Kevin Davis: 0:00

So we're facing a midlife crisis and community associations. And right now we're saying you have a choice. You can choose to go one way and say guess what? We're going to look at our place differently. We're going to maintain the community association to common areas. We're going to collect assessments, we're going to force the rules, and we're gonna live happily ever after or we have to say, Guess what is not going to work. We got to go for Plan B, Plan B, maybe at the span, you know, D can be convert the place, but your option should never be to do nothing. If one word, please, you have to make a decision that choice to move forward.

Announcer: HOA Insights: 0:37

Common Sense for Common Areas, exists to help all 2 million volunteer board members nationwide have the right information at the right time to make the right decisions for their future. This podcast is sponsored by for companies that care about board members, association insights and marketplace, association reserves, community financials, and Kevin Davis Insurance Services. You'll find links to their websites and social media in the show notes.

Robert Nordlund: 1:05

To celebrate your support for our show, I've got a fun announcement to share. HOA insights now has its very own merch store. Our team has whipped up some hats, mugs, T shirts, and more that we think volunteer HOA board members are gonna love. We also offer dozens of free zoom backgrounds. If your board is meeting online, these fun zoom backgrounds are a must check out the HOA board member merch shop at board heroes got SELLFY dot store. And that's board heroes dot s ELLFY dot store or just use the link provided in the show notes. Oh, Hi, I'm Robert Nordlund of association reserves.

Kevin Davis: 1:48

And I'm Kevin Davis of Kevin Davis Insurance Services. And this is H O A insight where we promote common sense for

Robert Nordlund: 1:55

common areas. Well, welcome to episode 59, where as you heard, we'll be speaking with insurance expert and regular co hosts Kevin Davis about what board members should expect on a big picture level about the future of your association. Before we get going. I want to encourage everyone to check out last week's episode number 58. A very important discussion with Kevin about what you can do to control your rising insurance costs. There are some very cost effective actions that you can take that Kevin describes in the podcast. Applying what you learned in that episode will potentially save your association, a lot of money. And I think we learned there's money to be saved when you do the right things. Well if you want to catch that episode or any prior episode, you can listen from our podcast website, www Hoa insights.org. Or watch the podcast from our YouTube channel. You'll find a link to that in the show notes. Or of course, you can subscribe to the podcast from any of the most popular podcast platforms to get every episode delivered right to your phone or mobile device. Now on the topic of episodes, we are going to do another live stream program for upcoming episode number 61. On July 8, it'll be an Ask Me Anything episode with myself, Kevin and Julie at your service will be on the program to answer your questions. So mark your calendars for 3pm pacific time on July 8. To see how fast we can think on our feet. We'll click on the YouTube link in the show notes below to visit the live podcast YouTube page and click on the Notify Me button to make sure you get notified when the podcast is about to begin. Now as we regularly do, we're going to start this episode with an audience question. So if you have a hot topic, a crazy story, or a question you'd like us to address in an upcoming episode, leave us a comment on one of our YouTube videos, leave a voicemail message at 805-203-3130 or send us an email at podcast@reservestudy.com. So Kevin, Sarah from Chicago asked, our association is getting older and it seems to be getting more and more expensive to insure and maintain. Is it going to just get worse? Kevin, I kind of feel the pain in that. But what do we tell Sarah and other board members who at this time are aware they're listening? The ones who are concerned about the future? They're older Association. What do we say?

Kevin Davis: 4:21

Well, first of all, I'm optimistic person. So I will say things will get better. I think they'll get better because we will become more educated. We will learn more. And we will learn how to manage these community association little bit better, so you can enjoy them a little bit more and increase the value of our unit because at the end of the day, we want to make sure that our unit is increased our values increase and we enjoy living in there. So if that's our end game, eventually that's where we want to be so well they no longer exists. No, I think they will always be around. First of all, it's probably the most effective way to live these days. You know because we are community people, we want to bond with one another. We want to connect with each other, just not today.

Robert Nordlund: 5:07

Yeah, well, I think you're right. Everywhere I look, I see that community associations are a reality in the real estate industry. That's just the cost effective way to build homes in places where the real estate is expensive. And I think there's an opportunity there, I hear so much about how we are becoming disassociated. As a people, we have less real friends, and more online friends, things like that. And the opportunity exists at a community association to have a neighbor, whether that's next home, or the people on either side of you, I remember when we were remodeling our home, we lived in a condo for a year and a half or two years. And it was a pleasure. I saw my neighbor every Tuesday as we pulled our garbage cans in. And he was a nice man. And I was chatted about how he washed his garbage cans out. And it was just a relationship that I never would have had. And just the opportunity to smile and be neighborly. So community associations are here, they're here to stay.

