129 | Do Older HOAs Mean Bigger Problems? - HOA Insights: Common Sense for Common Areas

Episode Transcript
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Kevin Davis (00:00):
There's a lack of trust out there, and so it

(00:02):
happened since covid, becausesince covid, we're looking at
people who work at home, wholook outside their window two
o'clock in the afternoon and seethings they don't like, and we
see things that you don't like,you go to the board and say,
Guess what, I don't like, andthen I don't like to respond
from the board. And when I liketo respond for the board, trust
starts to disappear. All of asudden, I'm going wait a minute.

(00:24):
Hold on. A minute. You wantmoney for what? What do you
mean? You need money for this.
What do you mean? You need moneyfor that?

Announcer (00:32):
six companies that care about board members,
Association Insights &marketplace, Association
Reserves, Community Financials,Kevin Davis Insurance Services,
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their website and social mediain the show notes

Robert Nordlund (00:47):
I'm Robert Nordlund from Association
Reserves,

and I'm Kevin Davis of Kevin Davis Insurance
Services. And this is HOAinsights. We promote common
sense

for common areas. Well, welcome to episode
129 where we're again speakingwith insurance expert and
regular co host, Kevin Davis.
This episode was driven by thetragic Champlain tower South
collapse in 2021 and theknowledge that there's perhaps
1000s of other old associationsall across the country trying to
sustain their aging building soolder buildings, just like older

(01:20):
people, require more delicatehandling, because the building,
just like an older person, ismore fragile and requires that
special handling it just can'tignore it. So how do you ensure
such an older building? How doyou reserve to sustain such a
building? Well, if your propertyis at or past a 30 year point.

(01:40):
This episode is for you. And ifyour building is newer, remember
that you'll soon join the cluband your building will be 30
years old or older also. Soyou'll want to know what's
ahead. Well, last week'sepisode, 128 featured a fun
interview with Gavin Nelson ofmerchants, bank, giving us all
some insights into what thecommunity association world

(02:04):
looks like through the eyes ofsomeone who holds on to all our
money. There are so manyspecialties like the banks that
serve our industry that it'simportant to stop and consider
all they do for associations. Soif you missed that episode or
any other prior episode. Take amoment after today's program to
listen to our podcast at Hoainsights.org or watch on our

(02:26):
YouTube channel, but better yet,subscribe from any of the major
podcast platforms so you don'tmiss any future episodes. Well,
those of you watching on YouTubecan see the HOA insights mug
that Kevin and I both havefavorites, and you can browse
through and see what we have forsale and free stuff at our Hoa

(02:48):
insights.org website or the linkin the show notes. Now I
mentioned free stuff. We havesome great board member zoom
backgrounds, and we have someitems for sale, like the mugs,
but if you'd like a mug, thenjust go the store, the merch
store, find the mug that you'dlike and email me at podcast, at
reserve study.com, and if you'rethe 10th person to mention

(03:12):
episode, 129 mug giveaway withthe mug choice your name and
shipping information. We'll sendthat to you free of charge.
Well, we enjoy hearing from youresponding to the issues you're
facing at your association. Wewant this to be a show for you.
So if you have a hot topic, acrazy story, or a question you'd
like us to address, you canalways contact us at

(03:35):
805-203-3130, or email us atpodcast@reservesafe.com but
today's episode comes from aninsurance professional, so let's
hear from him right now.

Eric Davis (03:50):
Hi, my name is Eric Davis, and I have a question for
the experts, as you know, froman insurance and reserve funding
standpoint, older associationshave their own sets of
challenges, but what I want toknow is what can actually be
done for these associationsbefore they start to become
risks?

So Kevin, what comes to mind when we dive into
this big topic?

You know what it's it's a great question, because
that's the number one problem,number one concern with the
insurance industry right now,you have all these older
buildings and the ones thatbecoming older, and for years,
they haven't done the job theyshould have done. So our job is
protect the association. Right?
Is to make sure that if you haveproperty damage or somebody sips
and falls, the job protect them.

