Does Your NYC Co-op Board Set a Realistic Budget?

Setting realistic budget goals for your co-op or condo will keep the business of your building running smoothly and help you strategically increase the value of your property. If you are involved in preparing or approving an NYC co-op and condo budget, you and your team should be asking yourself these basic questions:

Are you surrounding yourself with all the right people?

Budgeting for a co-op and condo is a job that comes with tremendous responsibility. Since budgets can only be made on predictions, it is important to involve individuals in the process that will help you gain insight in new ways.

Co-op and condo boards should build a team of people that can bring their professional skills to the budgeting table. This might mean working with management groups, CPAs, engineers, consultants, and board committee members as well as tapping into the expertise of any residents of the building. You can join professional organizations to network with other co-op and condo board members to more easily share the resources you may need.

Are you allowing enough time to create and approve your budget?

Ideally, boards should be reviewing the budget on a monthly basis, which gives you the opportunity to timely address concerns, look for areas of improvement, and explore areas to save money. If monthly meetings are not feasible, you should start thinking about the budget no later than October - you’ll have nine months of the year’s data to review and help make your predictions for next year’s budget.

Are you meeting benchmarks for your co-op budget?

When you create your operating budget for the year, you should be using data including the history of maintenance and repairs, utilities, and fuel costs to make a realistic budget forecast while also trying not to over (or under) estimate the costs to your co-op owners through maintenance fees.

For example, here in NYC, real estate taxes have increased by 7% per year on average. For co-ops, real estate taxes are a huge line item and account for roughly 50% of the budget.

Assuming real estate taxes are 50% of the co-op’s operating budget and all other costs remain the same, you should expect at a minimum a 3.5% increase in your overall operating budget from real estate taxes alone. You can add an additional amount to account for inflation, but if your operating costs are increasing by more than 5% each year, it is time for a deep-dive review.

Are you setting goals for your co-op budget?

Businesses set goals to provide motivation and direction and so should a co-op and condo board. If your goal is to reduce operating costs, you might work with a specialist financial consultancy like The Folson Group; they are also energy efficiency consultants who can optimize ways to reduce the amount of energy the building is using, making your building greener and more sustainable.

If you are looking to save on capital expenditures, The Folson Group can help you solicit and negotiate more competitive bids from vendors. Email us at info@thefolsongroup.com or call us at (917) 648-8154 to find out more.