How Can Condo Associations Boost Revenue & Cash Flow?

Property, location, convenience, and concepts are the unique attributes that make condo living a distinctive experience. But no matter how diverse the background, the shared characteristic of all condo associations is they must generate revenue and manage cash flow to maintain operations. Since Condo Association Insurance is a critical component in maintaining the financial integrity of any homeowners association, the Dickstein Associates Agency provides the following tips to help you boost revenue and manage HOA cash flow. 

Positive Cash Flow Is the Goal

A condo association must collect enough revenue to pay its expenses and if the cash flow is not positive, raising dues or reducing costs is necessary. Of course, HOA fees are an association’s primary source of income and would collapse without them. However, if your HOA needs more money, it can try alternative methods before raising fees or tapping the reserves.

You can cut down on expenses or rent out your facilities; you can also make wise investments, hold fundraisers, open newsletters to ads, or even offer extra services. It’s an important feature and common-sense requirement for every condo association to prepare a line of credit. However, always make raising dues or requiring special assessments the last option to consider.  

When you need an influx of cash, it’s best to know close to the exact amount and identify it as a one-time versus ongoing need. Use that knowledge to make informed decisions about how you will raise money.

Find Ways to Be Frugal

Every budget has fat to trim. The best prospects for cutbacks are in discretionary expenses and vendor contracts. Focus on your larger budgetary items first. Fine-tuning smaller budgetary costs can come later.

You can postpone non-essential services that don’t impact members’ quality of life. But don’t defer necessary and routine maintenance because it will cost more later. Instead, look for lower-cost alternatives that may not have been available in your original contract—shop vendor contracts to give your current vendors competition. Labor and material shortages affect all businesses today, so be firm but realistic with your vendors in renegotiating contracts or requesting lower rates or discounts.

Boost Your Investment Income

HOAs should never invest in anything risky. Opening a savings account is a safe investment but without much return. The goal for managing investment accounts with condo association fees is to stick to low-risk and high-yield investments. For example, consider bonds that offer lower risk than stocks but higher returns than ultra-safe T-bills. Consult your financial advisor for the best advice.

Establish a Line of Credit

A line of credit is helpful in many situations when used correctly. That is to tap the condo association’s line of credit when out-of-the-ordinary expenses occur. Doing this adds debt that must be paid later, and it raises the need for more cash flow, so only use it when necessary and avoid expensive options such as credit card debt. Use your credit line sparingly to bail out of problems quickly and without having to take on new and more costly obligations.

Explore For-Profit Services    

Depending on circumstances, most condo association fees cover lawn care, snow removal, landscaping, and other services. However, it’s worth considering what upgraded and for-profit services are potentially available and attractive to your homeowners. But, before investing time and money into establishing new services, it’s a wise suggestion to survey your members to learn their needs and preferences.

Housekeeping, house sitting, pet sitting, pet walking, babysitting, picking up and delivering dry cleaning and laundry, holiday services to set up and take down decorations are good choices. You can also offer services to homeowners who want to hire others to do those tasks. Either manage the payments and book the services internally or contract with vendors to give the HOA a cut. 

Vending Machines and Laundry Services

Suppose circumstances are such that your homeowners will benefit from and use vending machines for snacks and beverages or even for laundromat-type appliances. Ensure there is ample demand before making a capital investment into commercial appliances. Alternatively, look for vendors who will lease the space for the machines for a flat monthly fee or a percentage of sales. 

Advertising and Sponsorships

You can sell advertising space in your community newsletter or on message boards in the community center. Some events you produce may potentially sell sponsorship, such as golf, tennis, or pickleball tournaments with many other possibilities. Look for win-win deals wherein members, the association, sponsors, and advertisers benefit from participation.

Create Community and Fundraising Events

It’s human nature that members respond more charitably to events to spend and donate rather than being forced into a mandatory assessment. In general, people are generous. And they are likely to be more generous when making donations or buying tickets, services, or goods helps keep the HOA financially sound.

Transparency with your goals for creating fundraising activities helps foster an openness that builds trust. If you give your members the right reason, they will feel good about participating and respond better to your offer. And they’ll be more likely to promote the event to their circles of influence in situations where outsiders can contribute. 

