Russell Munz: 0:00

Poor collections on your financial reports. If the association hasn't saved money in their reserve account and they need to do a capital improvement, say they've got a leaky roof and they have to replace the roof, well, they don't have the money to do anything about it, but they got to go out and get a loan. So if the if you go to a bank and you have over 15% delinquency rate, you're at risk of not being approved for a loan that you would use to do the work.

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Robert Nordlund: 0:44

Welcome back to HOA Insights: Common Sense for Common Areas. I'm Robert Nordlund, and I'm here today for episode number 148, with Russell Munz of community financials, one of our podcast sponsors, community financials, provides condo and HOA accounting and other remote services. So he's our go to guy for financial tips for our HOA Insights program here, today's episode is called how to save money at your HOA now, to be clear, Russell and I don't have a magic wand, and we don't believe you save money by simply not spending owning and maintaining real estate is expensive, so today's program will be Russell explaining, from his vast experience, how to take good care of your associations, physical and financial well being without making mistakes that end up costing you extra money. Last week's episode number 147 was another of our popular board hero episodes, this time with Tim long from New Mexico, he shared a moving story about how they built community at their association because of their budget process. Now you heard that right? Their budget process was tense and was a challenge, but it was not divisive. So listen to that episode to find out what they did differently, to actually draw owners together through their budget process and make it a community building opportunity. So if you missed that episode or any other prior episode, take a moment after today's program to listen from our podcast website, Hoa insights.org, or watch from our YouTube channel, but better yet, subscribe from any of the major podcast platforms so you don't miss any future episodes. Increasing our subscriber base increases the podcasts position in search results. So becoming a subscriber helps others find this free resource so they can be better equipped to lead their association. Well, those of you watching on YouTube, can see the HOA insights mug that I have here, that I got from our merch store, which you can browse through from our Hoa insights.org website, or the link in our show notes, you'll find we have some great free stuff there, like board member zoom backgrounds and some specialty items For Sale, like mugs. So go to the merch store, see what we have for sale, and at least download the free zoom background while you're there. Well, we enjoy hearing from you responding to the issues you're facing at your association. So if you have a hot topic, a crazy story, or a question you'd like us to address, you can contact us at 805-203-3130, 805-203-3130, or email us at podcast at Hoa insights.org Now this episode was inspired by Jeff from Lake Tahoe, who wrote in, money is always tight at our association. What can we do to limit our assessment increases? Well, that's a hard one. Jeff, I don't think we have the power to stop inflation, but indeed, it's questions like this that made me think that we need Russell back on the program. So Russell, I know you came with a list. What did you want to talk about today to help our audience save money at their association? Sure.

Russell Munz: 3:59

Well, Thanks, Robert. I want to first say that in it is hard right now, being an owner of a condo or home in an HOA owners are getting clobbered with increased costs, whether it's the property taxes have gone up because house values have gone up over the last five, six years, and HOA fees have also gone up. And at the same time, their asset value is going down, in some cases, 20 to 30% in some markets,

Robert Nordlund: 4:28

actual home values, home value. So cost

Russell Munz: 4:32

of living is going up, home values going down. And you know, the home is the biggest asset for a lot of people. Similarly, if you're owning, you know, a different kind of asset, like stocks, the market general market can impact the price of the stock, but the value of the stock price can also be affected if the leadership of that company makes poor choices and the stock price goes down. So what I want to emphasize is board members. Members are the leaders of their corporation and the HOA and the condo community. This episode is to help them with part of what is clobbering the homeowners, and they're the board members are homeowners too. So they're under extreme budgetary pressure, insurance costs, utilities, maintenance and costs have risen significantly on all fronts. So what boards many don't realize is that this isn't just the treasurer's problem. This is something that the entire board needs to be working on.