Kevin Davis: 6:13

Available. Gonna get it, Robert, we'll get back to that. And that's the key thing is that, as we get back to that, that we are communal living, that we live together, and we look forward to seeing our neighbors, things will get better. And I think that's the future. However, we got to get there. And I think one of the keys is recognizing that it is an effective way to live, that as you build these community associations, you know, the state, the city that your county you live in, guess what they get a chance to take a step back, and allow you to say, this is how we're going to live, this is how we're going to collect our trash. This is how we got to maintain it. And guess what, you have that authority to do it? And the question is, is that can you use that authority correctly? You know, and that's kind of the issue in terms of Community Associations says you have volunteer board members whose job is to maintain the property, Forster rules collect assessments, as long as they do those three things correctly. Again, we think that, you know, there will be a future for the, for these community association committee associated lifestyles or the way of life we're

Robert Nordlund: 7:12

going to call it. I'm right now those three things, volunteer board members, that really effectively collect assessments. Yeah, go to assessments,

Kevin Davis: 7:21

enforce the rules now and maintain the association, I made this three simple, simple things that these board directors can do to help you really help the longevity of a community association, especially today we talk about the age communities, these communities had been around for 30 years now. And a lot of them have been. And what happened is, is that most Association board members to be eye off the ball somewhere along the line, and you have all these issues that impacted them. Because they took the off the ball. And the number one thing I guess the Robert loved one things deferred maintenance. That's the big red flag.

Robert Nordlund: 7:57

That's what I was gonna say because Mother Nature and father time they are inevitable, unstoppable forces. And I was wondering, I wasn't sure where this is gonna go conversation wise, but I was thinking a little bit that. I wonder if our industry, the Community Association industry is having almost a growth phase, where it's adjusting to being almost like a teenager, because it's in existence, it's there, it's part of real estate. And now we're getting board members who need to fully appreciate that this is here to stay. And we need to start managing well. And just like you say, maintaining the place, you can't be like a absentee landlord and just cross your fingers and hope. You have to appreciate that you have forces of discretion, destruction that are everyday working on your association, and you've got to keep up. So that proactive aspect of it, maintaining it as a community that we stand for this. We're not going to stand for a loud party in the pool at 2am. Just be a community. You know,

Kevin Davis: 9:01

here's an idea that I that were when I we tended to see AI conference, they said it is a midlife crisis, and that's what's happening right now. That's it. It's the midlife crisis and acute Association. You know, I remember when I had my midlife crisis, oh, I'm going to do what's going to happen. And I end up starting my own business and end up going a whole different direction. And again, we go through these things and we have a choice. We can go one way or the other. We say okay, I'm going to make a change, I'm going to be better. I'm going to do things differently. Guess what? That all of a sudden things work out for you. And for community associations, same thing. They are going through these midlife crisis's and you have make a choice to say guess what, we're going to make a difference. We're going to be better than Association down the street there. We're going to do things more so that we can enjoy where we're living and our property values will increase. So all of a sudden we think that way. Guess what, that we have a future.

Robert Nordlund: 9:56

Yep, yeah, it is gonna get expensive, but let's pull up are big boy pants, pull up our big girl pants and take good care of the place and ride the property values up. Because if we do nothing, the property values are gonna go down or they're going to lag. And the minor expenses are going to turn into major expenses. And it's just going to get way more expensive. But look

Kevin Davis: 10:17

at us down, just just us right now, you know, we look at ourselves, it costs a lot more to maintain our bodies, right than it did before. You know, when I was in my mid 40s, you know, I'd have to worry about going to the doctor, I had to worry about, you know, doing five miles a day. Now in my 60s, guess what, I got a lot more things to worry about, I made sure I get out there and do my 10,000 steps, and made sure I see my doctors and my specialists. So it cost me a lot more to maintain my body than it did 20-30 years ago. And the same thing for Community Association cost them more than it did 30 years ago. But they still haven't accepted it. They still say let's maintain the assessments the way they have been, while we're going to increase the assessments. Yeah,

Robert Nordlund: 10:57

yeah, you can't do that you can't be living in the past, there was a friend of mine who went to Las Vegas. And he was saying that, I used to be able to do that for an entire weekend. And now one night in Las Vegas, and I'm done, we have to adjust to the new normal of what the community association is. There's higher expectations in the industry, there's more resources. And then we have this podcast. And so we're able to reach out and touch so many more people than we ever would have, in the past, when you had to drive to go hear a presentation and park and take a big chunk of time out of your day. Now we're dropping right into people's ears, and be able to encourage them and say, Hey, folks, let's take a hold of this and ride the tide forward, and not just get slapped in the face when it takes us somewhere that we don't want to go. And