(04:32):
But if they haven't maintainedthe property the way it should
be maintained, maintained, thenwe're looking at the exposure
increasing, and so the insuranceprofessional is looking at their
number of accounts they have andsaying, Oh, how in the world can
we make these associations pricecompetitively at the same time

(04:54):
when they're not doing theirjobs to be price competitive. So
everybody wants lower insurance.
Insurance rates without doingthe job necessary to have a low
insurance rate. Okay, that's theproblem.

Well, I feel like the associations are all on
a freight train, not a runawayfreight train, but a freight
train, and they're headingdownhill and there's nothing we
can do to stop they're allgetting older. The entire
portfolio of associations allacross the country are getting a
little bit older every day, sothe number of associations

(05:28):
joining the 30 and older clubgets bigger every day. And
that's a legitimate question.
The board members are saying,well, they're they're very cash
sensitive, cost sensitive, andthey're seeing premiums go up
and wondering, how come this isand that's a very interesting
question that you ask, how canyou lower their premiums when
they're not doing their part?

So exactly, it's okay, look at your car
insurance. Look at your car. Youwrite every year you have pay
your car insurance, right? Butall of a sudden we have sensors
around the car. Okay? Wemaintain our car. We have oil
change and we make sure it runseffectively on the road, so that
we protect ourselves. So we wantto make sure our car is safe as
humanly possible when we getinside of it, so that it's not

(06:14):
going to break down. So now getan accident. So we turn we can
turn off all those sensors inour car, turn them all off, and
live like it doesn't matter. Infact, we can buy a cheaper car
and save money. Okay? We canignore all safety requirements,
but we don't, because we smartenough to know that that's
valuable. For some reason, inthe community associations, we

(06:34):
think short term. We thinkabout, okay, what is the best
thing for right now? And thenumber one thing right now is
we're not going to increaseassessments. Okay,

I was wondering what you were gonna say, and I
was thinking, low monthlyassessments. Low monthly

assessments is number one reason why we're
living in this problem rightnow. As an insurance
professional, as no anyprofessional as anybody, we know
that I'm gonna spend more moneynext year than I have this year,
and I have to prepare forcertain things that I have no
control over, because things goup. Okay?

Groceries, gasoline, everything is getting
more expensive.

Yeah, just the eye, that mentality of saying, guess
what? The I have a badge ofhonor because my assessments
haven't remained low for allthese years. Well, guess what?
The association down the street,Uptown, across town, they have
been going up every single yearnow. Which one of those? Which
one of those is the correctanswer?

Well, I guess it depends what you're trying to
do. Yes, I like the way that yousaid badge of honor, because
there are some people who boastthat we haven't had to raise our
assessments. We haven't had toraise our assessments in the
last five years or six years, orthree years, or whatever a
different association will say,Well, we've raised our
assessments because we arepaying for our bills through

(07:55):
operating we have enough moneyfor snow removal, or we have a
hurricane set aside, or we areready for our roof project in
two years, and we're going to beable to do it without a special
assessment. Those are twodifferent badges of honor. But I
think what we hear so much isthe badge of honor for the
boards boasting that theyhaven't had to raise their

(08:19):
assessments.

We have one answer already for Mr. Insurance
person, and that is, we have toshift in our thinking, you know,
and that is, do we have thatbadge of honor saying, guess
what? We are effectivemaintaining our association.
It's our one job that we have.
We have three jobs, you know, Ialways talk about three jobs
with the maintain theassociation. You know. We have
to collect assessments. We haveto force the rules. One of our

(08:42):
main responsibilities ismaintaining Association. In
order for us to do that, we haveto make sure we are collecting
enough money every single month,and that should be the badge of
honor, but we have to convincethe people out there, especially
now, when you have a brand newAssociation, because a brand new
association, or five yearAssociation, the last thing

(09:03):
think about is 30 years fromnow, or 20 years from now, where
that roof or anything is goingto need to be repaired. So they
are thinking the beginning, thatwhat we need to do is to
maintain the association basedon, you know, dissociation
documents, the reserve study,our maintenance plan, whatever
it is, if we follow them, then,30 years from now, guess what

(09:25):
happens? We're in pretty goodshape. Yeah.

