Shopping Smart Money-Savers for Co-ops & Condos

 The day-to-day costs of running a multifamily residential building are  significant. There’s the fuel oil, electric, cleaning supplies, equipment maintenance and service  calls for repair and upkeep. Then there are the insurance costs, landscaping,  trash removal, snow removal, advertising, property taxes, and maintenance fees.  

 In today’s economy, the cost of many of these expenses for HOAs have gone nowhere but up  (and up and up…) And after one of the harshest winters in a long time when fuel costs  escalated, most businesses are just raising their prices just to keep up with  their own rising expenses. Cost control should always be on the forefront of a  manager’s mind, and there may come a time when like it or not, the budget simply has to  be tightened. The bottom line to managing a building’s bottom line is to do what anybody does when facing more month at the end of  their money—evaluate spending, cut costs and look for better deals.  

 Evaluate Spending

 It's impossible to rein in spending if you don't have a working, comprehensible  budget. “Preparation of an accurate budget is critical,” says Michael Cervelli, founder and CEO of Cervelli Management Corporation in  North Bergen. “Sometimes budgets are created that do not accurately reflect expenses such as  supplies and maintenance in order to keep the residents happy for the short  term. The end result is special assessments —or worse, operating at a deficit.”  

 Most management and financial pros agree that evaluating current spending is the  first step in determining whether or not the association's spending is out of  control and if changes are needed to rein things in. Recognizing areas in need  of improvement and formulating a plan going forward can be tricky, however—trimming too much can sometimes create more headaches than the money saved is  worth.  

 “I think some of that comes with experience,” says Gary Wilkin of Wilkin Management Group in Mahwah. “We try to look at the size of the community or building, compare that to what  would be normal in that category, and sometimes things pop out at you based on  your experience with that type of building. You can analyze a building's  operation and [see potential] inefficiencies. For instance, you can look at  building supplies and material costs for operating the site and say, 'Wow!  That's a pretty hefty line item. Do we need to spend that?'”  

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