Kevin Davis: 11:51

that's the key thing is that, you know, we're having a more informed board members, and that more informed board members are allowed to make better decision. Now they choose. They're not just one thing. But we give him the information and say, Guess what I like when as a Sir, I'm going to have a more informed board of directors, because by having a more informed the board of directors will make better decisions. So that when it comes time to make sure those documents are enforced to where they should be enforced. Now I know the importance of it because I don't enforce them correctly. Guess what's going to happen? We have disgruntled people who live here, we got more lawsuits, and guess what the value of my unit will diminish and get? What do I want more than anything else? I want to be able to live in a place where I can look at the people who live here and feel pretty good about it. But I also want to make sure the value of my unit increases. I mean, that's so important to me.

Robert Nordlund: 12:40

Yeah, well, we said, safe and secure home, peaceful and productive community things like that. Now roll off our tongues, that takes some work takes a proactive board who understands that being a board member is hard work. And so you want to get committees, who then can come and replace you. And you want to get volunteers who can be on the committees to get onto the board all this thing about developing a healthy community. But there's now more information out there. I think there's managers that have credentials that you can look at, you don't have to hire just or just cross your fingers and hope to be lucky. There's attorneys who are specialists in community associations, there's reserved a providers, there's insurance agents, insurance professionals who have credentials for community associations, there's so many more resources and opportunities to do well for your association that this is what we want to encourage the boards to think that yes, it's gonna take some work. But boy, the payoff is nice. And

Kevin Davis: 13:40

again, like our midlife crisis that we go through, we have a choice, we can go and go down this rabbit hole and say, Oh, the world's gonna end as the worst place in the world. Or we can say, You know what, I want to make a difference. And by making a difference and serving as a board of directors, okay, and enforcing the rules correctly. Okay, maintaining Association, correctly, collecting assessments, raising assessments, don't you think that we should do so that we can have a better place to live? Guess what's going to happen? There will be a future for community associations.

Robert Nordlund: 14:12

Yep. And not just community associations in general, but community associations, your community association, and you talked about it in the last episode about looking around your association, looking around your association critically. How would I think of this association? If I was Mrs. Smith, the elderly lady in unit number 13. Who walks with a walker? Boy, yeah, we need to take good care of our sidewalks for her. How do we make this an inviting place for the people with dogs? Well, hey, we should put up a pest pet waystation. You have all these little things that you can do to build community and to take care of your association and while and we did it a few years ago with having online meetings so we could still run the business of the association Without sneezing and coughing on each other, all those kinds of things. So, yeah,

Kevin Davis: 15:03

there's a lot of other things that you talked about the lady with the walker, guess what we've all been living in for 30 years. So we all not only we all will have Walker's either another. So we that we have to be able to appreciate the fact that it's not this her. These associations are 30 years old now, a lot have been living in for 2530 years. And guess what, we start out at 40. Now we are approaching our 70s or in our 70s. And so we have to be aware too, that FSS next we're the ones going to be using the walkers and wheelchairs. And so we want to make sure that everything is really running a lot smoother. So we do get as midlife crisis starting here. We have the mission we've we've prepared for the midlife crisis to we're doing the thing necessary so that, you know 10 years from now, when the association that because most have been living here for 20 plus years, now we've prepared for this next phase that we will all be going through together. So we got to make sure that we understand that, you know, the things are more important in terms of overhanging trees and the dead trees and that are blocking the stop sign because now we want people to see the signs. So that Be aware that people are in here that maybe move a little slower than he used to be able to move now there's so you see we have to do,

Robert Nordlund: 16:14

or you've been there 25 years. And so you know there's a stop sign there. So you don't think about it. But when you are helping your nephew or your neighbor drive for the first time you say get ready for the stop sign. They say why? And you realize, oh, yeah, the trees overgrown or the bushes overgrown it and no one can see it. And just that fresh eye. I guess I come back to something that's near and dear to board members hearts. And that's money. It costs money to take care of the association. And getting back to the midlife crisis. I bought a red sports car a few years ago, and it cost money. boy does it put a smile on my face. And surprisingly, it puts a smile on my wife's face. And she said it's okay, if you buy a red car, I just don't want to hear about a redhead. And that was at that was our funny joke. But it takes money. But then again, the money that it costs to maintain the association is going to come back. But you need to have that idea that 25 years ago, the assumptions were the assessments back then property needs more money right now. And so we've got to give it the money it needs. Just like you and I are probably having more doctor's appointments now than we used to sure all those kinds of things. The association needs more money. But boy, if you take good care of it, it's going to reward you with higher property values. And that's a nice payoff. And then with the the roof that's intact, the tree that's trimmed or removed when it gets old and no good. Those are the kinds of things that are going to reward you with strong property values.

