As the 2012 federal legislative fiasco over the debt ceiling—as well as any number of other spending bills proposed since then—demonstrated, balancing a budget can be like pulling teeth. Balancing a condo or HOA community's budget can sometimes seem just as arduous—the task can be incredibly difficult because there are so many moving parts. Making sure that a building or association isn’t wasting money is even harder but budgeting is a necessary part of running and managing a building community.
In the case of a condo or an HOA, cutting costs is one sure way to bring a runaway budget under control but cost-cutting comes with, well, costs. Cut too deep, and not only may a board face backlash from residents if services and amenities are reduced, but they may find themselves in an even tougher spot if maintenance issues are left unaddressed and lead to bigger expenses down the road.
There are ways that HOA administrators can reduce waste and save money without neglecting necessary maintenance and services, however—it's just a matter of working smarter and consulting the right professionals.
“When it comes to saving money, you have to fish where the big fish are,” says Mitch Drimmer, vice president of business development at Snap Collections by Association Financial Services, a collections and financial services company based in Miami. What Drimmer means by that is that the first thing you need to do when you trim the budget is to figure out where the big budget-busters are within that budget. “Make a pie chart and see what the big piece is,” he says. “Usually insurance is the biggest piece.”
While Drimmer obviously does not recommend getting rid of an association’s insurance, he says there definitely are ways to reduce the costs without shooting oneself in the foot, as it were. For example, every year that the policy comes up for renewal, try to get it reduced, he says. You can either simply ask that your current premiums be reduced, or you can get bids by other competitors to see if any other businesses have a lower rate.