A budget can be very beneficial in several ways. It allows you to identify or establish:
- Performance targets
- A baseline of reviews for property management
- Income projections
- Expense projections
- Capital improvements planning and projections
- Problems that need to be resolved
The greatest benefit of a budget though is to help you maximize profitability and avoid unforeseen repairs and expenses.
The one over looked all too often is capital improvements and this can cost you significantly. Planning for improvements helps you stagger the expense and avoid surprises which usually always lead to more expensive expenses. These funds are commonly referred to as replacement reserves and include:
- Common area improvements such as new paint, lighting, carpet and parking lots and driveways. The most money saving is parking lot maintenance. By applying a seal coat to your parking lot can double the life expectancy of your asphalt. This huge cost saving tactic should be done every three years. Along with cost saving it is also a beautification tactic, the asphalt will look crisp and new.
- Major building system repairs or replacements such as windows, roof, air conditioning.
- Individual unit upgrades
Always remember to utilize your connections with your service providers. Your vendors can give you cost saving suggestions on possible improvements or services they can provide. Integrity Paving & Coatings usually suggests seal coating, filling large cracks with rubberized asphalt, and repairing holes and broken up areas. All of these methods will help extend the life of your parking lot and save you from replacing in its entirety too soon.
Use your annual budget as a tool and hold quarterly budget reviews with your staff. Your budget can drastically maximize your profits when used as it was intended.