Kevin Davis: 17:47

And one thing is simple you haven't talked about is just having reserves study that has a plan that makes sure that everything's maintained, you know, and that's a simple mechanism there to say I'd my job like easier now, because I have to worry about how long have to worry about that roof. I have to worry about certain things because I have reserves that are here that outlines what I need to do. And guess what, it has made my job so much easier. There are a lot of tools out there to make these boards of directors job a little bit easier. So that the author's look and go, Oh, what do I do now? How do I handle this stuff? And then you said earlier, hope that things get better? Yep.

Robert Nordlund: 18:23

hoping there's not a plan. Two things, two thoughts from that. One is that when I initially became the president of my association, the Treasurer told me Well, you know, welcome to the board, but you know that the roof is leaking. We need to paint the place and the asphalt needs care. And we have you know, a couple $1,000 in reserves. I'm like, oh, geez, Louise, what I get myself into things take money, and we have to be prepared. And that's what launched me in the reserves study field because we needed a plan. And then related to that is yes, it does cost money. But with respect to that midlife adjustment, there are going to be some people that are going to get priced out of the association. Yeah, perhaps they've been there for 25 years. And I think the kind thing to do is let them know every year it's costing a little bit more, a little bit more a little bit more to live here. And so they have the control, they have the opportunity to make their decision about when they choose to sell and move to less expensive housing because maybe they don't need a three bedroom anymore. Maybe they would best go and live with their grandkids down the street from the grandkids in a different town but we have to appreciate change as part of the aging process. I think that's something that our listeners do need to be reminded of. And I'm

Kevin Davis: 19:42

glad you said that because most of the decisions that a lot of these condo boards make especially the older elderly when they enter their 30 plus years. It's a do nothing. Their plan is to do nothing and do nothing is is a choice to do nothing is a choice and a lot of them choose to do nothing for them. They look at something 30 years later and they go into the garage and they see things start to peel, things start to come apart. And they keep looking at it. And he's still choose not to do anything about it. They choose to maybe get a reserve study done. But guess what happened after the reserve study is done. They said, Well, we got to start investing in it Aido next year or the year after them are there they started investing in it, but know that we will keep the reserves set aside in the bank and not do anything with it. So it is a combat upon them to make decisions to do something. No decision is a decision. Kevin,

Robert Nordlund: 20:33

I'm looking at the time and we're way past time to our midpoint sponsor at so let's take a quick break right now. We'll be right back after a quick break to hear from one of our sponsors.

Paige Daniels: 20:43

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Robert Nordlund: 21:15

And we're back, Kevin, we're talking about the choices that board members have. And we're trying to encourage board members to make the choices I have some clients that we have for years recommended, it's time to replace the carpet. And they just don't see it because they see familiar carpet, I see faded carpet, I see worn carpet, and they just don't see it because they've become so familiar with it. And we need to encourage change changes, normal changes the appropriate response to an aging Association. But I think we need to touch on one more thing. And you started with it at the very beginning saying the danger of no change. And if you've taken your eye off the ball. And now that you look around, if you take a walk around your association, you see a lot of advanced deterioration. And you realize, gee, the elevator has been limping along the carpet, the hallways are all tired. The boiler needs to be replaced the we still have a key entry system, we don't even have a telephone system or a video system, we missed a couple of generations of upgrading our entry access, what what do we do? Or what is possible? I think we need to touch on that subject.

Kevin Davis: 22:30

Yeah, you know, what some of the things we've talked about in the past is that you have money issues, you can't you can't get that special assessment out there. I mean, there's not enough money, you have deferred maintenance for 30 years, I would say the first thing is you gotta see if you can borrow money. I mean, you gotta go to the bank and see if you get money out of there. And if you can't get money, it's okay to say, you know, maybe it's time to disband our association. I mean, we have to be realistic enough to be able to say something that nobody ever talks about, Robert, and it's time to start talking about a little bit more. You've been living in a place for 2530 years, this place three, five years old, and you took your eye off the ball. Sometimes you got to say, Guess what? We have to disband the association by a developer to come in and says, Guess what? We'll convert this into apartments because guess what, millennials and Gen Z love apartments.

