Get Ahead this Budget Season – Top 5 Things to Look Out For
Get Ahead this Budget Season - Top 5 Things to Look Out For
From marketing and sales, managing staff, overseeing resident requests and more – it is critical for property managers to put together a solid budget to support financial performance all year long.
And though most dread this time of year – there are a number of items to help you survive and succeed the budget season. From being on time to having the proper support to ensuring the right model and templates — it is imperative to remember that the process is a work in progress.
Here are five tips to ensure you prepare accordingly and knock this year’s budget out of the park:
- List the big expenses first. Gather all relevant information, including current rents and occupancy, financial reports, salary information, and utility prices, and plan for the largest expenses first. Put those on the top of the budget and plan accordingly. From the ongoing costs to the one-time expense to marketing campaigns and more, put together a concrete plan first so that proper funding can be allocated in the budget to cover any new and or immense initiatives.
- Budget Capital and Operational Expenses. Part of a property manager’s responsibility is not only to keep a keen eye on operating expenses, but to also factor in the capital expenditure potential and the consequential ROI. In addition to forecasting regular, annual expenses your budget should include projections for capital improvements. Capital expenses/improvements are the big ticket items such as major property upgrades that add value to a property. This could include updating electrical or plumbing systems, replacing your roof, common area improvement, and more. Consider the notion: ““Are you rolling the dice on the AC unit for the other year?” Take a look at the age/expiration of the system. Chances are, if you don’t cough up the finances for it, it will fall into planning for the unplanned.
- Planning for the unplanned. While you may think you have everything covered, always expect emergency repairs. Establish a budget for those “random crisis” that may pop up throughout the year. Those unplanned items could include excess snow, hurricanes, equipment repairs, etc. If it comes to the end of the year and you find yourself with excess budget, consider ways that you could apply it to “extras” that will improve your property and make your residents happy.
- Review staff. Is the property overstaffed for your current residence? Take a look at wages, efficiency and performance. Perhaps it’s time to make a change and see if it’s time to update roles, employment, etc. Determine if there are any areas that spending is too much. Spend time reviewing budgets from the past few years and consider your unique situation to determine if any areas can be adjusted.
- Vendor evaluation. Take a look at annual vendor spend. It is important to review all contracts – such as lawn care, advertising, property and preventative maintenance, etc. Having data on how vendor spend per-unit-per-month is an essential piece to the puzzle. Reviewing vendors, categories of service/request through outsourcing can determine things like whether or not that extermination technician needs a place in your budget. Or possibly you can renegotiate service rates based on your volume and earn a bit of savings. You may also consider bundling services to help cut down on overall cost.
In summary, a budget tells a building and its respective property manager where they are and where they are going and it helps quantify growth along the way. And if one prepares, is organized and enlists the proper support, the budget will be an easily calculated grand slam.
If you’d like to talk on any of these, we have experts available and are always a phone call away 866-244-2204.