My mother is incredibly frugal. She hates to “waste” money on restaurant meals she can make at home, rarely grocery shops without coupons and drove her beaten-up 1996 Ford Windstar until it reached 200,000 miles and died on the side of the road. (According to my father, her side of the family likes to hold onto their vehicles until they “blow up.”)
For better or worse, I am my mother’s daughter. I have, for example, the same laptop I bought freshman year of college—a 2004 Compaq Presario. I can’t seem to justify buying a new computer when this one still technically works—though I use “works” quite loosely, since the screen tends to freeze when I have more than one tab open at a time.
Fortunately, I’ve been budgeting for a new computer for the past five years, anticipating the day I’m blissfully perusing an article about Ryan Gosling when my Compaq suddenly implodes and I’m left with nothing but a 20-pound pile of scraps. Well, scraps and the money to replace it.
A lot of people don’t enjoy budgeting or saving for the future, but personally and professionally, most would agree that it’s essential. In the August issue of units, Nick Alicastro, Vice President of Business Development for Western National Property Management, offers tips and strategies that apartment industry professionals can use to create an effective—and accurate—annual budget for their communities.
Following are a few:
1. Start Early. In early spring, team begins the budgeting process for the coming year. The construction crew, regional managers and vice presidents tour every community to determine what needs to be repaired or improved.
Additionally, every apartment is walked by the onsite team and regional manager, who note—among other things—the condition of the flooring, appliances, counter surfaces, cabinets and A/C units. The purpose, Alicastro says, is to obtain an accurate assessment of each unit in order to determine probable turnover costs. An extensive exterior review of each community also is conducted to identify additional deficiencies.
After such assessments are complete, Alicastro’s team determines how much capital would be required for each community over the next five years.
This is what I do every time my laptop takes 20 minutes to shut down.
2. Do Your Research. After all buildings are walked, the team collects and solidifies hard bids from vendors, suppliers, contractors and service providers for items that need to be addressed in the coming year. Alicastro says companies can never assume a project or service will be priced the same the following year.
At the end of the summer, Alicastro begins to load current-year operating numbers. By September, his team has a precise picture of its financial situation for the remaining months.
3. Understand Your Market. Once it’s time to budget for the coming year, Alicastro’s team relies on economic indicators, such as housing starts, new multifamily development, renovations on existing multifamily projects, employment statistics and new industrial and retail construction.
Alicastro says it’s also important to network with industry partners and ask them what they’re doing, seeing and thinking about the future of the industry.
And while you’re schmoozing, do me a favor and ask one more question: Mac or PC?
For more tips, check out “The 7 Habits Of Highly Effective Budgeters” in the August issue of units, which mails today.