Robert Nordlund: 5:38

And can we say the entire industry, because it's not just your association, it's every

Russell Munz: 5:43

Association This is going on in all, all, all the states, all the different neighborhoods and some you know when, when a home buyer looks at where they're going to buy a house, in a condo unit or a homeowner association, you know, they're looking at what The what the monthly cost is, and that monthly cost, the common charges, are dictated by the budget of the HOA and the community. So what we really want to dig into is, what type of smart choices can we make to impact part of that home ownership cost, which has a direct impact on the marketability of your home. If I'm looking at two different properties, one across the street from each other, one has they're both pretty similar, right? Same School District, same one has to double the HOA fee, right? I'm probably going to go to the other place across the street that has half of the cost, and those home prices might be a little bit more expensive, but my monthly carrying cost is going to be less okay? Is that always a good thing? It depends on your budget and where you want to live, right? But if you if you have similar products, and one costs more than the other, and they're approximately the same kind of amenities, quality, value. You're going to choose the one that that fits their budget, and they're going to go to the one that's that is even if they pay a little bit more on the home price, because the mortgage is locked in, the HOA fee is lower, you know, they're going to have a lower cost of ownership,

Robert Nordlund: 7:18

yeah, just carrying it each month, exactly.

Russell Munz: 7:21

Okay, so we got to look at ways that the board, being the leaders of their corporation, can make smart choices that will reduce the need to increase the homeowner association or the condo dues frequently, or the reduce the impact of needing to make special assessments, either on an ongoing basis or something that's like the norm at that community, because people don't want special assessments. And for decades, people don't want increasing, you know, dues or membership fees, although that is likely, you know going to happen because of inflation, but there are other things that are within the control that we're going to talk about today that can reduce those costs, or ways, techniques and tools to look at as board leaders to help to reduce that pressure of the those increases.

Robert Nordlund: 8:17

Got it. Okay, so you've got a list. Let's start touching on the list.

Russell Munz: 8:22

If you are not collecting dues, it has the same impact as overspending. So you need to make sure, because you're you have a fixed income based on the number of units in your community, homes of units and what the common charges are, right? Right? You have a fixed income coming in, and then if you have people that aren't paying into that system, that impacts, instead of having 100% of your budget now you've got 95 or 90% or 80% of your budget that you had to spend. So that's the same thing as having 20% more cost in that last case, right? So we have to look at how we can improve collections and taking, you know, taking a proactive management approach to collections, yeah,

Robert Nordlund: 9:12

because if you're only collecting 90% then you're inclined to increase your assessments 10% to be able to pay all your bills,

Russell Munz: 9:20

yeah, and because the rest of the people have to carry those that aren't paying Exactly Okay. You know, there's many governing documents have late fees. Most, a lot of communities don't charge them because they're difficult to administer, or they don't have a system to administer it. So one, it's a deterrent. So let's use it to see if that late fee, if it was in a governing document from the 1980s it might say $15 and that's not much of a deterrent if someone's not paying. So make it. Make it. You know, see if you're if you're making changes that it's a real deterrent. Then, you know, give people lots of different ways to pay. Let them pay by check. Let. Them pay by, you know, credit card if they need to, let them pay by, you know, online if they want to. So lots of different ways for people to make payments, or Apple Pay. Yeah, yeah. Well, I don't know about that, because I don't, I don't think that works with a lot of the systems in the industry. But you know, you need to have a systematic collection process in this one of the reports you're going to review is your age delinquency report. So you can see, okay, we've got a collection policy. The collection policy lays out at day when somebody's 30 days past due. This is what we do if somebody is 60 days past due, this is what we do if somebody is 90 days past due, this is what we do. And the importance here is, in about half of the states there have a statute that's called a super lien, which allows the HOA to gain priority the HOA money that's due to the association to gain priority other over other lien holders, but it's only for six or 12 months or unpaid assessments. So that means, what that means is, if a if you get after the association, you go to a foreclosure to get somebody to pay. If there's not enough equity in the home, the association gets six to 12 months of its unpaid assessments. And then after that, the mortgage gets paid, and then the HOA goes behind the mortgage, and if there's no money left, then all of those other payments that are past due from months six or 12 beyond it's uncollectible, and so the association doesn't get it. So you need to have a focus that you you don't risk losing that money. And the other thing I want to say is one last thing I want to say, Okay, you got to states have a shelf life for bad debts. And I've seen, I've had, you know, communities come to us and they have somebody that hasn't paid in years. There's a shelf life in most places, in most states, where debts commonly that are either three to six years old, where the debt becomes legally uncollectible in court. So you know, you can't carry these deadbeat payers for a long time, because that gets, you know, that gets uncollectible as well. And so those are just two items. I wanted to point out that you got to make sure you handle these things seriously.

