I recently purchased [NJ] a condo. It’s a house comprised of 2 units.( these types of 2/3 unit condos are common in NJ.) When I purchased they said, congrats you’re an HOA president! Basically the sellers have setup an LLC for our HOA for both my neighbors and I. We are both new to this so we’re looking for advice on how to get started. Right now we’re trying to find a bank to work with. First I was trying to find a local credit unions but there doesn’t seem to be ones that works with HOA accounts, at least ones that are local. Also not sure if we should have an HOA management tool for just a 2 unit condo.
My understanding thus far is that we should build up our funds and then put some of that money in CDs and brokerage accounts, eventually. Would love bank/credit union recommendations or any other helpful resources (that’s not trying to sell us a product).
First thing you should do is read the bylaws. There should be some that define how the HOA should operate when it was incorporated. You don’t want to break any bylaws. For two units I doubt it’s that big of a document. You also should also get organized about all docs and record keeping especially if you have any sort of finances.
My understanding thus far is that we should build up our funds and then put some of that money in CDs and brokerage accounts, eventually
I don’t know how much big of a budget you’re going to have, but with larger HOAs like mine, we have operating costs and reserve expenses both with their own accounts. Reserve is for long term expenses like you need a new roof. Operating for paying things like shared landscaping. Reserve studies can help you identify how much time until you need to replace the roof or the siding or whatever other things are common with your building.
Don’t invest in the stock market, but at a certain account size CDs for long term investments are a good idea. We use that to help offset dues increases.
It doesn’t have to be complicated but you are technically running a business.
Dissolve the HOA.
Small building HOAs like this are for managing joint property like the roof, common stairs and yard work. They also hold insurance and pay common utilities.
It’s not the same as a subdivision HOA that tells you what color your house can be and how short the grass must be
I think this is a cooperative between the people who own the units in the building to handle building maintenance and the like, not a gang to bully neighbors who don’t make the same landscaping choices OP would.
That’s how they all start…
Bluevine is a great online bank for new LLCs. It’s free. It’s easy to set up accounts. You can get a debit card. They will send you 200 free checks a year (upon request). I’ve used them for 2 of my LLCs and a nonprofit.
Don’t worry so much about interest rates right now. You’re just trying to get established. Once you have banked enough for operating costs for whatever joint maintenance there is, you can turn your attention to how you invest any surplus.
Is this a new build, or an existing building?
If it’s an existing building, with an existing HOA, then it should already have a bank account? (Probably with funds in it!)
If it’s new, build up an emergency fund, but leave it in a bank. putting it into stocks is crazy, it’s an emergancy/maintenance fund, you need to know how much is there, trust it’s not going to just disappear and be able to access it quickly.
Make sure you understand the voting rights and who has authority to access the money if there is going to be a significant sum in there.
