How Can Associations Increase Their Revenues To Reduce Assessments
Raising the annual assessments is simply the most detested steps you can take. It can be even more concerning at a time when the economy is not doing so well. The key to prevent the board from taking this action is to follow other methods to increase the revenues. Here are 4 methods you can follow to increase the revenues without causing trouble to your residents.
1. You Can Add Initiation Fees
An increasing number of associations are charging initiation fees to increase their capital. The buyer pays this fee during the time of purchase. It works as extra funds that can reduce the increase in assessments or delay it. The initiation fee can be anything from 50% to 100% of the annual assessment. Make sure that you amend the Declaration of Covenants/Condominium to include this fee in it before charging it.
2. The dues should be kept current
The annual budgets of all associations are based on the assumption that the owners will pay their assessments on time. But with high delinquency rates, the funds can be badly affected. This can force the association to raise the assessments. If you are not strict in collecting assessments, the owners will not be prompt with their payments. Make sure to follow a stringent process to ensure that all dues are kept current. All delays should be charged with a late fee and legal action should be taken if the arrears are not paid within a specific number of days. This is where a condo management company can come of great help.
3. Closing Letter Fee
You can also charge a fee when providing a closing letter whenever someone sells or refinance their property. They need to provide this letter to the closing attorney. It is a statement about any delinquent assessments. The fee you can charge will vary based on the law and the documents involved. The association can also charge for additional costs and expenses for the closing letter. This can include:
• Document chares for the copy of the government documents
• Charges for the entry cards, pool keys and other similar amenities
• Owner transfer fees for updating the owner details in the records
A legal counsel or your condo management company can help in determining the exact fees that can be charged.
4. Reducing Insurance Costs
Another way to reduce the assessments is to reduce your insurance costs. The premiums can be different from one year to another. It will be best to get competitive estimates every few years to help increase your savings. Following certain safety measures or programs can further help reduce your premiums.
You can also save money by reducing your collection costs. Instead of spending tons on attorney fees, you can hire a condo management company that runs your everyday business in a more cost-effective way. So follow these tips to help increase your association’s funds. This can help in reducing the assessments or at least delay the assessments, making things more favourable for your owners.