Modern Investment Strategies for HOAs

Sophisticated HOAs now work with HOA Wealth Advisors to safely grow reserves through:

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1. Municipal Bonds ("Munis")

• Tax-free income (federal and often state)

• Low risk (backed by governments)

• Typical yield: 3-5% (vs 0.5-1% in savings)

*Case Study: A 200-unit HOA invested $500K in a muni bond ladder, earning 4.2% tax-free vs 1% in savings - gaining $16K more annually.*

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2. Conservative ETFs

• Diversified stock/bond blends (like 30% stocks/70% bonds)

• Liquid (can sell anytime)

• Historically 4-6% returns

Best for: HOAs with >5 year time horizons

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3. HOA-Specific Fixed Income Funds

• Custom portfolios of corporate/government debt

• Managed by HOA-specialist firms

• Typically yield 4-7% with monthly liquidity

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4. Real Estate Backed Notes

• Secured loans to property developers

• Collateralized by real assets

• 5-8% returns with 12-24 month terms

Important: Always keep 6-12 months of expected expenses in cash

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Catching Up When Underfunded

If your reserves are below 50%, act now with this 3-phase plan:

Phase 1: Stop the Bleeding (0-6 months)

• Freeze non-essential spending

• Implement 10-15% dues increase

• Move idle cash to high-yield accounts (2-3% APY)

Phase 2: Moderate Growth (6-24 months)

• Allocate 20-40% of reserves to conservative ETFs/munis

• Refinance debt if rates are favorable

• Explore energy/solar grants for upgrades

Phase 3: Long-Term Stability (2-5 years)

• Establish relationship with HOA investment advisor

• Implement "tiered" dues increases (higher now, lower later)

• Consider small special assessment if >$1M behind

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Board Action Items

1. Review your reserve study % funded - If <60%, start Phase 1 now

2. Meet with an HOA-specialist financial advisor - Most offer free consultations

3. Present options at next meeting - Show comparison of traditional vs modern approaches

Pro Tip: Many states require board training on fiduciary investing - check your laws!

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The New Reality

With construction costs rising 6-8% annually, the old "savings account only" approach often leaves HOAs underfunded. Smart boards now blend:

✔ Safety (FDIC-insured cash for short-term needs)
✔ Growth (Managed investments for long-term reserves)
✔ Predictability (Dues increases timed with market conditions)

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Need Help? [Download our Reserve Funding Calculator] to model different scenarios for your community.

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*"The HOA that invested just 30% of their reserves earned enough to avoid a $2,000/homeowner special assessment last year." - Actual client result*