Well, we like to tell our clients, if you take
care of the present, the futureis going to take care

of itself, yeah, just like we do in our own
bodies, you know, I go todentist, I get a eye check, I
get a physical every year, youknow, I could, I can choose not
to do any of those things. Andguess what happens for me? You
know, years from now, I've beenwondering why, you know, I can't
see, I can't hear. You know, myteeth are fall. You know, all
those things that we plan for assoon as we get to a certain age,

yeah, and we will find out that, oh, we have
something. That's been growinginside of us for the last seven
years, and now it requiressurgery. And seven years ago, it
was detectable, and it couldhave been a minor, A minor thing
that you could have prevented,and I think, was it didn't Joe
Biden just he was not not doinghis colonoscopies. You got to be

(10:20):
doing that preventive stuff toprevent the big ticket items.
One thing that I hear about is,and it surprised me, the first
time I heard about it was someboard saying, well, the
homeowners don't trust us withtheir money. And I was surprised
about that. I didn't realizethat there was that many

(10:43):
homeowners concerned about theftor misappropriation or things
like that. Is that something yousee

that was the second if I had to pick a second point,
that would be a great secondpoint to tell Mr. Insurance
person, because there's a lackof trust out there. And so it
happened since covid, becausesince covid, we're looking at
people who live, who work athome, who look outside their
window two o'clock in theafternoon and see things they

(11:09):
don't like. And we see thingsthat you don't like. You go to
the board and say, Guess what, Idon't like, and then I don't
like to respond from the board.
And when I like to respond forthe board, trust starts to
disappear. And when a truststart disappearing, when they
start communicating with me, allof a sudden, I'm going wait a
minute. Hold on. A minute. Youwant money for what? What do you
mean? You need money for this.

(11:32):
What do you mean? Eat money forthat. And guess what? I just saw
out there, a brand new car foryou. So, you know, yeah, or I
see the new car for the Manage,manager who works there. I mean,
we live in a world right nowwhere there's a lack of trust in
institutions, period. The nextdoor neighbor could be the
president Association, but oncehe goes in that board meeting,

(11:53):
and he closes that door, all ofa sudden, and you're not
invited, all of a sudden. Guesswhat happened? This trust
happens? Yeah. And that is sucha critical piece there.

Kevin is the the kernel of that thought back
from that old Seinfeld episode.
Where was it? Jerry's father wasJerry's? Remember at boca delga
del Vista? Yeah. And Jerry gavehim a new Cadillac because he
was being a good son, and it wasjust bad timing. And they
thought, Gee, that has beenaround for a long time, but I
was frankly surprised about thatwhen the first time I heard

(12:25):
about it, because we're in thebusiness of saying you need to
have this much money set aside.
And it makes perfect sense tome, the roof is going to cost
500,000 you need to have atleast 500,000 in reserves. And
the board said, well, thehomeowners don't trust us with
more than 200,000

because guess what?
We know Association. Down theroad, they only pay $200,000 for
their roof. Okay, you know?
Okay. Again, it's not a matterof stealing money. It's better
getting kickbacks. It's a matterof you getting something that
you're not entitled to. Forexample, not only you get a roof
in there, but he'll come ininside your unit there and paint
it for free. Okay, he's gonnagive you special privileges

(13:02):
because you were a board member.
I saw him in your unit. Youknow, it's just a distrust you
have so, you know, it's not somuch as you embezzle the money
or you did something, is thatit's perceived that you did
something you weren't illegallyentitled to. You know, just
takes Can you imagine you have aroof for coming out of your unit
all of a sudden with equipmentnow you can come in and just do

(13:24):
a checklist of this where I'm atright now, but suspicion is
there that he did somethingspecial for your unit. That's
why you're paying a half milliondollars for the roof instead of
the $400,000 I saw our earlierbid on or you should have gotten
an earlier bid on it. You'regetting kickbacks. So the lack
of trust in institutions lead tothe point where, guess what,
you're cheating, you'remisleading. You're not doing