Robert Nordlund: 12:15

Got it. So make sure that if they miss their first one, if they're a few days late, try to not let them become 30 days late. Try to stop them from becoming 60 days late. And have your pressure points and enforce those.

Russell Munz: 12:31

And you know, you have a notification system that's nice, that says, hey, you missed paying your your dues. Please pay or whatever, because somebody may have forgotten it. But you just have to have a way of systemized. And then the next thing I want to say is pour collections on your financial reports. If the association hasn't saved money in their reserve account and they need to do a capital improvement, say they've got a leaky roof and they have to replace the roof. Well, they don't have the money to do anything about it, but they got to go out and get a loan. So if the if you go to a bank and you have over 15% delinquency rate, you're at risk of not being approved for a loan that you would use to do the work, but over 10% puts you at risk. And this is also especially tough for smaller communities, where just, you know, one or two delinquencies can get you to that threshold.

Robert Nordlund: 13:22

Yeah, well, does your what I'm hearing is that you need to have a system and for an association with a management company and an attorney on call, I trust that they have a system with community financials, as long as you're on the program. I want to ask you, is that one of things that you can systemize for the little self managed associations out there. Absolutely, absolutely, good, good, good. I just wanted to, I don't think I ever asked you that question before. So it's good

Russell Munz: 13:49

to know nobody likes collecting money from their neighbors. Being the person that says, hey, you you owe the association $300 when you pay it, right? It's not something you want to bring up at a neighborhood block party, but it's, you know, so let somebody, let somebody else

Robert Nordlund: 14:04

help with that. Be the bad guy. Yeah, okay, good. I like that. What else?

Russell Munz: 14:10

Next thing is, you need to get financial reports on a monthly basis so that the board knows what's going on with its financial picture. I talked it's so many times where I talk to community boards, and they they're not getting financial reports on a monthly basis. They maybe they get it quarterly, or maybe they get it sporadically because somebody is wasn't preparing them on time. But in any event, this is already old data, so you want to make sure, like we talked about before, that you you see what's happening at the community so you can react to it, and one of those key we already talked about the delinquency report, but another key financial report to look at is the comparative income and expense statement. Now what that is, is it has all of your income and all of your expenses listed out on a report you're going to. See for the month the prior month, how much income and expenses you had. Then it's going to have a column next to it that said, Okay, this is what we had for a budget for that period. And then it's going to show you the difference. Also, on the same report, it's going to show you where you are year to date. So year to date, how much have we collected an income, year to date, how much have we had expenses, and how are we doing on budget? So when you look at this, you can see, oh, geez, we're like, double what we budgeted for for this. Why is that? And that's when, that's what you use that report for, is to ask that. Why is that question? You may have a good reason, but you may not have a good reason, yeah.

Robert Nordlund: 15:37

Well, if you're on the East Coast and your snow removal is high. Well, number one, it's winter time, so this is when you expect to get a year's worth of expenses. And we've had some lot of snow lately. And so yeah, if there's a good reason, there's a good reason, but if all of a sudden your water bill is high or something else is high, or your collections are low, then that's, again, one of those things you want to jump on soon, exactly.

