Why Property Budgeting Doesn’t Have to be Complicated

What’s it like to go through budgeting season at your property? Multifamily and commercial companies have made great strides in modernizing operations, marketing and accounting practices in the last 15 years, but most operators still prepare budgets today in the same way that they did decades ago. You don’t use your cellphone from the ‘90s. Why are you still using Excel to do your budgets? In this post, we’ll discuss how to bring the multifamily budgeting process up-to-date. Excel is, of course, a wonderful tool, but it isn’t designed specifically for the purpose of budgeting, which in rental housing, is a multi-stakeholder, multi-step process. Busy property managers are assigned the task of completing the budget for a given community. A controller or a senior executive will prepare the formats of the spreadsheets for multiple properties. Regional managers will provide next-layer approval on the property manager’s work, which is then subject to executive review. Start with the right data Property management companies know that the challenges of budgeting are largely to do with the process of obtaining data of the right quality for something as important as a budget.  We estimate that 90% of property managers are using Excel.  Some have a way of uploading data into Excel, but most companies still have to key their budget data into their spreadsheets. Manual entry is, of course, time-consuming, but the problem is compounded by the fact that critical data resides in multiple accounting, leasing and property systems.  This forces time-strapped operators to juggle different data sources and formats in as they prepare their spreadsheets.  The risk of errors, rework and – worse still – inaccurate budgets should be a concern to management companies. Imagine, for example, budgeting for marketing – one of the more challenging items on any property’s budget. A good approach might be to look at...