It’s sad but true. Most owners dutifully pay their obligated fees, but few truly know where their dollars go.
The annual budget is truly important, as it reflects the decisions the condominium board has made. If your condominium fees are too high, this is the first document to analyze. Identifying areas of improvement leads to an efficiently operating condominium and lower condominium fees. Here at Karen King & Associates Inc., we provide free preliminary analysis for condominiums – just ask us and we will complete one with you.
Understanding the sources of income and expenses for your condominium is paramount. When a budget is built, it should be done in several different ways to optimize your savings. See this post on Budgets for more information. Each budget line tells you the expected cost of the item; this should reflect your priorities for your condominium and the current market value. For example, insurance rates in Calgary went up after the 2013 floods.
The more complicated your condominium operations are, the more complicated your budget will be. For example, a downtown high rise may have elevators or staff as added expense lines on your budget, whereas a bareland condominium (land only) will not.
Key categories to look at (if applicable) include:
- Income (Condominium Contributions, Laundry, Parking, Rentals, etc.)
- Administration (Audit, Management Fees, Legal, etc.)
- Personnel (Salaries, Benefits, etc.)
- Insurance (Premium, Deductibles)
- Utilities (Gas, Water, Electricity)
- Garbage Removal
- Repairs & Maintenance (Interior, Exterior)
- Landscaping/Irrigation/Snow Removal
- Elevator (Preventative, Repairs, etc.)
- Pool/hot tub maintenance
- Reserve Fund Contributions
The amount required by the expenses should be collected by condominium fees, and the other applicable sources of income, to produce a zero balance budget. Condominium fees are collected according to the Unit Factor, found on the condominium plan.
Sit down with your condominium manager and do a thorough review of your budget. Also, we are here to help if you would like one of our free reviews. It’s in your best interests to know where your money is being spent.
(photo courtesy of 401(K) 2012)