For Communities, The Pandemic Impacts More than Just Amenity Closures
Since the onslaught of this insidious virus, we have been all made aware of the human toll it has taken in people’s health, mortality, and economic life. The only thing we can say for sure about this virus is that its long-term effect is still unknown. We know that it has affected community associations by way of having to close amenities, require residents to put on masks, and keep their distance.
But what effect has it had on the business and finance of community associations?
Having to govern a community association with this sword over your head is a difficult business. Having to govern a community association during normal times is also difficult, but this pandemic brings a whole new dynamic. From a financial perspective, the big question is how will this affect the cash flow of the association?
Will we be seeing a jump in delinquencies? The economy has taken a big hit, so can we expect community associations to be hurt as well? Will the value of real estate in our community associations be affected? Not knowing what’s going to happen is causing paralysis in decision making for some boards.
What About You?
Have your community finances been impacted by this pandemic? Are you seeing higher delinquencies or experiencing cash flow issues? Take 4 minutes to share your experiences. We will share the results of the survey here on the Axela Blog.
Challenges to Consider for Managers and Boards
Managers and board members should be asking questions like:
- Should we move forward with capital improvement projects?
- Can we afford to continue to fund our reserves if people are being financially hurt?
- Do we need to keep all of our employees or should we cut down on labor expenses?
- If owners are having a hard time paying their maintenance fees what course of action should we take?
- Will we need to increase maintenance fees or make a special assessment if the cash flow falls short?
- How will all of this affect our property values?
These are questions that can only be answered if your association can accurately predict what the cash flow situation will look like in the next few months. At this time we do not know when things will return to normal or if there will ever be a “normal” again. So the only thing to do is to keep an eye not just on our own community association but what the trend in the industry is.
What is the impact of the pandemic on the industry as a whole? How are other community associations being affected? The other thing that can be done is to hope for the best but prepare for the worst. Let us take the fear and politics out of this equation and act like experienced business people.
“As a board of directors or management firm your job is to establish a policy that promotes the priority of paying the association first
What Will The “New Normal” Look Like for Condos and HOAs?
The first indication of trouble will be delinquencies. There will be owners who have had their jobs or businesses affected and they may have to make a few decisions as to who in their economy gets paid and who does not. As a board of directors or management firm, your job is to establish a uniform collection policy that promotes the priority of paying the association first. This is done by letting the members know that maintenance fees must be paid even if the owner needs to enter into a payment plan.
You must not allow payments to the association to come to a dead stop. Be prepared with a collection policy that automatically activates protocols when a unit defaults or is delinquent. Don’t lose touch with your members but rather engage them, help them, work with them, and do not allow the delinquency to get so out of control you lose the ability to ever collect. The idea is not to foreclose on units but rather to collect what they owe the association.
Take the Pandemic Impact Survey
To find the answers to these questions, we’ve prepared a Pandemic Impact Survey to get a feel as to where the industry stands today. Basically, you are working in the dark right now. With the results of this survey, we hope to give you some indicators as to what course of action is best taken.
This survey may not tell us where we will be at three months from today but it establishes a benchmark. Without this information, we are all operating in the dark with gloves on our hands and plugs in our ears. We’ll be sharing the survey results on the Axela Blog as soon as they are ready.
Get the White Paper
There is hope for communities to navigate this new recession economy. Community associations are one of the few industries that can successfully
weather economic depression. You just need to know what tools to leverage to keep the budget healthy.
Axela is standing by ready to meet what may be the worst-case scenario, and with veterans of the last real estate meltdown on staff, we’ve seen it all. We believe that your community can reduce the impact of the pandemic, face this crisis, and come out of it unscathed. If you have an indication of what is coming, you can be best prepared and least affected.
Please take 4 minutes out of your day to fill out the survey to help you and your fellow managers and board members shed some light on what is happening and what may happen.