HOA Vs Property Management : What Is the Difference?

If you ever feel confused between HOAs and property management companies, then you are not alone. People often confuse property management companies for HOAs.

The set of responsibilities associated with an HOA is different from that of a property manager; however, they both work together to govern, upkeep, and maintain residential properties. In this article, we’ll sort out the differences between HOAs and property management companies.

What is HOA Management, and What Role Does it Play?

HOAs are community-focused organizations. They are operated by a board of elected members. They are created to govern, maintain, and overall manage the residential neighborhoods.

The main role of HOAs is to enforce rules and regulations called Covenants, Conditions, and Restrictions (CC&Rs).

HOAs maintain common areas such as parks, walking trails, and pools, as well as shared community amenities.

What makes HOAs different from property management is their legal authority to enforce these rules. If someone violates these rules, the HOA can issue fines and place liens against the properties.

How Property Managers Serve Individual Property Owners

Property managers are a team of experts, and they manage day-to-day tasks needed to safeguard the properties for the landlords or real estate investors.

The role of property managers is to maximize profit, keep the properties well-maintained, perform tenant screening, and collect rent.

While property managers do not have any legal authority to enforce rules, they can incorporate HOA regulations into lease agreements and make sure that tenants follow those guidelines.

HOA and Property Management: Key Differences in Authority and Responsibility

The most significant difference between HOAs and property management is that HOAs can legally charge you in the form of penalties, whereas property management cannot.

HOAs enforce rules, oversee maintenance of shared areas, take care of amenities, and are responsible for repairs, whereas property management companies focus on the upkeep of individual properties and tenant relations, take care of repairs inside rental units, conduct inspections, and manage lease agreements.

The role of the HOA is more authoritative, while the role of the property manager is more financially driven and operational.

Pros and Cons of HOAs vs. Property Managers

While the roles of both HOAs and property management companies serve important functions, each comes with its own unique challenges and strengths.

HOAs: The Community Perspective

Pros: HOAs protect property values and maintain shared spaces. This ensures uniformity and protects the long-term appeal of the neighborhood.

Cons: While these rules protect and maintain the tranquility of the community, they often feel restrictive to homeowners, and constant monthly payments can often become a financial burden. Also, disagreements with the HOA board may create unneeded tension in the community.

Property Managers: The Individual Property Perspective

Pros: Property managers help landlords save time by handling their properties, including rent collection, tenant screening, and property maintenance. They are experts who help landlords maximize returns and keep tenants satisfied.

Cons: While property managers take great care of your property, they do come with a management fee, and the quality of services can vary depending on the company. As mentioned earlier, they do not hold legal authority over a community, which can often limit their influence in resolving community-wide issues.

By knowing the benefits and the shortcomings of both HOAs and property managers, you will be able to set realistic expectations for them.

Financial Roles and Expertise

HOAs are funded by the fees collected from the homeowners. The monthly fees cover HOA fees, community maintenance, amenities, administrative costs, and insurance.

If you hire a property management company, then you will have to pay them yourself. In short, the HOA approves budgets and allocates funds, and property managers set or adjust rental rates, budget for repairs and maintenance, and provide detailed financial reporting to landlords.

Tips for Homeowners, Landlords, and Tenants

Knowing the difference between an HOA and a property management company is one thing; navigating them successfully is another. Here are some practical tips:

For Homeowners: Always review the CC&Rs, enforced by the HOAs, before buying into a community. This way, you will know your rights, identify any misleading information, and avoid future conflicts.

For Landlords: Always hire a property manager who is familiar with HOA’s regulations and has experience in working with them. This will help to prevent conflicts between tenants and the associations.

For Tenants: Before you sign anything, carefully read your lease. Take your time; no one is hurrying you. Ask the HOA if anything seems unclear. Discuss even the basic things such as parking, pet ownership, noise restrictions, additional charges, and repairs. These aspects impact your overall living experience, so don't rush into anything.

Conclusion

The key to navigating through the complexities of community living and rental property management is knowing the differences between HOAs and property management companies, as well as their respective responsibilities.

Having a good property management company by your side not only helps you maximize your return but also protects you from unnecessary conflicts.

People often overlook the details and later on become prey to HOAs' unneeded rules and restrictions. However, a good property management company like Mosaic Services will sort everything out for you and make your life easier.