Whether you are a property owner or an HOA, capital expenditures may account for a large segment of both your annual budget and your extended reserve study. If you don’t have a strategy set in place to manage your expenses, your project could go over budget, you could get behind schedule, or your reports could be inaccurate.
What are the most effective means of managing your capital project expenses? Let’s take a closer look below.
1. Consult Your Property Management Company
Property management services such as RowCal handle many of the responsibilities that are centered around capital project expenses such as:
● Hiring vendors
● Preparing budgets
● Project management
● Time and material maintenance
● Capital expenditure bidding
Therefore, your best resource comes from the company that you hired to manage your organization in the first place.
2. Automate Your Processes
Utilizing an online automated system will save your HOA countless hours in preparing budgets, filing reports, and managing capital expenditures. RowCal’s Cinc Systems provides a platform that allows you to streamline your banking, accounting, and management processes while working alongside your HOA management company.
3. Standardize All Management Processes
Standardization consolidates all practices that your HOA employs to undergo the same process. So, if you find that different members of your organization, have their own way of doing things, standardization reels in all the procedural variations to formulate a singular method for managing capital project expenses.
Why is this important? Because standardization:
● Establishes a tangible and measurable norm
● Eliminates conflicting reports from multiple sources
● Promotes teamwork and organizational unity
● Effectively compares/contrasts current practices with HOA compliance regulations
● Reduces financial loss by creating best practices for managing expenses
Convert Capital Expenses Into Capital Improvements
From an accounting perspective, all capital expenditures are essentially the same. However, how you approach any upcoming project will determine if the work to be done is merely a capital expense or a capital improvement.
A capital improvement is often defined as the addition of a permanent structural improvement or the restoration of some aspect of a property that will either enhance the property’s overall value or increase its useful life.
Some examples of capital expenses may include:
● Lawn maintenance
● Pool cleaning
● Electrical inspections
● Winterizing the heating and system
With some budget planning and a little creativity, you could convert some of these same expenses into capital improvements.
● Turn your standard lawn care into a landscaping project that improves the look of the property.
● Instead of just cleaning the pool, try adding some lights, more secure gates, or implement some brand new pool furniture.
● Rather than just winterizing your heating system, trying upgrading your HVAC to include automation or zoned heating.
Restructuring your budget to make substantial discretionary additions, significant upgrades, or alterations that change the property’s appearance can boost your property value and establish your HOA’s reputation as a forward-thinking, progressive, and fiscally responsible organization.
Property Management Service in Minneapolis
If you are looking for a reputable property management company for your condominium, townhouse, or high-rise, then contact RowCal. We provide comprehensive management services for self-managed communities and HOAs.
To find out more about the products and services we provide in Minneapolis, MN, call us at 651-233-1307. You can also send a message on our contact page.