A little background--I'm the owner of two new construction cabins in a 10-unit PUD in downtown Pigeon Forge. Both cabins have been in service a little over a year and are professionally managed. I've been reasonably happy with this so far, since it's made the process fairly passive. As with most PUDs, the developer handed things over to a management company who immediately started a $400/month assessment once the final unit in the development was sold. I thought this was a bit steep compared to other developments I had seen, and so I volunteered to be on the board of directors and ultimately ended up president. We have a parking lot, a dumpster, a few picnic tables, a small playground, a small dipping pool, and a "dog park," which is really just a fenced in grassy area. It isn't like this a condominium where assessments are paying for common parts of the building like the roof, etc.

Prior to this, I didn't have much experience serving on an HOA board and have therefore relied on the management company for their opinion on certain decisions. Since I'm not a pigeon forge local, I also don't have a good feel for the appropriate cost of goods and services either.

While I don't necessarily suspect anything nefarious from the management company, I don't now that our financial incentives are always well-aligned. As an investor, my goal is to always get the best value at the lowest price. HOA management for a bunch of peripherally involved out-of-town investors is probably a great opportunity pass along overpriced contracts to your local buddies. Any contract or suggestion they give seems overpriced, whereas contracts/work I've found seems to be much more reasonable.

Case and point--a bear kept getting into our dumpster. The first time this happened, the board of directors got an email showing trash everywhere, and HOA management offered to get "their people" out there to clean asap. We agreed, and then they informed us after the fact that the cost end up being $2,000.00 because it was "so dirty." The bear began repeatedly getting into the dumpster, and by that time I'd already found a different company to help clean up the area that agreed to do it for $65.00 per clean. At one point, this bear got into the dumpster 5 nights in row requiring us to clean the area each morning. I called animal control and the city myself and facilitated the process getting a bear proof dumpster. Shortly after this, I was reviewing some of our financial statements one month and noted a $2000.00 charge from the HOA management company. I asked about this and got no answer. I follow up a few weeks later and was told that "the city was going charge $3,000.00 to remove the old dumpster but we (the management company) could do it for $2,000.00, so we just did it. Sorry, we should've mentioned that to you guys." We've had one cabin that has failed to pay a single assessment since the inception of the HOA one year ago and has wracked up $1750 in late fees. While management has been helpful in dealing with this, I also learned that per our contract (which we never signed, the developer did) that the HOA management company is entitled to all late fees. This means that not only do we lose the unpaid assessments, but we may also owe the management company the continually increasing pile of late fees.

At $400/month/cabin, our total annual assessment income is $48,000. The company I found to open, maintain, and close our small dipping pool ended up costing $2,215.00 for the season. Repairs and maintenance was $3492.50 for the year. The HOA pays water/sewer for all cabins, and this was $9235.97.

Our largest expense is landscaping/law maintenance, which is $12,200 for the year and proposed to be $14,400 for next year. Management fee is $9000 per year. Management proposed that the HOA needed to be insured and put this in the 2025 budget at a cost of $10,000 per year. We didn't have any insurance for 2024. They also proposed we increased our annual assessment from $400/month to $450/month.

Between the proposed landscaping fee, HOA management fee, and insurance, the total cost is $278.33 per cabin per month. These are our three largest expenses by a large margin.

Does anyone have any suggestions on local landscaping companies or insurance? The $10,000k/year insurance costs seems ridiculous. I'd also be interested know if our current contracts are reasonably priced or if we're being overcharged. The Long term, after some reserves, I'd like to bring down the assessment costs since I worry that this will negatively impact the property value. On the other hand, since we're a smaller PUD, our assessments may simply need to be higher since there are fewer cabins sharing the costs.

Gatlinburg/Pigeon Forge, Tennessee

0 Votes