The Meter is Running
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AUTHORFrederick Rudd, President
PAGE #p. 78
THE BIG PICTURE
The better new board members understand the financial condition of the property, the more helpful they can be in the decision-making process to improve the property. There are three keys to this understanding.
First, look at the annual financial statement. It’s prepared by an accountant on an accrual basis and, unless you have an accounting background, it will be hard to understand. The next document you should familiarize yourself with is the building’s budget. That gives you a detailed analysis of where the revenue comes from – whether it’s the laundry room or maintenance, all the income areas are broken down in the budget. So are all of your expenses. It’s important to look at these numbers and understand how your building is running and what you’re spending money on. Only then can you help make smart decisions on how money should be spent.
The next area that’s very important is your building’s five-year plan. That is the capital plan for your building, and it talks about such items as the elevators, boiler, building facade, entranceway, and general curb appeal. In short, all of the things that affect your quality of life.
It’s very important to understand your building’s five-year plan. The better you understand it, the more input you can give. This plan is a moving object that changes on a regular basis. So it’s important that you give your input to change the five-year plan so that it matches what you see as improving your building. Many people join the board because they have an agenda, maybe something simple like having the hallways redone. They need to remember that the board’s ultimate goal is to improve the value of the entire building and every apartment in it.