(13:47):
things you should be doing.
You're breaching your fiduciaryduty, you know. All those words
come out, you know, and all of asudden it puts that extra
pressure on you, because again,funny with Boca del Vista, that
happened 30 years ago onSeinfeld. Okay, but can you
imagine now you have lots ofpoker del VISTAs out there, and
a lot of Jerry Seinfeld dads outthere, who's saying, I don't

(14:10):
trust you. And you know, as yourson bought a car, I don't
believe a son bought your car.
You got a car,

Cadillac.

And that's, that's, that's one of those issues out
there. You know, as an insuranceprofessional, our job is saying,
Okay, we need to make sure youmaintain your association so I
can give you an adequate rate,but if you're not maintaining
the association, I can't giveyou an adequate rate. And if
you're telling me that you keptyour assessments low or you
don't trust your board when itis a special assessment. What

(14:42):
you're going to do, instead ofsaying, we understand and we
agree we need it, you're goingto go to a judge and say, Judge,
they lack the authority to passa special assessment. They do
the mandatory number of votes,and we don't think it's, you
know, constitutional for thempass special assessments in
violation. Question of yourstate loss, and now all of a

(15:02):
sudden, guess what happens? Youknow, you spend more money
fighting that, then guess what,putting the money aside for your
roofs or for whatever has to bedone.

Kevin, we I have two thoughts on that. One
is, wasn't the aftermath of thatsnafu with Jerry's father that
they had a board turnover, arecall, and they elected Kramer.
Yes, that's it, yes and that,and that's no i The Kramer was a
wonderful character, but thatrepresents the silliness of what

(15:32):
then happens. It goes from okayto what goes from better to
worse, something like that. It,you know, it goes the wrong
direction,

but that's a perfect example of how these
things can deteriorate. We leftthe episode, but we do get
associations where all of asudden that special assessment
is done, we have a recall, wehave a recall election, then all
of a sudden we're the new boardof directors, and first thing we
do is stop the specialassessment. Well, guess what the
current board is saying. No, weare the official board of
directors. So now you have alawsuit out there for a judge to

(16:03):
determine which one isillegally, legally, in charge,
board of directors. Yeah, andguess what happens now the
insurance is paying for it,because insurance doesn't know
who's the real president andwho's not the real president. So
you have to defend the currentpresident, the new president who
thinks he's new president. Soyou have this battle going on

(16:25):
all because of one thing, andthat is, we don't believe that
you have the authority to passspecial assessment, so we
recalled you, and now we have anew board, and that old board is
saying you didn't have theauthority to disband us, to kick
us out, or whatever you want todo. And so now this battle goes
on for a number of years, andall you had to do is say, Guess
what? We need a specialassessment, because, based on

(16:46):
our reserve study, this is whatwe need to do. But again, you
have people who are short termthinkers, and for years, said we
the badge of honor thing, so wecannot move forward. That badge
of honor and the lack of trustthere stops associations from
doing their job of moving theball forward, to saying, guess

(17:08):
what, if our goals have lowerinsurance premiums, we have to
make sure we maintain theassociation. As simple as that.

In the second half of this episode, I want to
talk about things that they cando to to move forward
effectively on this. But I justwant to share another story with
you. Last week, we werecontacted by a reporter who was
doing a story on a big specialassessment at a property. And
they pitched the story as, Howcan this be? How does this

(17:39):
happen? The evil board, the poorhomeowners are now faced with a
special assessment that theycan't afford. And that was how
the story was pitched to us. AndI asked the reporter for more
information, how many units?
Where is it? Are there anyreserve stays? And the reporter
provided us with two priorreserve studies, and it was very
clear it was a 45 year oldAssociation. The last reserve
study had recommended somespecial assessments. You know,