Russell Munz: 16:04

Oh, okay, just, you know, especially there's a lot of states that they didn't expect a lot of snow, or maybe you have more snow than you had the previous year, and you're using the previous year to make your budget, so you're going to be over budget in this. So, you know, one of the things, and I used to run a management company for 16 years in Connecticut. So if they had unusual snow, you know, a homeowner doesn't want to get a special assessment bill for snow removal in August, right? So if you got to do a special assessment to cover the shortfall, do it while people still remember that there was a snowstorm. Do it while they remember the pain. Yeah, exactly right. And you know, that's a way of covering the gap in what was projected in the budget. But some real examples of early detection to save significant money is water leaks. You wouldn't believe how many times there was a truck that came to the association. They they did something where they were tree trimming or, you know, some other landscaping. They backed their truck over a pipe. Was the water pipe. No one can see that there's any leak, but the water bill quadruples after a couple of months. There's like $3,000 of a water bill that you're like, Whoa, whoa, whoa, what's going on here? Yeah, if you're looking at the financial reports, you're going to see that something's going on, and then you can, you can do some investigation. Another thing is maintenance. If your maintenance, you know, is one of the things that is, and we'll talk about this later, but I got another example. But maintenance is something that can go poorly quickly. You know, you're spending spending a lot of money on water leaks, for example, yep, but we'll get into this in like. The next thing is, I'll give an example of that, but those are things that you want to look at in the financial reports to then ask the questions, why is this over budget? And then do a little investigative research and see if there's a way that you can get back on budget.

Robert Nordlund: 17:53

Fix the problem. Try to try to keep things tight. Don't let it get out of hand.

Russell Munz: 17:57

I will say the next one is fix it this. This kind of comes into the same thing I was talking about, fix it right the first time. And I have seen this over and over again with roof leaks, where we're going to patch it for two or $3,000 and inevitably the patch doesn't work, and what you end up having is water infiltration that ruins drywall. Paint has to be remediated for mold. It ruins carpets. It ruins cabinetry. You've got multiple parts of the the house that needs to be repaired. Now this is more in town homes and in in condos in this particular example. But if you were to, and I have seen in my years of doing, you know, working in this industry communities, that this was their mode, they would just patch, and then they would have this huge maintenance line item, because they were constantly fixing drywall and repainting homeowners units and working with, like a company, you know, water remediation company, to go through this. And it like they did, they had to do this for like, you know, eight units a year. I mean, it's like crazy and like to the brain damage of having to manage this over many different seasons, with many different homeowners who are really upset. You know, it's, it's, it's a problem, but it's, it's, it's indicative of a board that's not, you know, this is, well, we're always used to this is just normal for us. It's not looking at the big picture of, okay, we need to fix the roof, and we won't have to deal with these problems anymore, and our budget's gonna go down.

Robert Nordlund: 19:45

Yeah, it's that's not a good normal I'm fidgeting here because I hate the $500 or $1,000 roof leak that is a patch on a patch, and it leaks, and it ends up being a$10,000 or $20,000 interior. Your repair type problem,

Russell Munz: 20:02

and then you get, you've got, like, you know, you got to pay the, you know, the your deductible for the insurance company, right? And then your insurance cost goes up. It's just a snowball effect. But this is, like, indicative of poor management and leadership by the by a board. And you don't want to fall into

Robert Nordlund: 20:19

that trap, Russell, let's take I'm looking at the time here. We need to take a quick break. I want to follow up on that, because there's pressure when a board feels we don't have enough money to replace the roof. And that's another that's a reserve problem. But we'll get to that after our break. It's time to take a break now hear from one of our generous sponsors, after which we'll be back with more common sense for common areas and today, specifically, how to save money at your association?

Paige Daniels: 20:46

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Robert Nordlund: 21:17

and we're back well before the break, I was starting to get all fidgety because I feel the pain. I feel the pressure of poor decisions. And some of those poor decisions come from the pressure that what we don't have the money to do it right? So Russell, is that what we're talking about with the reserve pressure, it

