IREM Certified Property Manager (CPM) Practice Test

Bank loans are often preferred over special assessments for major expenses because they can be more cost-effective for raising large sums. When a property management team or a homeowners association faces a significant expense, securing a bank loan can provide immediate access to the necessary funds without requiring a lump-sum payment from property owners upfront.

Bank loans typically offer lower interest rates compared to the costs that can be incurred through special assessments, which might involve higher administrative fees and more complex approval processes. Additionally, loans allow the cost to be spread out over time, making payments more manageable for community members or property owners compared to a one-time assessment that might impose a financial burden.

This financing option can also help maintain positive cash flow and avoid placing a sudden financial strain on community members, supporting the overall financial health of the property management organization.