Re: HOA Dues and Reserves Consultants
From: Mac Thomson (
Date: Sun, 6 Aug 2006 08:03:30 -0700 (PDT)
I'm skeptical of the need to hire professional consultants for HOA dues and reserves studies. I'd rather have that money invested to one day actually pay for various roof, stove, etc replacements. Every dollar we pay for a consultant today is $10 less that we won't have available to pay for that CH roof replacement in 50 years. (We have a metal roof.)

A couple of caveats:
1) Our homes and their upkeep are the responsibility of each of us individually. Our HOA dues and reserves only go towards commonly owned assets so our overall HOA responsibility is probably much smaller than for many other communities.

2) I was a CPA in a previous lifetime so I'm pretty comfortable playing with numbers and financial projections. It seems that with only a reasonable amount of research, number crunching, and monitoring balances over the years, we can maintain a strong financial position. Being the frugal Scot, I have a hard time imaging paying someone for that.

For HOA dues, in our first year, we had each team estimate their needs. We added a 10% contingency and that was our total annual operating budget. Our Steering team is authorized to spend the contingency as they see fit. It often goes to teams who need more than their operating budget because of unexpected expenses. Or it goes unspent and goes into profits, along with all other unspent operating budgets.

It doesn't matter if you don't get these team budgets just right in the first year. (Of course it helps to have some savings in the bank just in case teams grossly underestimate their budget needs, but I wouldn't expect that to happen.) After several years of doing this and data under your belt, it will become pretty easy to estimate your annual operating budgets.

Reserves are a bit more difficult, but still not rocket science, IMHO. We had each team identify all assets that they were responsible for that would need replacing some day. We then had them research and estimate how many years until replacement and what the replacement cost would be. This is obviously a very challenging and slippery exercise. There's no one alive who can get all those forecasts right, whether they're a paid expert or one of my neighbors talking to a roofing company to research the CH roof. We just tried to be reasonably conservative in our estimates and are committed to monitoring reserve spending and balances over the years and making adjustments to our estimates as needed.

We through out all asset replacements of less than one year or $500. Those can be paid for by annual team or contingency budgets.

We added up all of the various reserve needs and determined that one day we would be spending about $11,000 per year. We then translated that into net present value and determined that we needed to invest about $7500 per year in order to be able to spend the $11,000 per year in the future when it's needed. (We started with about $100K of construction profits in the bank so our investment income had a big jump start.) To get the $7500, we add $6000 to our annual operating dues plus we've agreed to automatically put all annual operating budget profits into reserves.

This is a somewhat rough sketch of our whole budget process, but I wanted to give you a picture of a way to do it in case you want to do it yourself. Good health and wealth to you and your community no matter how you choose to proceed. :-)


Mac Thomson

Heartwood Cohousing
Southwest Colorado

"The only thing necessary for the triumph of evil is for good men to do nothing."
                           - Edmund Burke

On Aug 6, 2006, at 3:17 AM, cohousing-l-request [at] wrote:

Date: Fri, 4 Aug 2006 06:49:59 -0700
From: "Marcy, Robert, Nathan & Buddy" <thinkpeacenow [at]>
Subject: [C-L]_ HOA Dues Consultants...
To: cohousing-l [at]
        <d69b6a0b0608040649n56e231f9sd8fa7d02e1454e3a [at]>
Content-Type: text/plain; charset=ISO-8859-1; format=flowed

   Our cohousing community (CoHo Cohousing, Corvallis, OR) will be
breaking ground in the next month or two and we are currently going through operation & maintinance/reserve study exercise to determing how much HOA
dues will be.  I want to do some research to find out if anybody has
recommendations on a consultant that they have used for this purpose. Also what does one look for in a consultant and what can you expect from their
services?  Any information would be greatly appreciated.

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