It's Human Nature - for Condo Owners! Everyone wants to keep their Monthly Homeowner's Assessments as Low as Possible.
However, keeping the Owners' Assessments TOO LOW might result in an Under-Funding Situation, especially in the event of an unanticipated building expense - like a failed hot water heater, or surprise roof leak!
The Challenge for Homeowner Associations - here in Chicago, and elsewhere - how to keep monthly assessments reasonable, but still have enough Emergency Money in the Operating Account, just in case!
Pamela Dittmer McKuen, in a recent article in the Chicago Tribune, offers these important suggestions for Condo Board Members -
- Realistically Create an Annual Budget Based on What Maintenance and Repairs are Needed - not what Unit Owners Wish to Pay! Often times, to keep individual owners happy, Condo Boards increase the Monthly HOA Fees by an arbitrary, often too-low amount, or defer any raise at all. Such action inevitably results in the need for a higher assessment down the line.
- Avoid Litigation! Whether a lawsuit against the Condo Developer, or unwarranted action against an occasionally-tardy unit owner, lawyers cost money, and they deplete reserve funds for necessary capital projects.
- Complete a Reserve Study, and Keep Refining It! Such a study will require an investment in a specialized consultant to create, but will likely pay off, mid and long-term.
- Consider Financing Major Capital Projects, Rather than Delaying Them! These days, the Lowest Interest Rates in History continue. Required work can be done sooner, removing the need for additional patchwork maintenance.
Often Times, a little Advance Financial Planning, along with Keeping Up on Building Maintenance, is the Right Approach. It helps the Condo Operate more Smoothly, and more attractive to potential new buyers, as well as their lenders.
Want to Further Discuss? Contact Our Team . . . ANYTIME!
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DEAN MOSS & DEAN'S TEAM CHICAGO