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Tips To Prepare For HOTMA And Operate Your Affordable Housing Management Business More Efficiently

September 7, 2023

Last modified on September 7th, 2023

Affordable housing management comes with a unique set of challenges. To qualify and quantify what those challenges are and how to overcome them, AppFolio conducted multiple surveys of affordable housing property managers as well as residents. The resulting data served as the basis for our first annual Top Challenges and Opportunities in Affordable Housing Management report.

In a recent webinar, James Erickson, Senior Product Marketing Manager at AppFolio, and Isabel Jordan, Product Manager at AppFolio, delved into the top challenges that were reported. They also explored how innovative technology can help operators overcome them. Let’s dive into the key takeaways from the webinar. 

Operational efficiency: the top challenge

Operational efficiency emerged as the foremost challenge for affordable housing property management companies, with 75% of respondents ranking it as their top challenge. This result is particularly noteworthy and aligns with the current economic climate: because of inflation and its knock-on effects on staffing, the need to cut costs and enhance efficiency has become even more pronounced.

Teams want to be more efficient

The survey also sought to understand how employees of affordable housing property management companies perceive their daily routines. Alarmingly, survey participants reported spending nearly 40% of their 40-hour work week on “busywork,” underscoring the need for improvements in operational efficiency. Approximately 60% of affordable housing employees expressed a desire to allocate more time to higher-value tasks. 

HR, staffing, and recruitment challenges

Like in conventional property management, recruitment and retention challenges trouble affordable housing operators, with 47% identifying this as a top challenge. These difficulties are exacerbated by financial pressures, which limit the resources available for hiring, retention, and training.

In the survey, demand for higher compensation was a significant challenge within HR, staffing, and recruitment. But, unlike other industries, affordable housing operators can’t simply raise prices to cover increased operating expenses, making it a unique and pressing challenge. Additionally, the need for swift training of new hires, which naturally takes longer due to regulatory complexities that team members must learn, further hampers operational efficiency.

Navigating risk, compliance, and regulations

Staying compliant amid constant changes in regulations was reported as being the primary challenge related to risk, compliance, and regulations. The complexity of affordable housing regulations often disrupts workflows, consumes time, and frustrates team members. These challenges contribute to employee burnout and compound staffing difficulties, creating a cycle of interconnected issues in HR, staffing, and recruitment and ultimately operational efficiency.

Adding to the challenges that come with maintaining compliance is the imminent rollout of the Housing Opportunity Through Modernization Act, or HOTMA.

HOTMA: a game-changer

The primary goal of HOTMA is to streamline administrative processes around certifications, income verification, and income calculations. HUD’s intent with HOTMA legislation is to reduce the burden of compliance paperwork and overall efforts and, more generally, to align HUD rules with ever-changing economic conditions.

HOTMA introduces the most significant and comprehensive set of changes to HUD’s occupancy requirements in the last 10 years. The changes go into effect on January 1, 2024, so stay tuned for additional notices from HUD. Also, make sure that you are getting information from the applicable HUD department. Within HUD, there’s the Department of Multifamily Housing and the Department of Public and Indian Housing, and each might have its own rollout plans or guidelines. Make sure you’re not on the Public and Indian Housing site instead of the Multifamily Housing site, and vice-versa. 

Start preparing for HOTMA 

While it will certainly take a lot of time, effort, and patience to understand the new compliance rules, get your whole team up to speed and trained on them, and update your documents to make sure everyone is aligned, the results will be worth it. Here are some suggestions on how to get the ball rolling on your HOTMA prep:

  • Keep an eye out for HUD and state agency updates. 
  • Register yourself and your team for HOTMA training. 
  • Review and update current policies and procedures to align with the new HOTMA requirements.
  • Take a deep dive into income and asset changes, as these are a major part of HOTMA.
  • Communicate with residents, as the new rules may impact occupancy. 
  • Update your forms, notices, and owner-created documents. Some of the documents you might need to update include the tenant selection plan, house rules, owner-created recertification notices, questionnaires, applications, policies, and procedures. 

Here’s a checklist that you can keep on your desktop or print out to help guide you through your HOTMA preparation. If you’re still curious or uncertain about HOMTA and would like to learn more, we’ll be hosting another webinar on October 12th, where we’ll be joined by affordable housing industry experts who’ll speak more specifically about the changes that HOTMA will bring and how best to prepare for them. Stay tuned for registration details, and we hope to see you there!

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