(18:02):
seven years ago, they had anupdate. Two years ago, because
they were on every five yearcycle, not recommended, but at
least they had it. And two yearsago, the last reserve study
recommended another specialassessment. And from my point of
view, it's a very normalprogression. It's old building.
They had been wearing the badgeof honor of minimizing

(18:23):
assessments and not raisingassessments enough, and the
consequence is specialassessments. And I wanted to
pull that reporter aside andsay, hey, it's not the board of
directors that has the problemhere. They're not the evil board
of directors. It's just thatbuildings get old, and I can
imagine they're in the hot seatnow, because they know in this

(18:44):
place it was a facade issue, sobalconies and exterior type
things, and that becomesdangerous. They know that that
needs to get done, and thehomeowners are saying, You're
crazy. We don't want a specialassessment. And those, those are
two opposing forces. When youhave the homeowners that think
that the board is just takingYeah, and the board feels the

(19:05):
responsibility that, hey, wehave this building, and they
know, like you've said, theirjob is to maintain the
association. They need tocollect the funds to be able to
maintain the association andthen enforce the rules, keep law
and order going on there, butthey're in a jam.

It's worth I just think this board lives there. So
they go to the pool, they go tothe gym, they may work out, and
every day, all they do is getbeaten up because of that. They
can add the old board who said,Guess what? We maintained it.
You the one that didn't do yourjob properly. You the one didn't
maintain it when we were theboard. Guess what we did? We had
a special assessment. We did X,Y and Z. But what happens is,

(19:44):
over the past five or six years,things change, the expenses
change. You know, inflation.
We've been inflation sincecovid. Anything that happened
over the past five years havechanged, but our mentality
hasn't changed. We live incommunity, associations. We
still believe the world. Worldruns the same way it ran, you
know, eight years ago, sevenyears ago, but in the past five
years, they've changed, and wehaven't shifted our attitudes to

(20:07):
this new change. So we're stilltalking about things we talked
about 10 years ago, 20 yearsago, 30 years ago, and they no
longer apply.

He got me really sobered up here. Yeah,
this is it's a real deal, thatbadge of honor that's real. And
expenses we live in a differentworld. All the buildings are
eight years older than they wereeight years ago. They're a whole
lot more expensive because ofeight years of inflation, some
of that, some very highinflation years we learned words

(20:39):
like supply chain. We had covidthat caused us to have lower
trust in the people above us,and that creates kind of a toxic
situation where we have evenmore frustration the boards that
are seeing the higher insurancepremiums, higher reserve funding
recommendations, and thehomeowners are getting mad at
them. How come you can't, youknow, run the place. Well, cut

(21:01):
the fat somewhere. Jesus, waste.
You can't cut the fat. Peoplehave been cutting the fat for 35
years.

Was that wasted abuse? Right? Wasted abuse,
right? Give it the wasted abusewithout a problem. Yeah. And
again, one more thing is that,again, at two o'clock in the
afternoon, we're home, and we wesee the landscaper out there,
and he's taking his time. Guesswhat? Cut the landscaper? I
could do. I get somebodycheaper. It is if we because we
are home, we're seeing things wedidn't see before, and we don't

(21:29):
like it, and we think it iswaste that, you know, the
landscape takes so long to cutthe grass.

I saw them sitting down out there, exactly.

Yeah. Taking the lunch break. Taking a lunch
break?

Gee, the amount, the money we're paying
them, they should be workinghard when

they're here. You guess what? Just stop. Let's go
back to the positive stuff,because they don't want to hear

this. Yeah, we could. This is not getting good,
okay? Kevin, well, there's agood time to take a break. Let's
take a quick break to hear fromone of our generous sponsors,
after which we'll be back withmore common sense for common
areas, and we'll be talkingabout solutions. What can you be
doing for this?