Robert Nordlund: 23:18

Yeah. And it may be a tired old building and maybe your wonderful tired old building, but it may be a tired old building. And if you're facing a $50,000 per unit special assessment to get it freshened up, to get it fixed up the plumbing, the all the things that need to get done. We heard this at the latest conference, the idea of deconversion disbanding the association. And I feel it's a little bit like the emergency procedure. When you get onto an airplane, the flight attendants tell you what happens in case of an emergency. Well, if you haven't taken good care of the place, and you realize that we are out of control here, it's just economically good old river view villas. You can't see the river anymore because all the trees have overgrown and you can't go back there because the hillside is slipping and the roof

Kevin Davis: 24:06

and lakes no longer any good is good to enter the lake. Yeah, venturi need to dredge it millions of dollars to dredge the lake. You know, sometimes you got to be realistic enough to say, You know what, this is not going to work. You know, we can't, our expectations are too high at this point in time, like the 80 year old lady or the lady with the walker. Like, you know, she can't go dive out the airplane anymore certain things she can't do any more. And sometimes you have faced the realities that, okay, this is not going to work under these conditions. And we got to really do something more drastic. And again, the whole topic of this conversation we're having is the future of Cuban associations. One of the futures is a plan B, be able to say, Guess what? This is not going to work for us anymore. Yeah. deconversion is possible to find a developer to say, You know what, there's apartment buildings all along here and maybe this should be an apartment building and no longer icon The minimum Association.

Robert Nordlund: 25:01

Yep, a nice fresh apartment building. And some developer is looking at your plot of land and saying just drooling thinking what they can do with that plot of land. So we want to be encouraging board members to appreciate that community associations are here to stay. They are perhaps built on the backs of volunteer board members expected that volunteer board members are going to make good decisions, wise decisions, effective decisions, we talked about expecting change, making sure that you are not just sitting on your hands and doing nothing. But the opportunity to pull that emergency exit if you need to. And that is deconversion. I think we're going to see more and more of that, as we have more associations aging out and finding out that they were caught, they were caught with their eye off the ball. But just interesting things, community associations are here to stay I believe.

Kevin Davis: 25:53

But and they should. They should. They should but

Robert Nordlund: 25:56

but not necessarily every community association, there perhaps are some old and tired ones where it may be more cost effective to say, we're out we're done. And get your money from the developer than it is to pass that $50,000 $100,000 special assessment and try to yourself make it a better version of what it was or what it used to be.

Kevin Davis: 26:19

So we're facing a midlife crisis and community associations. And right now we're saying you have a choice. You can choose to go one way and say guess what, we're going to look at our place differently. We're going to maintain the community association to common areas, we're going to collect assessments, we're going to force the rules, and we're gonna live happily ever after or we have to say, Guess what is not going to work, we got to go for Plan B, Plan B, maybe at the span, you know, D can be convert the place. But your option should never be to do nothing. Ever one word, please. You have to make a decision, that choice to move forward. Yeah,

Robert Nordlund: 26:55

move forward. And that means getting fresh blood on the board, raising assessments, all those kinds of things to just normal to be in a state of change. Well, Kevin, as always, it's great talking with you any closing thoughts to wrap up the three things, yet

Kevin Davis: 27:10

those three things, you know, you have to make sure you maintain that association. Nothing more important that collect assessments, but make sure they are up to date, and the force of documents. If you do those three things there. You will have a great community association and they will be around long after we will be

Robert Nordlund: 27:29

the stands the test of time, we hope you'll learn some HOA insights from our discussion today that helps you bring common sense to your common area. Remember to mark your calendar for July 8, our asked me anything live cast, check the show notes for details on how to sign up. We look forward to having you join us for another great episode next week.

Announcer: 27:51

You've been listening to HOA Insights: Common Sense for Common Areas, you can listen to the show on our podcast website, Hoainsights.org, or subscribe on any of the most popular podcast platforms. You can also watch the show on our YouTube channel. Check the show notes for helpful links. If you like the show and want to support the work we do, you can do so in a number of ways. The most important thing that you can do is engage in the conversation. leave a question in the comment section on our YouTube videos. You can also email your questions or voice memos to podcast@reservestudy.com Or leave us a voicemail at 805-203-3130. If you gained any insights from the show, please do us a HUGE favor by sharing the show with other board members that you know. You can also support us by supporting the brands that support this program. Please remember that the views and opinions expressed by the podcast do not constitute legal advice. You'll want to consult your own legal counsel before making any important decisions. Finally, this podcast was expertly mixed and mastered by Stoke Light Video & Marketing. With Stoke Light on your team. You will reach more customers with marketing expertise that inspires action. See the shownotes to connect with Stoke Light.