Russell Munz: 21:36

is, and there's, there's a couple of examples, I want to say is just like I talked about before with the value of condo prices. We'll just use condos right now, but it also happens at HOA in Florida, they've been working on a structural integrity reserve study after a collapse of a building. So now there is more pressure to save money for reserves, and a lot of communities were underfunded on reserves, and now have to make up the shortfall, so that is providing upward pressure on the money that they have to put up that they weren't anticipating or they weren't paying before. Florida is not alone in this, though, as you know, there's a lot of other states that are also having more and after that event, are having more and more. You know, regulations on reserves. And so, you know, the reserve is something that needs to, you know, be funded, because you need to have that money set aside to make these replacements happen. And just like we were talking about before, you're going shopping for a new home, one community across the street has reserves, and they've got a million dollars in the bank. Another similar property, same age, has $50,000 in the bank, right, right? You know, it's it feels safer for me as a buyer to go to the one with a million dollars. So I don't have to pony up the reserves. And I've had, I had a friend who recently bought a condo. It was negotiated at the sale that the seller had to pay for the upcoming structural, you know, reserve fund, right? And that was how they worked it out. But, you know, it's gonna impact the value one way or the other. So let's take care of it now. And so I'll talk with you. What are you seeing behind you know, setting aside money for this so that people are don't see it as an expense, but they're, they're, they're seeing it as a valuable thing that they can't escape.

Robert Nordlund: 23:33

Yeah, well, first off, it's a perception issue. Deterioration is like the sand through an hourglass. It's not like a future roof project that you're trying to avoid, or a future boiler project every day due to Mother Nature and Father Time. They're the bad guys. A board doesn't have any choice about the expenses. The roof is going to fail, the boiler is going to fail, the asphalt is going to fail. The board has no choice in that. All you can do is offset the ongoing deterioration with your reserve funding so that you have the cash when the item fails. All you're doing with funding reserves is preventing your own special assessment. You're not creating charity for the future. You're not paying someone else's bill. You're simply offsetting your own deterioration bill, that every month the roof gets a little bit older, the asphalt gets a little bit older, that kind of thing. And when we look across the entire market and across the entire industry, that reserve bill is very often about 25% of an Association's total budget. So it's a big number, but there's, again, no choice about that. If you don't pay it with your ongoing budgeted reserve transfers, you'll get hit with a special assessment. It's just that simple. So don't feel like you're the bad guy as the board saying we need to raise our reserve funding, the bad guy is mother nature and Father Time. Point to them to say we're just trying to offset the. Deterioration that's happening now, and that will mean that whoever is sitting as a homeowner in the future will have enough money to pay that roof bill, because everyone paid their little fair share over time. So it just we see just a lot of perception issue that

Russell Munz: 25:17

they don't understand. Get ahead of it. Get ahead of it and and budget for it and just be, you know, part of the process, exactly. Okay, good. Another one that comes up as like has been the villain in this budget, ruining kind of scenario that we have. Yeah, yeah, insurance. So insurance has been the Bugaboo. So insurance prices I had, I can't tell you the number of of communities that need to do a special assessment, because their insurance went from, say, 50,000 to 350,000 crazy or something like that, right? So it may have happened on a smaller scale at your community, if it's smaller, but it went, you know, it went, it could go two times, three times, four times the amount that it was the previous year. And why is that? It's not just because there were fires in California and hurricanes in Florida, although that does add a factor, but on an annual basis, the insurance company is going to send out a representative to look at the community, and in their renewal, they're going to send out a list of requirements or recommendations. They call them recommendations. It could be a substantial list of things that they want done that will reduce the risk of an insurance claim, right? Yep. And if the community just takes them as okay their recommendations and does nothing about it, they are leaving. You know, many of the underwriters are going to cancel them, and when they get canceled, they go to something called the surplus lines. And surplus lines is when your insurance rates get go through that, you know, giant jump that we just talked about. Now, what the community should do is somebody needs to be tuned up where they are looking for those recommendations, and they knock them out in 60 days as best that they can, and communicate with their insurance agent that they have a plan to deal with it so that they will get renewed and they will keep their insurance. Maybe their insurance stays about the same, maybe their insurance goes up by a little bit of inflation. Maybe their insurance goes down. That's also possible, but they they have to do these recommendations, and they're not just recommendations. They need to do it so they don't risk getting canceled, and then if they're canceled, there's fewer and fewer options for this, this segment of housing stock, and so that they risk going to the excess lines.

