These 4 Budgeting Basics Are Crucial for a Successful Community
When the time comes to plan for next year’s costs, it’s important to recognize that this initial budget will set the blueprint for your community moving forward. Starting off on the right foot means stepping into the new year with a solid gameplan. There will be some time to adjust your budget as the year progresses, but you want your budget to do the hard work for you. Playing catch up and changing your approach halfway through the year could put a strain on your budget, which inevitably means more stress for your residents.
In this article, we will discuss four important budgeting basics that all homeowners associations (HOAs) should keep in mind when planning for next year’s budget. As you will see, everyone benefits when you plan ahead, but failure to do so could result in a chaotic community. If you need help getting your community back on track, or simply want to sit back and let Tampa homeowners association management experts do the hard work for you, Wise Property Management can help.
1. Review All Active Contracts
Communities that fail to manage their contracts without outside parties could find themselves paying for services they don’t need or want. The first rule of budgeting is to eliminate unnecessary costs. For example, if the HOA decides to take on a pool cleaning service contract for a newly renovated clubhouse pool, but forgets to sever ties with their old provider, the community could end up paying two pool cleaning bills. What a waste!
2. Consider Past Budgets
Year to year, your community shouldn’t change drastically unless special circumstances dictate otherwise. Reviewing budgets from the past can help you set the framework for next year’s budget. We recommend looking over the budgets of the last three to five years. This can help you identify the types and amounts of expenditures commonly required for your community. Of course, all of these figures will need to be checked, double checked, and confirmed, but it’s much easier than coming up with all new figures from scratch.
3. Check Financial Statements
Reviewing financial statements is another critical step in the budgeting process. Start with your income and balance sheet to see if your community is in the green. If it is, congratulations, your budgeting needs should be relatively simple. If you discover that your community is spending more than it’s earning, you may want to consult one of the leading Tampa HOA management companies, Wise Property Management.
4. Calculate Next Year’s Homeowner Fees
Want to figure out what you should charge for homeowners fees? Simply add up your operating expenses and annual reserve contributions then divide by the number of residential units in your community. This figure is expected to rise each year, but attempting to boost homeowners fees to offset your budgetary deficiencies will most likely cause a residential revolt. Budgeting isn’t easy, but with an expert at the helm, such as a Tampa homeowners association management professional, you can ensure that your community is on the right track for the following year.
Are you ready to work with one of the top Tampa HOA management companies that makes life easier for you and your board members and improves the value of your property? If so, submit our proposal request form today!