Most HOAs Are Not Financially Prepared… And No One Wants to Admit It

I have spent nearly fifty years in this industry, long before Zoom calls, long before drones were inspecting roofs, long before reserve studies came with graphs that look like NASA launch trajectories. I have sat in boardrooms from San Diego to Sarasota, in high-rise glass towers and in community clubhouses where the air conditioner gave up sometime in the late ’90s. And in every one of those rooms, I have watched the same story unfold:

Good people voluntarily, stepping into leadership roles…
and inheriting financial problems nobody wants to talk about.

If there is one truth I have learned, and it is not a comfortable one, it is this:

Too many HOAs in America are not financially prepared for the future.
And deep down, everyone knows it.

Not because they are irresponsible.
Not because they are dishonest.
Not because they do not care.

But because in today’s society, the culture of HOA governance makes honesty feel dangerous.

And communities nationwide are paying the price.

The Illusion of “Adequately Funded.”

I have lost track of how many times I have heard a board proudly announce:

“Our reserves are adequately funded.”

Whenever I hear that, I have to resist the urge to ask:

“Compared to what? Maybe last year’s fantasy or next year’s reality?”

Most reserve studies are built on assumptions that become outdated soon after the ink dried. Inflation estimates from yesterday’s Wall Street Journal. Cost projections that can change like the seasons. Component lists that, with some boards, conveniently leave out anything that might disrupt the comfort of the audience.

After half a century in these trenches, I can say this with absolute clarity:

Many associations do not have true reserve replacement studies, they have comfort documents.

Designed to soothe.
Designed to reassure.
Designed to avoid the discomfort of truth.

And comfort, my friends, is expensive.

Underfunding: The Secret Everyone Tries to Keep Quiet

National data from the Community Associations Institute (CAI- 2025) shows close to 70% of HOAs are underfunded.

But the numbers do not tell the complete story. The real story is in the boardrooms where I have seen:

• A 30-year-old roof with “8 years left” and available reserve funds equal to the price of a decent used car.
• A $1.2 million roadway project looming like a thundercloud… with $300,000 in savings.
• High-rise plumbing systems aging like warm milk, with not a capital plan in sight.
• Communities that have not raised dues in over a decade because our “residents don’t like it.”

Of course, they do not.

Everyone wants amenities.
Everyone wants safety.
Everyone wants property values to rise.

But nobody wants their dues or assessments to increase.

So, what happens?

Truth becomes taboo. Silence becomes policy. Hope becomes a strategy.

None of those are time-tested financial tools.

Why is it that Many Boards Stay Quiet?

If you have taken the plunge, volunteered, or ever served on a board, you know exactly why this happens.

Being a board member is often (no. always) a thankless job.
For every resident who thanks you, five are convinced you are secretly plotting against them, or worse, in it for your own benefit.

Raising assessments?
You might as well announce you are eliminating Christmas and weekends.

So, boards inevitably delay.

• “Let’s revisit this next year.”
• “The roof hasn’t leaked yet.”
• “We’ll wait for the new board members to manage it.”

But deferred decisions do not disappear.
They compound.

Silence is not conservatism, it is slow-moving risk.

The Big Lie: We Cannot Afford to Invest Our Reserves’

This is my favorite myth, and by “favorite,” I mean the one that keeps me up at night.

Keeping long-term reserves in checking, or low-yield savings accounts does not keep you safe or make you prudent.
It does not make you conservative.

It makes you unprepared to state the obvious.

Communities are not losing money because of bad investments, they are losing money because of no investments.

• No FDIC engineering
• No investment planning
• No time-matched maturities
• No strategy
• No structure

These are not “extra” steps.
These are the steps.

Every reserve dollar has a specific purpose.
Every reserve dollar has a unique timeline.
Every reserve dollar must work every day.

Idle money is not safe money.
It is sleepy money… and sleepy money loses value.

Fiduciary Duties: The Part Nobody Wants to Say Out Loud

Fiduciary duty is not a ceremonial phrase you sprinkle into minutes to sound official.

It is a legal and ethical obligation that every new board member inherits when they join their board.

And it demands:

• Evidence-based decisions
• Annual reserve updates
• Professional investment structure
• Stable assessment increases
• Long-term planning over short-term applause

Yet the system most boards inherit is perfectly designed for failure:

• Fear of raising dues
• Fear of backlash
• Fear of difficult conversations
• Minimal if any HOA-centric training
• Outdated documents
• Cultural resistance to change.

It is no wonder financial preparedness has become the exception instead of the norm.

The Fix Is Not Complicated … It Just Requires a bit of Courage

The path forward is not rocket science.

Strong communities do the following:

• Update, or at a minimum, review the reserve study every year.
• Invest reserves based on timelines, analysis, and data, not gut feelings.
• Educate homeowners about the real cost of community living.
• Adopt a structured formal Investment Policy Statement (IPS)
• Partner with professionals
• Normalize financial transparency.

The hard part is not the strategy, however, it is the courage to implement it.

Because courage is contagious.
And so is denial.

One Question Every Board Must Ask

If you have read this far, congratulations, thank you for your time and ask yourself this:

“If this were my personal life savings, would I manage it this way?”

If the answer is probably no, so perhaps it is time to change course.

Communities do not fail because of roofs, asphalt, plumbing, or concrete.

Communities fail because leadership chooses silence over truth.

And the good news?

Truth is a choice too.

Final Thoughts from an Old Man…

The bravest thing any board or manager can do this year is simple:

Speak the truth.
Confront the numbers.
Stop pretending the long-term will take care of itself.

Financial preparedness is not political.
It is not emotional.
And it is not optional.

It is the firm financial foundation of a healthy, resilient, thriving community, and it begins with leaders willing to say what others will not:

“We deserve better. And we are going to fix this.”