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(22:27):
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And we're back.
Well, we're going down a littlebit of a dark path before the
break, and Kevin and I want tospend a little bit of time here
on what can you do? We all weknow we live in aging
associations. If yourassociation is not old now, it
soon will be. So Kevin, what?
What is one of the first thingsan association can start to

do? Easy goes go to the trust area. We need to build
trust back in theseassociations, and the best way
to do is communication andtransparency. You can't get
better than

that. Okay, Transparency means a bunch of
things, making the boardmeetings, inviting so more
people come, sharing financials,so everyone sees a situation,
communicating multiple ways. Soit's not just the you said it
earlier this when the boardmeets in secret, behind closed

(23:27):
doors. Well, yeah, maybe it'snot behind closed doors, just
that no one comes to the boardmeetings. Maybe that means a
website. Maybe that means anemail blast once a month,
multiple ways. We know we'veheard it so many times. That's
why there's so much advertisingon television and on radio and
on podcasts and everything else,because it takes multiple Okay,
so let

me add another word in attitude. You have to have a
better attitude when youcommunicate. You know, nobody
talks about they say,communicate, transparency,
communication. But what attitudedo you have when you
communicate? Is it a pleasantup, or are you giving this
information? Do you is itpleasant? Is it kind? So let's
talk about communication in akind way. Let's just do it that

(24:09):
way.

Kevin, that's near and dear to my heart. I am
the boss of my company, andthere's oftentimes I give
directives. My leadership teamhas said, Robert, you're a
little harsh. Can you soften itup a bit? And they gave me some
chat GPT versions of what Ishould have said that was a
little more empathetic. And I'mhearing that, and you're right,

(24:34):
I can be more empathetic incommunication with the employees
at Association reserves, and Ibet the average board could
probably be a little moreempathetic in the way they
communicate with the homeownersin order to maintain a wonderful
place here at Happy Valleyvillas, you know, soften it up,
give it some directives, or inpursuing our mission to be the

(24:56):
whatever it is at Happy Valleyvillas. Okay? So communication
in a chosen

way, in a kind way.
Let's do it that way.
Communicate in kind way, becauseeverybody can't be empathetic.
Everybody can't be I can't feelyour pain, and we all could be
kind. We can all just speak.
Thank you and please and just bekind in a way you communicate.
You know, we have this, and thisis the reason why, I hope it's
you understand.

We together, co own homes at Happy Valley
villas, and together, we want tohave this be a nice place now
and in five years and in 10years. So this

is being kind. You know, you're not sharing your
pain. It's just being kindcommunicate in a kindly

way. I like that. Okay, that'll that'll be
in the show notes. That'll makethe show notes. Okay. Another
thing is, well, and I hearJulie's voice in my head,
because she emphasizescommunication so much. Different
ways, different different peopleare going to be sensitive to
different things. Okay, let'stalk about the message and
understanding of the differentpeople, the different interests.

(26:05):
We're going to have some boardmembers who are, I'm
stereotyping, the old timers, ormaybe homeowners who are the old
timers who bought 30 years ago,and they remember buying their
condo for $52,000 and now it'sworth $520,000 and there's the
new couple who bought it for$520,000 and talk about a

(26:27):
different couple of people. Andthen there's everywhere,
everyone in between. So we havethe people who remember the old
way. They remember when the dueswere $78 a month. And we have
the new people who paid a lot ofmoney for this place, and they
expect to be there for 1020,years, and they are working and
they're ready to pay for keepingit nice. So how do we work with

(26:52):
that? Is that a matter of, howdo we have the board members
appreciate the differenthomeowners or the different
board members and come, cometogether. And

that's a that's a key part too, because we're
looking now that everyAssociation has it's I we call
the culture, okay, the culturalnorms. Okay? Again, if you've
been in association for 30 ifyou have a 30 year old building,
that means you may only have ahandful of board directors. You
know, because some of theseBoard of Directors last for 10
years, 15 years today, thisdon't rotate. And so now you get

(27:23):
new owners, those new youngmillennials that they want to
move in, and what they want todo is say, Guess what? We want
to make sure that ourassociation is maintained.
Because I want my half a milliondollar associate, my whole half
million dollar unit, to be wortha million dollars in 10 years.
Now, people were living therefor 20 years, or anytime at the
time, they don't care about thatanymore, that I care about the

