If your HOA board is planning a big project and looking at your financing options, what do you do if the reserves and operating budgets don’t cover the full cost? Your options could include special assessments, dividing up the project over a few years, or getting a loan.
Getting a loan might seem like a scary option. After all, at the end of the day it has to be paid off and interest costs will mean you owe more than the original bill at the end. However, there are several reasons why it can sometimes be the best decision.
Homeowners are Happier
You know special assessments work, but they can leave members of the community less than enthused. Plus, you’re often left worrying about whether or not all your residents will pay the special assessment in full and on time. This can lead to worrisome delays if you need to use them for a timely project.
Everything is Paid Upfront
Even though you’ll have to pay it off, a loan means that the full cost of the project in paid off upfront. Plus, the debt service is often paid in smaller amounts of an extended period, allowing you to better spread the benefits and costs much like you would with reserve funds.
It’s Helping the Whole Community
It’s important to keep in mind that any project, no matter how you fund it, is for the benefit of everyone in the community and the association as a whole. You’re mission is improving your homes and making it a comfortable and safe place to live long-term.
If you’re still feeling a little unsure about your next steps and whether a loan is a good idea for your community, don’t worry; hiring an HOA manager can helps you better explore the pros and cons of each option. To find out how Cedar can start helping you with this and other areas of management, click here to reach out.