Rent Real EstateEasy Money Budgeting in Homeowner Associations
With ever increasing costs, many associations find it difficult to
accumulate the funds they need to provide essential services and a
reasonable level of property maintenance. Simply keeping up with inflation
currently calls for a 3% annual increase in revenue. But fighting inflation
can be easy if the board makes cost-cutting a priority. Start by identifying
the high ticket items.
1. Utilities. Associations with high utility costs should commission a
utility audit. Utility auditing companies verify the accuracy of utility
bills, notes discrepancies and assists in refund claims.
2. Insurance. Associations can save on insurance premiums almost dollar for
dollar by raising deductibles.
3. Landscaping. Save on water and maintenance costs by replacing turf with
drought-tolerant native species.
4. Pools & Spas. Adjust heater temperature and pump cycle times for savings.
A two degree drop in temperature can significantly decrease the heating
bill. Use a pool solar blanket to conserve water temperature and reduce
heating costs. Consider solar heating panels if feasible and repair them
annually for proper operation.
5. Lighting. Use high-efficiency outdoor lighting like compact fluorescent,
metal halide, halogen and mercury vapor. Installations usually pay for
themselves in one to two years in labor and energy savings while providing
better security.
6. Preventive Maintenance. A preventive maintenance program is your biggest
money saver since it catches problems when they are small enough to resolve
cheaply. Pay to have a knowledgeable consultant inspector perform this
service.
7. Owner Related Repairs. Associations can save money in owner generated
expenses like power, water and sewer, which are included in the monthly
assessments. It"s often cheaper to have the association to fix faucets and
leaky toilets than to wait for owners to take action.
8. Review Contracts Annually. Fixed costs like insurance, management,
landscape and pool contracts should be reviewed annually. Physically
communicate with these vendors to inquire of ways to trim costs. It may not
always be possible but ask the question.
9. Review Variable Costs. Variable costs like gutter cleaning, plumbing
and electrical repairs change depending on circumstances. Is there an
identifiable trend that can be handled better? For example, by trimming
trees away from the roof, can gutter cleaning be reduced? Look for "causes
and effects" that are driving up costs.
The Board is responsible for large budgets and the care of often millions of
dollars of owners" assets. When spending other"s money, it"s easy to get
complacent. As Senator Everett Dirksen said, "A billion here, a billion
there...pretty soon you"re talkin" real money!" As with any business, the
Board should carefully watch the"bottom line", the margin of profit or loss.
Easy money is there waiting to be found.
For more on this subject, see www.regenesis.net