(27:45):
value. I've been in my house for20 years now. I don't care about
the value. I don't think aboutthe value of it. It's not
important to me. But the personacross the street who just
bought that house cares aboutthe value. They want to make
sure that value continues goingup. So he comes over and wants
to understand, you know, how thetrash work. You know? Well, you
know, I kick my trash cans inand everything. So he's, he's
more aware of the value of theneighborhood than I am, because

(28:07):
I've been here for some long soas board members, again, they
have to understand the peoplewho live in an association. You
know, if you have people who'vebeen there for a long time, you
know, Ed, who may have wentthrough special assessments
before. It's easy to talk tothem about special assessments,
but they never had one before.
It's hard to talk to them aboutit, where the new people, you
can say, Guess what? To increaseour values. You need to, you

(28:29):
know, you need to understand thespecial assessment as board.
We're talking aboutcommunication. You know, you
have the active adultcommunities out there. Okay,
these guys, they do the best jobof maintaining and guess what,
most of them are short termthinkers, but they enjoy their
life the quality of life theyhave there. You know, when

(28:50):
special assessment happens, theyend up paying it right away. But
then you have, you know, theassociations where people may
live paycheck to paycheck or maybe on, you know, Social
Security. How do you communicateto them in terms of, we need a
special assessment and theycan't afford it? Well, again, it
goes back to, you have tounderstand that you can't ask

(29:12):
for a quarter million dollarsfor people who don't have a
quarter million dollars. There'ssome associations, and we have
to say this thing. Someassociations had to say, You
know what? We have to disband.
We have to disband.

Yeah, that's, I think of that as the emergency
exit. What's that emergencyexit? Yeah, deconversion.

If you happen to live in a community association
that's 40 years old, andsomebody says, Guess what, your
balconies are gone. Okay, youhave so much damage do, and you
want to fix income. You know,you're you have to deal with
some realities. You know, thisis a challenging podcast for us,
Robert, because we're giving,you know, we likely stay

(29:53):
positive and up, but this is oneof those things we're saying
from that insurance person said,Guess what? I'm concerned about
the future. These condominiumassociations. Now we're saying,
guess what? If you communicateproperly, if you invest
properly, if you pay properly,you don't have a problem. It's
6070, years from now, you canlive. But if you haven't done
that, you have to think aboutwhat do you do? We have to

(30:16):
communicate better. But if youcan't afford, if you live in a
Fixed Income or Social Security,anything where you can't, you
don't have the money that's toyour 40 years old. You may have
to have it's kind of pull outthat, you know, break here,
here, you know, break glass forin case of emergencies.

Again, in my world, it's really interesting.
Intersection between your worldand my world. Your world is the
world of decisions, lookingafter the board members,
watching what decisions theymake, and the decisions are
getting more complicated. As abuilding ages, there's more
things going on. There's moreactivity. It's probably harder
to be a board member, but in myworld, I can see those expenses

(30:55):
coming, and it's no surprise tome, a roof will fail roughly in
the 20 year range. You can seeit coming. You can see it
coming. It coming for 20 years.
It blows my mind how anassociation ignores the reality
of a roof that's failing inplain sight, or paints that
deteriorating in plain sight,and they say we have an
emergency special assessment.

(31:15):
I'm like, there was noemergency. It just deteriorated
a little bit each day onschedule, and that is part of
the communication of helpingeveryone know that this is the
plan. It's gonna cost $500,000or a million dollars, or $50,000
or whatever it is at yourassociation for a new roof, and
you need to be setting aside themoney. And have we said it here

(31:38):
today? Owning real estate isexpensive. We have to appreciate
that when you were talking, whenwe were talking about
demographics on the board, onething I started to think was,
what about the board? Who hasbeen the board for 15 years, and
they think, as one mind, I thinkthat's also dangerous, because

