Budget Season: Set Yourself Up For Success Before, During and After Drafting Budgets
While there are many components to executing a good commercial property budget, here are 10 helpful activities curated by OPEX Management commercial real estate experts that may better prepare you for budget season and assist in successful property operations.
Budget your commercial property successfully with these 10 OPEX Management expert tips:
Tenant Survey: Sending out a tenant survey at the beginning of the budget season is a great opportunity to get the voice of your tenant and learn about any property needs that may not have been detected during the scheduled property inspection.
Discussion with Ownership: Serving as a check-in with your owners regarding their investment goals, the pre-budget ownership discussion allows you to be mindful of any budget items that owners may have knowledge of such as insurance premium renewals or direct requests from leasing agents, tenants, property neighbors or others.
Benchmarking: Compare your property's financial performance to industry benchmarks. This can help you identify areas where you can improve your budget.
Negotiate Contracts: Negotiate contracts with service providers, such as maintenance companies, to get the best rates. A lower cost of services can help improve your bottom line.
Schedule Tweaking: Fine tune the budgeting schedule and appoint lead people for each step in the process to ensure it runs smoothly and timely.
Variance Analysis: Compare actual financial results with your budgeted figures regularly. Analyze any significant variances and investigate the reasons behind them. Understanding why expenses or income deviate from your projections is key to making informed decisions.
Understand Occupancy: Hybrid work creates a fluctuation of peoples at different times of the year. Knowing this allows you to allocate spending in key areas like HVAC units, and amenities needed to operate at reduced levels.
Tenant Trends: Properties allocate limited resources to enhance Tenants experience. Utilize the survey to understand what your tenants are prioritizing and to stay ahead of competitors.
Ownership Reporting: An experienced Property Manager should be PROACTIVE and give the landlord a brief on the strategy behind the budget and how the property will operate over the next 12 months.