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Welcome back to Go Gaddis Real Estate Radio right here on AM nine 20. The Answer. My name is Cleve Gaddis. Thank you so much for listening to go get us Real Estate Radio. Don't forget, we want to connect with you and it's easy. Go to go ga us radio.com. You can ask questions, you can make comments, you can push back, you can share your ideas, request your neighborhood, be featured in our neighborhood spotlight and you can subscribe to our podcast.
It is my pleasure to welcome back a distinguished guest that we've had so many times on the show, but we have not had you on in months and months, Michael, and I apologize for that oversight, but we've got Michael Crew, who is the president and c e o of. Homeowner Management Services Inc. Michael, you and I met one another, not necessarily in a professional environment because you and I were both working with the same association of homeowners associations, helping educate and train and all of that kind of stuff.
But I've gotten to know you through the years and you've gotten an amazing rep. Reputation. Welcome back. Thank you. Thank you so much, CLE. It's good to be back. I am starting to hear, if you don't mind us jumping right into it. I'm starting to hear some, uh, some, a fussing in the state of Georgia, uh, about homeowner association dues going up really quite significantly, so I'd like to talk about that.
I would assume that early in the year is when they start to change the assessments or whatever the, the, the assessments are. But, but give me your feedback on. Lee, well, you hit, you hit the nail in the head about when they change. You know, most, uh, when we talk about homeowners will be referring to homeowners in single family homes, condominiums, townhomes, they're all kind of in the same boat because there, there, there's three different associations in Georgia, right?
There's homeowners, homeowners associations, property owners, associations, and condo associations. Yes. Did I, did I get that right? Okay. So regardless of what type of associa. Someone is a member of, or part of what we're gonna talk about, pertains to them? Yes. Okay. Absolutely not. Okay. So, so all those organizations, they set an annual budget.
Yep. And almost, almost all of them use a calendar year as their fiscal year. Okay. So they pay the same amount. If there are condominium or a town home, they pay the same amount every. If they're a single family home association, they might make one big payment in January or February, or they might pay quarterly maybe, but most HOAs don't pay monthly.
Right? So, uh, so they only see their budgeting change when the board sets a new budget and puts it into effect in January. That's why you're hearing the grossing now, they all got bills in December, or they're getting them this month and they're going up, and in some cases they're going up a lot. They're going up 25.
and, and people are shocked and they want to know why, why is this happening? Yeah. And so, so even if invoices had been increasing throughout 2022, in many cases, they don't really have a mechanism for fixing that. So I, I'm guessing that's what you're saying, which means that's exactly what the problem is.
And, and so if. I'm just making this up, but let's just say you had an association where the dues were, let's call it 200 bucks a month. It could be that they really only need to go up 20 a month to solve the forward going pricing problem, but the issue is they've got a deficit from the past that they have to make up kind of like an escrow account on the mortgage.
Is that correct? Well, they, they're getting, there's a double whammy actually. You, you've got the issue you just laid out, which has also got the issue. The board sets a budget for the following year, and they generally do that in, um, August, September, October timeframe. Yep. Okay. So that budget reflects increases that the board learned about during the course of the year.
Right. The landscapers charge us more, the insurance charges more. Okay. So they have to put that into the budget. And then they also have to be looking forward and saying, well, you know, we haven't seen our insurance yet, or we haven't seen our, you know, our, our water bills yet, and they're gonna be more next year too.
So they're catching up for last year's increases and they're planning for next year's increases, and it's all hidden in January. And I would assume that it is just all. Inflation related. It's just like when I go to the grocery store now, every time I stand in the line at the grocery store, in the grocery, the, the, the, the total of my grocery bill comes out, it, it is always like 50 or 60 or $70 more than I expect it to be.
And I, I assume what you're saying is just the cost of everything, the cost of gasoline, the cost of services, the cost of materials, the, certainly the insurance costs, because now the replacement costs of everything has skyrocketed. It's just, everything's just going up across the board. Everything's going up.
There was a lot of inflation last summer. It's kind of tapered off now, but nonetheless, those increased costs got built into the cost of products and services. Uh, and uh, it's become a, a pretty big nut. It, it's interesting you randomly picked 200. Yeah, I talked to somebody the other day. Their monthly town home fees, uh, went up by $50.
They went from 175 to 225, and they were shocked. and uh, you know, you get, I mean, you get a big end price increase on your building insurance. You, it's not something you can ignore. You gotta pay it. Well, I mean, you gotta have insurance. You gotta have insurance. And I would guess that the default position of many homeowners or town home or condo owners, Is to blame the board, meaning I would assume their default position is to go, Hey, you guys didn't manage this stuff correctly and so it's your fault.
I, and I hate to just throw everybody in the same pot there, but I think that's kind of the normal first reaction. But what advice would you have, Michael, not for a board before a homeowner, a member of an association, what advice would you give them to be able to look in to see, hey, is this something we've got to do no matter what?
Meaning, if I was on the board, I'd have to make the same decision. Do you have any recomme? . Well, I, I can almost guarantee you when they're not involved, when the homeowner's not involved, they do not really understand the dynamics of what's going on. You know, it's Dr. Driving from the back seat always looks a lot easier when you're not operating the pedals.
