Tips to Make Budget Season Successful
Digested from Multifamily Insiders
Surviving budget season requires being on time, having the proper guidance and templates and remembering that the process is a work in progress.
Even unforeseen repairs, such as unforeseen repairs, unexpected increases in vendor costs or the need to upgrade to a more sophisticated software platform, can make original budget projections useless, it is still important to provide the most accurate projections possible.
Writing for Multifamily Insiders, Jim Kjolhede says it is important to be timely with your projections. It is also important to make sure that property managers are properly trained to go through the budgeting process.
“Left without proper guidance and templates that calculate accurate year-over-year costs, most property managers will put less revenue in the bank for the upcoming year but spend more on the asset,” Kjolhede writes. “This reduces NOI, which is the antithesis of what property management is geared to do.”
Kjolhede advises property managers to project spending for the remainder of the year and add it to the year-to-date actuals.
“Evaluating this with a keen eye can provide the base for the beginning month’s revenue performance, as well as the calculation for year-over-year performance on the asset,” he writes. “Likewise, reviewing the monthly trends of actual year-to-date performance alongside the projected budget allows you to diagnose any movement before it’s too late.”