(32:00):
they're missing the insightsfrom the young couples or the
point of view of the youngpeople, or the point of view of
the people with kids, or thepoint of view so many different
things, because they may not berunning the association Well, in
the best interest of everyone atthe association, like they're
supposed to,

yeah, and that's again, if you look at the
election, that's why every fouryears, or six years, every two
years, you have these electionsout there to bring in new, fresh
ideas. You know, it's just inthe country elections are there
to bring in new people, to bringin new thought, new ideas. Yeah,
if you have a same group that'sbeen there for 1015, years,
they're still thinking in termsof, guess what? My badge of
honor, low assessments. If youtransition these board boards

(32:39):
like you should do? You get anew board in there, a board that
is hungry, that want to maintainit, and looking at their
association saying, five yearsfrom now, I want to sell, and I
want to sell for more money thanthe association down the street.
So you have to, I must say, youhave to transition. But you have
to understand that if you'vebeen doing the same job for 15

(33:01):
years without much growth, thenthe association hasn't changed
much in the last 15 years. Youhave to have change in order to
say, Guess what? You know what?
I have to reserve study. It'sbeen updated, but I don't think
we ever funded it. You get a newboard. And the first thing on to
say, wait a minute, here's areserve study. Are we? Is a
fully funded

Yeah, we're in a heap of trouble here, folks.

That's why those transitions are really
important. And again, this isour conversation today is kind
of unique, because we giving thepeople out there who listen to
us saying it's time to look atyour association and say, who do
we want to be? Do we want tohave that badge of honor saying
we're prepared for the future,or we have that badge of honor

(33:45):
and saying, guess what? Youknow, we're cheap. You know, do
you would have a WalmartAssociation? Or do you want to
have a, you know, Nordstroms, orpick something that of value?
Okay,

well, I've heard someone say that there's
two types of people in thisworld, the types of people who
are holding on to baggage andthey're holding on to the past,
and people who are holding on toluggage because they're planning
for the future, and just likeyou were talking about, you need
to have healthy change in theboard. I was wondering if that's
just like the old associationthat has an old roof, old paint,

(34:19):
and they just been limping italong. And you and I know that a
healthy Association gets freshpaint at the right time. It gets
asphalt care at the right time.
It gets new carpet at the righttime. It gets a new roof at the
right time. And I think theboard likewise needs to have new
voices at the right time on anongoing basis to regenerate the
board, just like you regeneratethe physical property. That's

(34:41):
interesting. We maybe haveanother episode in that. Well, I
want to bring this episode to aclose. Something I had on my
notes was a great resource. It'sa free download from the CAI
Research Foundation. It's areport called aging
infrastructure. They releasedthat in. 2020, and has some
great information on it. I'llhave a link in the show notes to

(35:03):
that report. But Kevin, gee,you're right. There's a little
bit of a different episode. Butany closing thoughts to wrap it
up,

the words trust. We have to establish trust between
us, the board of directors andpeople who live there, because
once you have that trust, youcan solve the problem of your
aging Association. It's not thatchallenging to say today, right
now, we're going to startsolving this problem because we
know we can, and first thingwe're gonna do is tackle the

(35:35):
assessments and then move thisball forward. If we communicate
in a kindly way, then guesswhat? We'll be in a lot better
shape than all the othercommunity associations out there
that because we're all aging,everything's aging, and
everything as we age, we don'tstay the same. And I wish I
could say 10 years ago, I lookthe same. 40 years ago, it's

(35:56):
gone.

Today. I've seen some old pictures of you
and we were on athletic teams.
Yes, exactly yes. Okay, well, wehope you learned some great HOA
insights from our discussiontoday that helps you bring
common sense to your commonareas. Thank you for joining us.
We look forward to bringing moreepisodes to you week after week
after week we'll be here. It'llbe our pleasure to have you join

(36:18):
us, and have you joining us on aregular basis, so please spread
the word

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129 | Do Older HOAs Mean Bigger Problems?

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.css-14f5ked{margin:0;word-break:break-word;display:-webkit-box;-webkit-box-orient:vertical;box-orient:vertical;-webkit-line-clamp:2;overflow:hidden;}129 | Do Older HOAs Mean Bigger Problems?