A necessary – albeit laborious – task for anyone who owns commercial property is the creation of an annual property or asset management plan. The budget provides a comprehensive understanding of each category of income and expense for your property and also sets realistic, measurable expectations for the performance of the property. Once created, it serves as a roadmap to avoid lost revenue and help react to unexpected expenditures.
Here are some tips to maintaining your property management budget:
- Complete scheduled maintenance during the month it is included in the budget. If HVAC service is in the budget for April and October, then work with vendors to ensure that service is completed and the invoice is paid during those set months. This not only ensures your building systems are consistently maintained but minimizes variances or shortages in cash flow.
- There will be unexpected expenses. Even the most seasoned property manager can’t prepare for every scenario, but steps can be taken to help cushion the unforeseen expense. Big ticket expenses typically come from major building systems like HVAC, sprinkler systems or water tanks. As a rule of thumb, make sure to be aware of the anticipated life cycle of these systems to help predict repairs or replacements. And it’s a good idea to over budget these areas so an unexpected outlay isn’t such a huge hit.
- Make sure invoices are coded to match the line items in the budget. As time goes by and work increases, it’s easy to forgo double checking where something was originally allocated – especially if the property manager didn’t create the original budget. A simple slip in coding a plumbing repair under ‘routine maintenance’ instead of ‘plumbing repair’ can easily throw the budget off track.
A competent, trustworthy property management company can help ensure a property management budget is thoroughly prepared and properly maintained for your commercial property. If you have a real estate investment in the metro Atlanta area and are considering a property management company to maximize the return on your investment, contact McWhirter Realty Partners today.