You can't see 'em. Of course it is uhhuh. Mm-hmm. . So, uh, so the, there's a few things a homeowners can do. Okay. They can get involved in their neighborhood and they should be getting involved. Okay. Yeah. They should find out when their community board holds their board meetings. Okay. Typically, they're monthly.
They might be quarter. and they should ask to attend them, or at a minimum, they should ask for the minutes for the meeting and keep track of what's going on. Uh, all associations, I'm gonna say all, all are supposed to produce financial reports, profit and loss statement. A balance sheet every month. The homeowners should be asked.
Should be able to get those. They're, they're absolutely entitled to see those financial statements and they can see what's going on. They. Uh, if they're reading the board minutes and the, and there was a big landscape increase cost in August. It was in the minutes, and it's gonna show up in the budget in January, and they'll know it's coming at least and more than likely in the minutes, an explanation of the, the, the difference in charges might show up there as well.
So if you want to know exactly what the board received, an experienced the minute should, should give you that. They're entitled to see, don't talk about that. They're entitled to see the monthly minutes for every board meeting or however often they happen. They're entitled to financials on a regular basis.
Sounds like monthly. They are. Um, I, I do some coaching. In a business world, it's sometimes hard to get people to do financials on a monthly basis. So I'm, I'm going, maybe they don't all do that. And then I would assume, um, they can take a look at the budget. Every member of the association can see the, the last year's budget, this coming year's budget.
Actually, they were probably sent the budget either in the December or January timeframe because most associations, bylaws require that the board published the budget to the membership. So yeah. Yeah, they should definitely be getting that. If somebody, the thing owner should do is their expectation should be set properly, assess dues assessments, they should go up every year some.
And when I see associations that don't increase their assessments year after year after year, all they're doing is they're just delaying the inevitable sooner, kicking sooner later, kicking the can down the road sooner. And Slater, instead of $5 a month, it's gonna be $50 a month because they put it off.
Yep, absolutely. If somebody wanted to reach you, Michael, if they were a member of a, a homeowner's association or condo association or property owners and they wanted to look at maybe switching management companies, how, how would they. Well, there's a couple things they could do. They can call our office.
Uh, phone number is, can I do that? Sure, please. 7, 7 0. Uh, 6 6 7 0 5 9 5. Okay. That's our office. And the reason I suggest they call our office because they would normally talk to our marketing director, but if she's not, Uh, one of the other executives could talk to them. Wonderful. So that might be a good thing.
They can go to our website, they're website savvy, www dots dash i nnc.net. Uh, and there's a contact form. There's a request for a proposal form. They fill those out and uh, someone will be getting back to. That day or the next day. Perfect. Perfect. I love that. Hey, we've only got about two and a half minutes left in the segment.
I'm surprised we took that much time on the one subject, but it is so important and it's all over the place. It is. Uh, right now, real quickly, I know there is a, uh, there is a looming crisis coming Yeah. In terms of Lake Lake maintenance, and, and to be specific, what we're really talking about is the maintenance of the dams that holds the water in place.
Yes. Uh, let's take the last couple minutes and talk about that. Yeah. Let me just quickly. Atlanta. The thing that set me off about this was the Atlanta magazine have to give credit where credit's due. Atlanta Magazine ran an article about dams in the state of Georgia, and, and we've always, our industry's always known it's a problem, but the, the person who wrote the article, uh, really outlined the problem well.
And fundamentally, there are more dams in Georgia than there are any place else in the country almost. Wow. We got a lot of. Uh, like 5,554. 5,500 dams. Wow. And it turns out that 500 of them are on the, uh, uh, intensive care list, I guess is what you would, they're in the icu. They're not Well, wow. They're not well, and they should be in the hospital somewhere getting worked on.
Wow. Okay. And they're not being worked on. Okay. They're being ignored. Uh, and, and this is the really bad part about it, associations don't fund to repair dams because they have 58 year life. So they don't set money aside for them. And even if they did, the numbers are horrendous. Okay? Uh, it's not uncommon to spend a million dollars to repair a dam.
And when you go to a neighborhood and start talking about, we have to come up with a million dollars, that's a big funding. That's a big deal. That's a big deal. And so it sounds, so if you, one last thing. Yes. If I. If you live in a neighborhood, you ought to find out if there's a dam there that the HOA sponsored wrapped around about.
Yeah, about where we are and what's gonna happen in the future. And it sounds to me like the only solution is to make sure that they have a vehicle for making up for any funding that has not been set aside in the past. And then figure out 1 58 of what it costs to maintain that dam over the next 58 years and collect it every single year.
Michael, thank you so much. I think I need to thank you so much for coming back. Will you come back? Uh, anytime you'd like. Thank, thank, thank you very much. We're gonna take a quick break. Now the question is, can a closing delay throw an entire real estate sale off track? And it could be that Atlanta's old fourth board distillery is going to be in new hands in the month of February.
We've got those subjects and more. Stick with us. We'll be back.