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Time is now to finalize 1993 budgets.

Never do today what you can put off till tomorrow, says the wry, old adage. Well, "tomorrow" has arrived for a majority of the area's co-ops to prepare their budgets for 1993.

Following this advice can spell disaster for a property manager trying to formulate next year's budget.

All too many managers only start worrying about the budget at the end of the year. This really should be a year-round process. For instance, capital improvements are one budget consideration that requires a multi-year plan. Property managers must use forethought when money is being allotted for such items as exterior renovations, plumbing and heating.

Establishing priorities for capital improvements is an important aspect of an orderly budget process. When budgeting for 1993, managers should pay special attention to fuel and insurance costs.

The current downward trend in insurance costs will end. Expect at least a 10 percent rise in premiums. Fuel costs have been low the last few years. This, coupled with mild winters, may leave managers unprepared for the 10 to 20 percent increase he predicts.

For a successful budgetary process, the following items be monitored carefully throughout the year: *Payroll. This may seem elementary. However, staffing levels must be reviewed regularly, overtime eliminated and vacation time budgeted. For instance, proper scheduling can mitigate the problem of spending extra money on hiring a part-time employee to cover for someone on vacation. *Property tax. Rates should not increase greatly in the immediate future, because they are already a political issue. However, the assessed value must be scrutinized carefully - and vigorously challenged if overstated. *Mortgage rates. May rise as the economy recovers. *Utilities. Energy-saving devices, like dual-fuel systems and fluorescent lights, should be used and budgeted for. *Service contracts. The cost of such services as elevator maintenance and cleaning are not likely to increase in this competitive environment. *Delinquent payments. In this sluggish economy, set aside funds for possible delinquencies by shareholders and owners.

A well planned budget will anticipate and prepare for maintenance and capital costs in an orderly, manageable fashion.

Contrary to the old adage, a good property manager never puts off till tomorrow what should be done today.
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Copyright 1992, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

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Title Annotation:advice on preparation of budgets for housing cooperatives
Author:Brecher, Oskar
Publication:Real Estate Weekly
Date:Nov 11, 1992
Previous Article:Low bank appraisals holding market down.
Next Article:Crossland Savings sells 100 Time Equities units.

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