Match Your Services to Demographics and Needs

Depending on your facility, you can tailor your efforts to match your membership demographics. Communities with older folks have different needs and wants than younger people. Suggestions for fundraisers include bake and plant sales, intimate live concerts, financial and lifestyle workshops, and auctions. Other ideas include movie nights, pool parties, picnics, and baking or cooking contests.  Everybody loves pancake and sausage breakfasts because they are social events where people can mingle and get to know their neighbors. But don’t stop there. Be creative with a weekly or monthly Tacos Tuesday event, for example. 

Employ Unused Assets

Does your condo association have meeting spaces, community rooms, banquet facilities, sports facilities, open spaces, or other underutilized assets? In that case, you can devise many creative ways to monetize them while keeping with the spirit of the association. Every situation has unique opportunities and drawbacks. 

Cell Towers

Some associations rent empty rooftops to cell tower operators within the community, while others rent space for towers disguised as palm trees, clock towers, and other objects. Monthly payments go as high as $3,000, a substantial income. There are also time-limited range, lump sum options. Plus, the community and local area will benefit from excellent cell reception. And whether the 5G rollout makes a difference to this concept is something to investigate should you pursue this idea.    

There are negative aspects to cell towers that have killed many deals. For example, health care concerns rank at the top of strong opposition to having cell towers in a community, significantly when above their living space. And some may object to the visual aesthetics of seeing the towers as part of the landscape, and others consider them to cause lower property values.   

Open Spaces

Take advantage of your property’s natural features. For example, do you have slopes for sledding, ponds for skating, rivers for rafting, creeks, or trails to follow? Do you have a space or facilities for outdoor events? If your situation is urban, consider any unique aspects you can use. 

Storage and Parking

Find ways to rent spaces if you have unused indoor, covered, or outdoor parking spots. Any storage spaces, outbuildings, or other functional vacant areas are potential revenue sources for you to employ.  

Amenity Fee Option

Consider implementing an amenity fee. You can review options for fees related to extra storage space, additional parking spaces, locker rooms, bike storage, or garden plots. Such conveniences can help generate sufficient income to justify upgrades and improvements to the community’s amenities. In addition, you have a winner if you find popular upgrades become genuinely scarce; for instance, there is no space to install more full-size personal lockers.

HOA Reserve Study and Special Assessments

It is crucial that your reserve study closely mirrors your association’s real-world depreciation of its buildings, facilities, appliances, and equipment. However, getting reliable data requires consulting with an architect or a structural engineer. Although such consultations are costly for smaller associations, they pay off by not needing expensive engineer services as often.

If You Have a Problem, Own It

If you have bad news, be candid and transparent with the situation. People don’t like to hear bad news, but they can deal with it. However, they hate to feel they aren’t getting the whole story. Don’t alienate your members, but instead, figure out all the options to raise extra revenue to repair the expensive and unexpected problem. Layout your decisions and reasons is the best you can do. 

Keep Your Reserves Sacred

Don’t resort to borrowing to fix problems. It’s a financial trap because interest siphons cash flow from the budget, and the debt further weakens your position against future issues. And you must know that banks are not always open to lending to associations, especially those with inconsistent cash flow.

Adequate cash reserves are your first line of defense to avoid the nightmare of your association being unable to borrow while not having sufficient reserves to deal with its current problems.

Protect Your Condo Association Assets

Condominium associations have unique insurance needs and require the expertise of professionals who can meet those needs. That’s why the Dickstein Associates Agency offers Condominium Association Programs to protect associations for their responsibility in the event of property and liability damages. 

Condominium associations and their boards have distinct insurance needs that require expertise to meet them professionally and adequately. For example, at Dickstein Associates Agency, our Condominium Association Insurance experts are here to help you protect your association from devastating property damage and liability claims and find the best ways to avoid them. Our job is as much about helping our clients prevent catastrophic claims as assisting them in their aftermath.

About Dickstein Associates Agency

Dickstein Associates Agency has distinguished itself as a leading provider of personal and business insurance in the tri-state area since 1965. We pride ourselves on being advocates for our clients and providing them with quality and affordable coverages. As Trusted Choice™ independent insurance agency, we partner with various national and regional carriers, allowing for flexible coverage for each client’s unique circumstances. For more information on how you can leverage all your insurance to work best for you, and how we can secure the best insurance in the marketplace suited to your specific needs and business objectives, contact us today at (800) 862-6662 or www.dicksteininsurance.com.