Of all the laborious tasks bestowed on property managers, carving out a budget is likely to be the most crucial and most difficult. Particularly for companies owning multiple high-value commercial properties, a budget must be comprehensive and detailed, mapping out each category of income and expenses as accurately as possible. Without a proper budget, there is great loss potential. From marketing, maintenance, and supplies, to community events and residential repairs, property management companies must stay on top of their budget at all times.
Open Lines of Communication
Guidelines should be in place to cover both planned and unplanned expenses. Sticking to a budget cannot be done successfully if various departments are not communicating. If something is below or above the estimated budget, documentation should be reviewed as to why. This can help you to increase or decrease the projected budget for the next year and also track expenses within a specific area. Unexpected repairs are bound to happen, so setting guidelines on over-budget spending can reduce risks and costs. Try setting a spending limit, say $500, and any repairs over this amount should be reviewed after written documentation has been submitted. This allows the owner to review spending, get a quote, and reduce costs if possible. The same goes for other areas such as marketing, events, and upgrades, to name a few.
Work to Meet Deadlines
Much of your budgeting, planning, and spending will be month to month. If a maintenance budget is set in place for September – October, be sure the upgrades and repairs are completed and the invoice is paid within the set time-frame. Otherwise, you risk carrying over your intended budget to another month, causing confusion and misrepresentation of your numbers for that quarter. If you have to extend a budget for another month, be sure written documentation is in place so everyone is informed of the change and can adjust accordingly. Same goes for other areas of spending. If an event gets rained out or moved to another month, we sure you are adjusting your books to reflect this change.
Pay attention to Detail
While allocating every single detail of each expense area may be tedious, it can save you thousands in the long run. Be very specific when itemizing your marketing plan. From print to social, and email campaigns to community events, each area should be budgeted separately. The same goes for repairs and scheduled maintenance. If electrical work is done, be sure to label it as such and create a budget that is based on detailed quotes, supplies, and labor rates. Specify your intended time-frame and keep track of project progress. Document any changes along that way that may impact expenses, revenue, etc.
Expect the Unexpected
You should have a provision that indicates an allotted budget for unexpected repairs or issues. It would be at the owner’s discretion, but the goal is to preserve and prolong the life of the building or property as best as possible. Toilets leak, pipes break, and damages happen without warning. Be prepared for this.
Creating a detailed plan and staying on top of changes will keep your budget on the forefront, maximizing the return on investment.
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