As a residential property manager, you’re likely already gearing up for the 2018 budget season. As busy as property managers are with the many hats they wear — marketing and sales, screening prospective residents, assisting with all manner of residents requests, and more — most understand that putting together a solid budget is critical for financial performance all year long.
A budget tells you where you are and where you’re going, and it helps you measure your progress along the way. It provides an organized and easily understood look at money coming in and going out for anyone who might need the information, including your staff, community investors, and financial professionals. It’s also an invaluable tool for you in assessing how your community is performing, identifying any fat to be trimmed, and adapting as situations change.
As you prepare your 2018 budget, take a look at the tips below to help make the process as painless as possible.
Review industry data
Visit the library, use an online database, or search online to review standard income, expenditures, profit margins, and other metrics for your industry. You can find lots of free information simply by searching online for various keywords, and you can also find annual reports from market research firms that give away some information for free and include others for a fee.
Generate methods for increasing revenue
If your community isn’t at full occupancy, create a marketing, sales, and communications plan before working on your budget. Does your website need work? Should you be focusing more on generating and cultivating leads? If marketing isn’t your primary area of expertise, consider working with a local marketing firm or a national company specializing in property management for ideas.
Put together your marketing plan first so you can include funding in the budget to cover any new or existing initiatives. Also, spend time thinking about whether your pricing is on target. Are rents where they should be based on market averages, demand, and supply? Should you consider additional fees for services such as using the fitness center?
Consider cost-cutting measures
What can be trimmed from last year’s budget? Are you overstaffed for your current occupancy? Are there areas in which you know you’re spending too much? Spend time reviewing budgets from the past several years and considering your unique situation to determine if any areas can be cut.
Review your tax situation
Prior to working on the budget, sit down with your tax professional for an update on any changes in the local, state, and federal tax codes that may affect you. Plan accordingly for any additional expenses that may result.
Plan for capital expenditures
Sit down with your maintenance staff — and maybe even a hand-picked panel of residents — to plan for needed capital expenditures. There will always be something that can be fixed or upgraded, so you’ll need to prioritize. What has to be done in 2016 and what can be put off for future years’ budgets? Consider your community’s overall financial situation, but also consider the marketing impact and curb appeal of certain upgrades over others.
No property manager looks forward to creating a budget. However, most also understand that taking time to put together an effective budget is critical to the ongoing financial and operational performance of a community. Spending some time planning by reviewing industry information, thinking about how to increase revenue, reviewing spending and taxes, and negotiating with vendors can help make the task a little less daunting.
by Amanda Cupp: One Call Now