Attention property managers: whether you like it or not, budget season is here!
For property owners or managers, it’s that time of year when you prepare for one of the most vital responsibilities you have, and that is preparing for your 2017 budget. Budgets are a key component of good management practice for your property, but before you can prepare, you must understand the basics about budget season.
First of all, what is budget season?
Budget season is the time of year when the homeowners associations (HOA) and Property Management Companies meet to establish the budget for the next year and plan for any projects up ahead in the next fiscal year.
What’s included in the budget?
Basically, there are three main components to the budget.
- Daily operation – First, you must figure out how much is needed for daily operations of the community. This includes electricity, water, grounds maintenance, management, insurance, and general building maintenance. These expenses can be figured out based on historical data, or they are contractual.
- Reserve funds – These funds are for meeting any future upkeep costs or unexpected costs that may come up. It’s basically a savings account that provides money for repairs and replacements that are needed throughout the year.
- Enhancements and improvements – This includes funds for any additions or enhancements to the existing property that community members want and are willing to contribute to. The community should give input to what kind of improvements they want and approve them before the budget is settled.
Budget Season is About Balance
The main goal of budget season is to develop a balanced system for allocating funds for the next year. How do you make it balanced? Well, there are two sides to the equation: the human side and the financial side. Your residents and prospective residents are highly important, and so are their needs. You have to maintain a good reputation and keep them satisfied. At the same time, making a profit is just as important. Every decision you make carries weight, and a price tag. It all comes down to your ability to earn a profit while protecting the integrity of the property. Both are equally vital when it comes to the success of your operation.
Do your homework before you settle on the budget. The development and implementation of a well-thought-out budget keeps your operation running to the best of its ability, and keeps you reputable, credible, and profitable!
Check out our next blog for tips and tricks for preparing your budget.