8 Tips for Effective Property Management Budget Planning
Property management budget planning can help you prepare for unexpected costs and allocate your funds effectively. With a properly constructed budget, you'll have more control over your finances, predict a property’s budgetary needs and track a property’s performance long-term.
Here, we’ll look at some top property management budget planning tips to ensure you stay one step ahead.
- Prepare for Changes in Occupancy
- Use a Property Management Budget Planning Schedule
- Budget for One-Time and Ongoing Costs
- Do Your Research
- Work With Your Team
- Analyse Work Order Trends
- Get One Step Ahead of Tenant Trends
- Use Technology to Automate Your Processes
1. Prepare for Changes in Occupancy
After the COVID-19 pandemic and during a cost of living crisis, it’s essential to be aware that occupancy rates may fluctuate more than usual.
Starting early conversations with dissatisfied tenants can help you configure a plan to keep them in the property, such as restructuring leasing terms.
2. Use a Property Management Budget Planning Schedule
Creating a schedule to plan ahead with fixed deadlines is always the best way to succeed with your property management budgeting.
Deciding on future projects and gathering vendor proposals takes time, so by planning ahead and giving yourself plenty of time, you’ll put yourself in the best position possible.
3. Budget for One-Time and Ongoing Costs
Developing your budget can often feel like you have to predict the future. Even so, planning is crucial as best as possible for ongoing or one-time costs.
Ongoing expenses could include anything from periodic property inspections to maintenance, with one-time costs such as making a property suitable after a tenant moves out or large expenses such as a faulty pipe.
It’s important to plan for these big unanticipated expenses, so you should start a contingency fund to give yourself a layer of protection.
4. Do Your Research
Before you input numbers into your budget schedule, you should know a few things. Before you begin, look into current occupancy, current rents, salary information and any utility price increases.
You can also investigate your outgoing costs for products and services you use throughout the year, such as advertising or software.
Part of your research could be a strong knowledge of competitive properties and their rental rates. This will mean you can plan for renovation to improve current properties or maximise your rental rates to match your competitors.
As well as looking into competitive properties, you can measure their operating expenses against your own to produce a benchmark. Having a point of comparison means you can adjust your expenses and control your costs to meet those of your competitors.
5. Work With Your Team
Working with your team can help you produce a more comprehensive property management budget plan. Get together to discuss the budget with your team and ask:
- Are there any categories we should add to the budget?
- What changes should we make, if any?
- Are there any amenities we can offer to tenants?
Discussing amenities with your team can improve relationships with your tenants and help you offer a more premium living experience. Plus, by opening a clear, transparent line of communication with your employees, you’ll be less likely to omit categories from the budget due to increased input from others.
6. Analyse Work Order Trends
Analysing work order trends can help you plan for equipment repairs and maintain the right staffing levels. Equipment breakdowns are inevitable but can lead to a rapid change in your budget, so it’s vital you’re best prepared for these circumstances.
Although predicting exactly when one of your assets may fail is impossible, you can see how often a specific piece of equipment failed in the last year and its replacement cost by routinely analysing work order trends. By analysing the lifespan of your equipment, you’ll be able to factor replacement costs into your budget planning.
Your work order data can also help you assess staffing levels, as maintaining the right staffing level is essential.
7. Get One Step Ahead of Tenant Trends
Tenants’ needs can change quickly, meaning the resources you may need to provide can change, too. Getting in touch with your tenants — through a survey or simply having conversations with them — can generate information on what they need to improve their living experience, so you can adjust your budget accordingly.
8. Use Technology to Automate Your Processes
Technology can streamline your processes and compile large amounts of information quickly, freeing up time to manage other areas of your workload.
Moving away from spreadsheets or other manual processes will save time and significantly reduce the risk of human error. Property management software can compile data and present it clearly to improve your budgeting further.
Finding a Solution That Meets Your Needs
If you’re looking to save time and efficiently manage information and data across several properties, it’s perhaps time to consider switching to property management software.
Our free comparison guide looks into various popular options for accounting software and property management, analysing the factors you need to consider before choosing the right software for your needs.
To download your free copy, click below.
Are You Ready to Move Away From Spreadsheets and Stop Juggling Different Accounting Software?This is the perfect resource to help you decide whether to use a consolidated accounting solution, multiple software or spreadsheets.