Robert Nordlund: 27:52

Yeah, Russell, I got to add in the board members do have agency in this. They have a they can participate. And just like you say, don't take that recommendation is just, oh, nice to do. There's two associations I live in Southern California, two associations that we know of just a couple miles from my office where I'm at right now. One has stable insurance premium costs. The other one had to pass a big I think it was a $5,000 per unit special assessment because of fire exposure, and the difference is one spent about 10 grand clearing the hillside at the perimeter of their property, and the other didn't. So one took the recommendation, one didn't. One spent 10 grand to clear the hillside. The other didn't. Boy the second Association spent way more than 10 grand in $5,000 per unit special assessments. Gee, just two units worth would have paid for that tree trimming. It was just crazy. You got to do that.

Russell Munz: 28:52

And there's lots of things like that. There are, you know, if you have hot water heaters and you're a Multi Floor community, you need to have shut off valves on the hot water heater. So if it, if it leaks or breaks, that doesn't keep flooding for hours and hours. And there's a drip plan, drip pan underneath it there. I mean, there's all these recommendations to do smart things.

Robert Nordlund: 29:10

There's alarms for that. Now, yeah,

Russell Munz: 29:12

exactly, exactly. So you have to get ahead of this insurance. The other thing that I see is, if you're updating, you know, communities have tried this when they're updating their their governing documents, is that if there's something that was due to the negligence of an owner, that the deductible is then passed on to that unit owner. So that's something they can talk about with their you know, the attorney. But then it's not the associations cost of covering that insurance deductible, it would be the offending owner that caused the issue. So those are things, another thing to take a look at, because those deductibles can be, you know, 10, $20,000 yeah.

Robert Nordlund: 29:56

Okay. Last couple things.

Russell Munz: 30:00

Get what you pay for from a service provider. So I have you know, this could be vendors give you a flat price. They tell you they're going to do these things, and then they don't do them, and so they're cutting corners. And it's like my son looked at like we got this big wrapper for a candy bar, and when you opened up, the wrapper inside was this teeny, little candy bar, and he felt gypped. He felt gypped. So the same thing happens. I get, I get talked about, and I'll use one example. The boards tell me we're paying this big price for management, and we're doing all the work ourselves, and we're getting, we're getting, you know, some some accounting support, but we're doing, we're calling the vendors, because the manager won't get back to us. So the managers have a tough job, right? And they may have high turnover of staff. The manager might not be trained or experienced. They might not do the things in the contract, and they may be handling too many customers without enough staff. That's the whole, you know, student, teacher ratio, like, you know, how many, how many are you running? So oftentimes, the board volunteers say, I'm doing the job of the manager. I call the manager. The manager doesn't call me back. I try and find out what's going on with the vendor. I call the manager, I don't hear back, so then I have to call the vendor myself. I asked for a bid on something. They didn't get back to me. I have to do that. I haven't seen them around the property, so I'm walking around and I'm telling the vendor what they have to do. This can happen with any vendor. I'm just using that as an example. But this happens with landscapers, right? It can happen with with any vendor. You have to be somebody, has to be supervising what's going on so that you make sure that you know corners aren't being cut. So there, you do have options. I just want to say this, there's the perception that it's just working with a property management company, what's, quote, unquote, called Full Service Management. And then there's also the board does everything 100% themselves, and it's self managed. But there is a middle option where the board can do 60 just well, the board does like 30 a third. Let's just call it a third of what the you know, the manager did. They're calling vendors, they're getting bids, they're holding their own meetings. The Secretary is taking minutes, and then they work with a service provider that handles, let's say accounting and let's say resale and lender questionnaires and other compliance issues, and provide software to make it easier for the for the board to do. So I would just say, yeah, yeah. So there's cause comparison, you know, you're gonna, you could save money because you're not, you're you're not doing the job of the manager and paying the manager full price. Or, you know, similarly, go out to bid. If you find, like, your landscapers not doing what you you told them to do a lot of times. I talk with the communities, landscaper is the most expensive item on their budget. Well, put that one out to bid if you're not very 100% satisfied with them. If you wouldn't rate them a nine or a 10, go out to bid next season and get you know free, free competing bids and see how they're doing and see if somebody you know will will handle it. Yeah, okay, at a better value,

Robert Nordlund: 33:22

yeah. One last one to finish off with.

