Video summary

HOA Budget Template: Build Your Annual Budget Step by Step

Main summary

Key takeaways

Business

Business-purpose summary

The video provides a practical framework for building an HOA/condo annual budget that reflects current reality (not last year’s spreadsheet). It emphasizes separating operating costs from reserve funding to prevent chronic underfunding and surprise special assessments.

Core budgeting framework: 7 expense categories + revenue logic

Expense side (7 categories)

The “seven categories” are presented as expense buckets for an HOA/condo annual budget, with an explicit split:

  • 6 categories = Operating budget
  • 1 category = Reserve fund contributions (reserves)

Mixing these is called out as a common cause of budgeting trouble.

1) Administrative & management (Operating)

  • Management fees (if using a manager)
  • Management/accounting software
  • Accounting & tax
  • Legal (retainer or accessible counsel)
  • Postage/printing, meeting costs
  • Payroll/staffing (if onsite manager, front desk, security, maintenance, etc.)

Note: If payroll is large, consider separating it into its own category.

2) Landscaping & grounds (Operating)

  • Lawn care, landscaping, irrigation
  • Tree trimming, seasonal planting
  • Snow removal (noted as potentially large and unpredictable)

Actionable recommendation: get real quotes every year; contractors may “roll over” pricing and price creep can go unchecked.

3) Building & common area maintenance (Operating)

  • Janitorial, pest control
  • Elevator servicing
  • Pool maintenance
  • HVAC/building systems servicing
  • Fire & safety systems
  • Security/access control (gates, cameras, entry systems)
  • Repairs to common elements

Key operational rule (maintenance vs reserve):

  • Repairs/one-off fixes → operating maintenance
  • Replacement/modernization done as scheduled big items → reserve

Example test given:

  • Patching drywall / pool pump repair = operating
  • Replacing the pool deck / modernizing an elevator = reserves

4) Utilities (Operating)

  • Electricity for common areas/exterior lighting
  • Water & sewer (can be large with irrigation/pools)
  • Trash/recycling
  • Possible gas
  • Shared services (bulk internet/cable)

Budgeting process note: use multi-year history/trends, not just “last year + inflation,” because utilities rarely trend downward.

5) Insurance (Operating)

  • Property insurance for buildings/common elements
  • General liability
  • Directors & Officers (D&O) coverage
  • Fidelity/crime coverage (easy to miss; may be required by lenders in some states)

Strict recommendation: do not guess—get a current renewal quote. Premiums can double or triple in certain states, and carriers may even drop coverage.

6) Contingency (Operating, but treated as a cushion)

  • Not a true “expense type,” but a planned operating cushion (e.g., ~5% per category or similar)
  • When a cost occurs, record it under the correct category (e.g., pipe bursts → maintenance)
  • Contingency exists so you can absorb overruns without emergency special assessments/meetings

If unused: roll surplus into reserves (unless state laws/governing docs require otherwise).

7) Reserve fund contributions (Reserves)

  • Funds predictable major replacements over time (roof, siding, roads, pool, elevators, etc.)
  • Prevents special assessments from “appearing out of nowhere” (underfunded reserves are the warning)
  • Funding requirements depend on location, bylaws, and state rules
  • Condo-specific regulatory expectation: generally expected to fund reserves at at least 15% of budget to support conventional mortgage eligibility (Freddie Mac/Fannie Mae referenced at a high level)

Best-practice directive: do not treat reserves as “whatever is left after everything else.” Base reserve contributions on a reserve study (explicitly called “universal best practice”).

Revenue side: how dues and other income should (and shouldn’t) balance the budget

Revenue sources highlighted

  • Assessments / dues (primary funding engine)
  • Late fees, interest income
  • Amenity/pool rentals
  • Clubhouse/application/transfer fees when units change hands
  • Caution: “violation revenue”

Key policy caution: violation income

  • Don’t budget for violation revenue as a target.
  • If violation income is required to balance the budget, the organization effectively shifts from enforcement to “collecting a tax.”
  • Violation income is unpredictable; it can support contingency/reserves when it happens, but shouldn’t be planned.

Budget conservatism rule (income that can’t be controlled)

  • Set dues to cover expenses + reserve funding on their own.
  • Treat uncontrolled income (rentals/late/violations) as upside cushion only.

Step-by-step process (implementation playbook)

  1. Start with operating needs + reserve needs, not last year’s numbers.
  2. Pull last couple years of actuals (don’t guess).
  3. Get current quotes for the biggest movers:
    • Grounds/landscaping
    • Insurance
    • Utilities
  4. Fund reserves according to the reserve study (not “leftover”).
  5. Add a contingency cushion to keep the operating budget survivable.
  6. Total expenses (operating + reserves), then:
    • Divide by number of units/homes to determine what dues must be.
  7. If computed dues are much higher than current dues, that’s an early warning that otherwise becomes a special assessment later.

Metrics / KPIs and numeric targets mentioned

  • Contingency cushion: “maybe a 5% cushion” (typical example given)
  • Reserve funding expectation (conventional mortgage eligibility): reserves at ≥ 15% of the budget (condo-specific regulatory expectation referenced)
  • Reserve study example outcomes:
    • A reserve study conducted in 2023 projects:
      • $30,000 shortfall in 2025
    • It projects being $33,000 behind budget and needing $177,000 more than what the association currently has (as framed in the demo explanation)
  • Dues math concept: dues per unit = (total annual budget) / (number of units)

(Though not called “KPIs” in a traditional sense, these are the concrete numeric thresholds used for budgeting and risk control.)

Concrete examples / case-style scenarios

  • Maintenance vs reserve misclassification

    • Pipe bursts (repair) → operating maintenance
    • Pool deck replacement / elevator modernization (scheduled big-ticket) → reserves

  • Utilities under-budgeting

    • Use trend data because costs often rise steadily

  • Insurance “blow a hole in the budget” risk

    • Premium increases (double/triple) and carrier non-renewal scenarios highlighted

  • Contingency usage

    • If you’ve “tapped out” a category, contingency is what prevents sudden crisis spending or emergency meetings, but expenses still get coded correctly

Actionable organizational recommendations (business tactics)

  • Stop “copy/paste last year” spreadsheets; build a living annual budget from current data.
  • Get real quotes annually (especially landscaping and insurance).
  • Keep strict accounting discipline:
    • classify correctly between operating vs reserves
    • use contingency as a buffer, not a dumping ground
  • Ensure procurement, budgeting, dues collection, and reserve planning are connected (the video argues most boards use disconnected systems that don’t reconcile).
  • Use reserve study outputs directly to drive reserve contributions; treat reserve funding as a real planned obligation.

Tool/process integration described (product positioning, execution focus)

The presenter describes Solume as an “all-in-one” platform integrating:

  • Chart of accounts / categories as the budget framework (“chart of accounts” + line items)
  • Budgeting (operating vs reserve classification)
  • Transaction tracking and document attachment (receipts/invoices/images)
  • Procurement/quotes and bidding workflow mapped to budget/reserve items
  • Dues collection tracking (paid/unpaid/delinquent lists) and sending delinquency communications
  • Reserve study as a dynamic system (risk/shortfall shown, projecting future underfunding in real time)

Primary claimed benefit: prevent major special assessments by making reserve status visible instead of relying on static PDFs and spreadsheets.

Presenter / sources

  • Presenter: Joe Braun
  • Company/tool referenced: Solume (demo shown in-video)
  • Mortgage entity referenced (high-level): Freddie Mac and Fannie Mae (for condo reserve expectations)

Original video