Budget Season is Upon Us!
The next few months in multi-family management will be the busiest time of the year for many properties. The summer months typically include an influx of residents and prospects searching for new homes, a higher number of expiring leases up for renewal, employees cycling through vacation time, increased HVAC maintenance calls, and its swimming pool season. Then, as soon as you catch your breath, the first draft of your budget is due. Whether this is your first budget or your 50th, proper preparation can make the experience and budget season a success. In this article, we will help to define and provide some tools to inspire your quest with this year’s budget season!
Unit by unit inspections
If you haven’t done so already, it is a great idea to conduct an annual or bi-annual unit-by-unit walk of your property. This is especially important for properties 10 years or older. Unit-by-unit walks can help teams plan for recurring capital replacements, renovation projects, and turn costs. For turnkey costs, click on the following highlighted words to link to our flooring and paint estimation tool for budget expense forecasting.
Collecting serial numbers and appliance information can also make life easier in many ways and is good information to have on hand. You never know when you will have that on-call emergency refrigerator or stove malfunction over a holiday weekend, and you will need to look up relevant information. Unit-by-unit inspections and inventories are great for preventative maintenance, forecasting turnkey expenses, planning large capital projects, and to identify any hazards that may not have been reported. You may even catch a few unauthorized pets or other lease violations in the process.
Pricing for vendor services
Contact current vendors and see if they are going to be keeping their rates the same or if rates will be changing in any way. The Buyers Access® Account Management team and Member Services departments can obtain the best possible pricing for all your products and help to make this a much easier process. Wouldn’t it be great to have an advocate that is constantly focused on bringing savings into your budget, and a higher NOI?
Completing unit-by-unit inspections along with an exterior and interior common area inspection is required when building your short term and long-term capital project plan. The Buyers Access® suite of services includes access to Bidders Access®, a comprehensive capital project bidding platform. For more about Bidders Access and how it can help you this budget season, please click on the following link www.biddersaccess.com, or speak with your Account Manager to get started right away.
Recurring operating expenses
Completing an audit of all contracts is also a helpful budget tool. Click on the following highlighted words to access a contract audit spreadsheet to use when conducting a contract audit. Budgeting the necessary amounts for contracts currently in place, and that will affect the upcoming budget season, is key to maintaining accuracy throughout the year on property financial statements and variance reports.
When drafting the Income portion of your budget, it is important to look at historical rental increases, fees, and other income categories. and how they have performed over the past 5 years as well as the past 12 months in detail. Pulling reports on market conditions from apartment data sites and analyzing historical and current market data will help to forecast income categories such as application, administration, and pet fees, to name a few. Also, pulling industry data for your area can help forecast projected rental increases for lease renewals and potential rent growth on turns. Historically, most properties typically see between 3-5% rental increases, but some may realize higher gains if in a high demand market, or if there are other factors such as a substantial rehab.
Other expenses and bids
Click on the following highlighted words to access a payroll expense spreadsheet, which is designed to aid in the calculation of the annual payroll expenses by a property, or by portfolio. Also included is a standard budget worksheet and a bid comparison form to aid in the overall planning of recurring and non-recurring operating and capital expenses.
The document library below is for anyone to use as a tool to aid in preparing for an annual property budget. For a full property spending analysis contact our team at 1-800-445-9169, or email Buyers Access® at email@example.com.