Russell Munz: 33:25

There's fraud prevention through checks and balances. So this is one I don't want to talk about. It shouldn't happen that often, but it does happen, and unfortunately so if somebody, like one board member has a checkbook and they pay bills, maybe I've seen I've done like, I don't know, 25 fraud case studies. And sometimes somebody comes on hard times and then they write personal checks. There's other times when it's a conflict of interest and they pay bills to a family member business, right? And maybe the maybe that wasn't vetted, maybe they were cutting corners, maybe the quality wasn't there, maybe was over inflated price, you know, so keeping an eye out for there should be multiple people in the approval process of bills, so you see what's getting paid. Also, you would, you know, take a look at your bank statements so you can see the transactions that are going through there. And, you know, similarly, if you have, I've seen people that had an on site person who was doing their own payroll, cut themselves extra bonus checks, or had a debit card and was using the debit card for personal expenses. You just have to pay attention, because this is another place where you have that leaky you know, you have a leak in your bucket, so to speak, and money's dropping out of the bottom. You shouldn't have these issues. So by looking at having. And you know some internal controls where two people are reviewing bills before they're paid, that you're looking at bank statements, that you can or you can see transactions and go line by line, and that is somebody is reviewing debit card or credit card charges, besides just one person. And so it's split up, and then you're also going to see, like in these financial reports that they're correct, and the one way to know that they're correct is also getting a bank reconciliation report that proves what's on the financial reports matches up with what's on the bank statements. So just a couple of ways, because that's a terrible way to be, you know, not be able you have to pass along increased costs because somebody stole money, and now you've got to get the money back by increasing costs on the rest of the owners. And I have seen this, you know, even recently, last year. And so it's something to be

Robert Nordlund: 35:50

cognizant about. Yeah, well, I think as we summarize today, it's expensive to own real estate. We know that you want to be intentional about what you're doing as a board member and as a board, you don't want to be allowing leaking money, whether it's fraud or leaky water or other things that are making mistakes, confirm where the dollars are going. Make sure that it's not going to the wrong places where you're not getting value. If the pool service company is supposed to come twice a week, make sure they're coming twice a week, just little, simple things like that.

Russell Munz: 36:23

Yeah, one other thing, if the if the pool company was supposed to include chemicals, make sure they're not charging you extra for chemicals. We have all these like, extra, like, add on charges. Make sure that you go through them. And I just, you know, I would say, while people are going through their budgets, go through every expense. The last board may have had different expenses than this board wants to have. Just like if you reviewed, like, all of your checkbook and you saw, Oh, yeah, I was paying these subscriptions for these three services that I no longer use, and you go and cancel them, do the same thing at your community.

Robert Nordlund: 36:54

I like that. I like that. Well, Russell, your wealth of information. It's great talking with you and having you on the program, sharing some of your insights, the things that you've seen, the experiences that you've gained over the years. Any final closing thoughts to add at this time, I'd say

Russell Munz: 37:10

that pricing pressure is real for boards on fixed budgets, boards need to take action on the items that we discussed today to reduce that pressure from being transferred to the homeowners through charge increases. So take your notes from this episode and have a discussion at your next board meeting and see which of these steps you can take to make a difference this year at your community.

Robert Nordlund: 37:33

I like that. Speaking about that you did have a list, and are you okay with me having that list posted in the show notes as a reminder. Okay, cool. We hope there's a lot of value. We want you to have value. Want Your association to succeed. If you'd like to get in touch with Russell and see what community financials can do to support your association, you can see more at very simple community financials.com and we hope you learned some great HOA insights from our discussion today that helps you bring common sense to your common areas, and in today's theme a reduction in costs, or at least containing those costs, we look forward to having you join us for another great episode next week.

Announcer: 38:17

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