HOA vs. Property Management: Understanding 3 Critical Differences
So you are thinking about property management? You’ve come to the right place because we think about it all the time! Managing property is an interesting and sometimes complex world full of tenants, paperwork, and regulations. But how does this differ from having an HOA at a property? What are the differences between HOA vs. property management, and what implications does that have for landlords, as well as potential investors? Good questions.
It is a crucial difference any time you’re considering purchasing or managing property. Our day-to-day in rental property management in Boston, we see the difference in the ongoing little things that tenants may or may not see see as well as the background things that only property managers and landlords may notice in the distinctions. So let’s jump into the topic and explore the key differences between these types of properties.
Key Insights
- Property management and HOAs both maintain properties but differ in approach. Property management handles daily tasks like maintenance and finances for owners, while HOAs, led by a board, enforce rules and manage common areas with a community focus. Each offers distinct benefits and challenges, so landlords and investors should research to choose the best fit for their needs.
What Is Property Management?
First it’s important to define the terms. Property management is the daily handling of residential, commercial, or even industrial real estate through a 3rd party contractor. They are responsible for the day-to-day maintenance and repairs and upkeep of the property. Their main roles and responsibilities are to oversee and often conduct the routine tasks set out by the owners. This includes daily maintenance tasks, that ultimately help to preserve the value of the housing or property so that it can generate income.
An HOA, or homeowners association, is an organization of a subdivision, community, or condo building that creates and ultimately enforces regulations in that community. They are run by a board of directors and collect dues to pay for the regular maintenance and upkeep of the community spaces and facilities.
Key Differences Between HOA vs Property Management
There is a lot of overlap between properties overseen by an HOA vs. property management conducted by a property manager. Sometimes tenants may not see the difference. But there are key responsibilities that may result in a significant difference in experiences that landlords and investors may want to keep in mind when looking at a property. Here are some unique characteristics of each.
| Property Management | HOA |
|---|---|
| Governance – Property managers represent the owners, which is an individual or a company. | Governance – HOA management companies represent a neighborhood HOA that is governed by a volunteer board of directors. |
| Maintenance – Property management means a central responsibility of maintenance on a property manager. While the property manager may hire contractors, there is generally one person in the center. | Maintenance – HOAs may hire an HOA manager (similar but not exactly the same as a property manager) or they may hire an HOA management company. |
| Supervision – A property manager reports directly to the owner or owning corporation. | Supervision – An HOA manager or HOA management company reports directly to the HOA and adheres to their governing documents or procedures. |
Benefits of HOA vs. Property Management
There are basic inherent benefits (and in turn some drawbacks) to properties that exist under HOA vs. property management. The intrinsic differences result in some preferences that some may prefer while others may find an issue. While some may find the idea of being part of an HOA a communal positive, as reported by Boston.com, many Boston natives report “negative experiences with their associations.” So let’s dive into some of the benefits of each type, while acknowledging that benefits to one may often result in a negative to the other.
Benefits of Property Management
Expertise – Property management companies and managers often come with a certain professional expertise. This includes being experts with experience in tenant screening, maintenance, and contracts and agreements.
Time Saving – Property managers can often save time by getting decisions and actions done quickly, having a direct line of communication with owners rather than needing to wait for decisions by a board of directors.
Financial Management – Property managers and property companies are well-versed in the financial aspects of running the property, from rent collection, budgeting, to financial reporting.
Benefits of HOA Management
Community Engagement – HOAs tend to be focused on the community, which often leads to enhanced upkeep of common areas. They often encourage community involvement.
Regulations – HOA communities enforce rules and regulations governed by the board. Residents can participate and be a part of this decision-making, which might be beneficial as a means of transparency and community involvement.
Amenities – HOA management often provides amenities and services that individual owners or corporations may or may not be able to afford or may not be obligated to provide. This might include security features, landscaping services, or recreational facilities.
HOA vs Property Management: How To Choose What’s For You
As landlords or potential investors, properties that are governed differently under property management companies and HOAs come with their own set of pros and cons. A lot of the basics can be the same, while it’s important to know that going down one route or the other can come with its own baggage that you’ll have to live with for a while. So thinking through the ramifications is necessary to making the right decision.
Doing research, both online and in-person, can be a game changer. The more you learn about not only the broad differences but also the particular companies and HOAs you might be getting involved with, the more you can make an informed decision. You may read or hear things about how a company or HOA manages their everyday responsibilities. It may be anecdotal, while the more information you get, the more it can create a larger picture in your mind of what working with one will entail.
Why Property Management Services Might Be Best
We’ve explored a lot in our examination of HOA vs property management companies. There are key differences that might compel you in one direction or another. The most important thing is research and forethought is put into it before you go far down any one path.
If you are looking for someone to handle your rental properties, Bay Property Management Group is here for you. We provide expert insight and property management in Boston MA, and throughout the mid-Atlantic. So if you’re looking to take your rental business to the next level, contact BMG today!
