its plumbing and filtering equipment. Put the Jacuzzis, whether above or in ground, on timer switches that automatically shut off every 20 minutes or less.

Cable TV, Internet, Security

If you provide some or all of these services for the community, negotiate the best “bundled package” possible – again, shorter term might assure the best services and rates can then be renegotiated annually. Sometimes paying a little more per month not to be locked into a long contract is a wiser move. Most of these companies offer a teaser price (good for 3-6 months) to lure you in, then raise the prices higher and higher throughout the usual 24-month term. Of course, if you can leave these items up to the individual homeowners to handle, it is just one less issue for your HOA; and they will appreciate the ability to choose their own carriers.

Office Expenses

Postage is a large expense, considering the various notices it is your job to send out to the membership annually. Try to combine documents into one mailing (invoices with newsletters for instance), use postcards to communicate instead of letters when possible, and of course email whenever you can. A PDF document sent over the Internet costs nothing, and the responses (if required) are much quicker.


Bid out the account each year to take advantage of market changes – don’t assume your insurance agent will automatically apply earned discounts, stay on top of this. Consider raising your insurance deductible in order to reduce the premiums; make room in your operating budget for the larger insurance deductible so you are covered in case of a loss. Be certain to require all vendors to provide up-to-date license and insurance binders; requiring that the vendor name the HOA as additionally insured will prompt the carrier to advise you if the coverage is cancelled.

Interested in getting a Reserve Study for your community? Click here to get a proposal!



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