The Benefits of a Budget
Tara Taylor / September 13, 2017
Budgets and CAM Reconciliations (common area maintenance) are two of the most labor-intensive functions in property management, but also two of the most beneficial. While most property managers see these tasks as arduous, and many self-managing owners completely fail to do them, the benefits certainly justify the effort.
Prepare a budget in order to properly prepare for the year.
The process of preparing a budget for a property is equivalent to setting goals for your investment for the year. It is an opportunity to map out projects for the year, determining which are crucial and which can be postponed. The budgeting process ensures you receive the best services for your money.
Sending a scope of work for each recurring service on the property to three vendors to provide proposals each year forces them to remain competitive. If your existing vendor’s services are not priced reasonably relative to their competition, it may be time for a change, or at least a conversation. This bidding process creates an opportunity to confirm all necessary documents are on file for each vendor, such as W-9’s and certificates of liability insurance listing the appropriate entities as additional insured. Checking in with utility companies regarding potential service increases and budgeting accordingly will save you from being blind-sided during the year.
And, the income forecast portion of the budgeting process is just as beneficial. Annual reviews provide an opportunity to confirm rent increases and other adjustments affecting income. Additionally, confirming lease expirations allows you to reach out early to tenants with expiring leases to determine whether they would like to continue in their space, or if you should begin marketing it for lease.
If you are not currently preparing budgets, or if this requirement is not in your existing scope of work with your management company, it may be time to reconsider this choice. Should you wish to discuss this portion of property management services, or any of the services we provide call Laverty Chacón, I can be reached at (916) 722-0333, or via email at firstname.lastname@example.org.
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