budgeting
Zero-Based Thinking: The Game Changer in Strategic Decision-Making
Photo by Jason Strull on Unsplash
Zero-based thinking redefines how choices are made, and strategies are formed. The concept, often associated with fresh perspectives and unbiased evaluation, involves approaching situations as if starting from scratch without being burdened by previous decisions. Its application can lead to better outcomes, especially in environments where conventional methods have plateaued in effectiveness.
Zero-based thinking encourages a fundamental question: would you make the same decision again knowing what you now know? This simple yet profound question catalyzes re-evaluation, compelling individuals and organizations to scrutinize their current paths. It’s an invitation to shed the weight of sunk costs, historical data, and emotional attachments, enabling a clearer view of the present situation and future prospects.
Though seemingly straightforward, the concept demands a high degree of intellectual honesty and courage. It requires acknowledging when a path, once promising, no longer serves its intended purpose or aligns with current objectives. This admission, often challenging, paves the way for innovative solutions and strategies that might have been overlooked in a more conventional, path-dependent approach.
In business, zero-based thinking can manifest in various forms. It may lead to re-evaluating ongoing projects and questioning their relevance and effectiveness in the current market scenario. It might prompt a reassessment of long-standing business relationships or strategies, weighing their current value against emerging opportunities and risks. This approach can be equally transformative in personal decision-making, prompting individuals to re-examine career paths, investments, or even relationships through a lens unclouded by past decisions.
One notable application of zero-based thinking is in budgeting, which builds budgets from the ground up, starting from zero, rather than relying on historical data. This method ensures every expense is justified for each new period, based on its current utility and alignment with strategic goals, rather than merely adjusted from the previous year’s figures. This approach fosters a culture of efficiency and accountability and compels managers to justify each dollar spent.
The digital age offers fertile ground for the application of zero-based thinking. With rapid tech advancements, traditional methods and strategies may quickly become obsolete. Companies that continually reassess their strategy and operations through a zero-based lens are better positioned to adapt and thrive.
However, the application of zero-based thinking isn’t without its challenges. It requires an environment where questioning and re-evaluation are encouraged, and the psychological comfort of the status quo is consciously overcome. Leaders and decision-makers must foster a culture of radical rethinking.
#ZeroBasedThinking #DecisionMaking #StrategicPlanning #Innovation #BusinessStrategy #Leadership #Management
Achieving Success in Multifamily Property Management
Photo by Joshua Earle on Unsplash
As we approach mid-year 2023, multifamily professionals need to reflect on their achievements and opportunities for growth.
Building strong resident relationships, optimizing property value, and preparing for the second half of the year are crucial steps toward success in this industry.
To foster resident satisfaction and retention, managers must take customer service to a whole new level. And, dare I say the whole new level is a baseline level that includes answering the phone, being available, and swiftly addressing concerns.
Take time now to thoroughly walk your property and identify potential improvements to enhance your property.
Careful plan and budget for the second half, focusing on what people are looking for in a new home.
With these steps, you can maximize the final month of the first half of 2023 and prepare yourself for success in the remaining months of the year.
It’s important to keep in mind that achieving success in this industry requires building strong relationships, optimizing property value, meticulous planning, and above all, flawless execution.
Keywords: multifamily property management, tenant relationships, property value optimization, budgeting, market trends, success, real estate.
Apartment Budgeting: Water Income
It’s Tuesday and time for another installment of Apartment Budgeting. This week we talk water. We all know that utilities are likely the fastest growing line item in your annual budgets. And, if you haven’t tapped in to sharing this expense with residents – then read on. But, more important – act. If you have tapped in – please stick around and add to the discussion at the end. As I am sure to leave some important details or alternative angles out.
Water Income Defined
It is known as RUBS or Ratio Utility Billing Service. And, water income is just one piece of the picture. We will discuss the other pieces over the coming two weeks.
Water income is derived from taking your total monthly water bill, applying a ratio formula to it and then billing it back or passing it through to your residents. Now, it is much more complicated than that simple definition but you get the gist.
It is also much more complicated than simply splitting your water bill across the respective occupied units in a given month. And, don’t be tempted to take the easy way out and settle on billing a per unit type flat rate. It’s tempting to do it this way but trust me – it’s much better to partner with a company versed in this art we call RUBS.
*Item of particular merit about utility billing – this is a highly regulated business and you are not a utility company. Under no circumstance can you bill back or pass through a number that is in advance of your monthly bill. You will love not the consequence if you are caught.
There are a number of good companies out there to partner with. Our friends over at Appfolio Yardi and RealPage, just to name a few, offer it as an add-on to their respective property management software packages. Or, there are independents that focus 100% on utility billing. Either option is okay. I am personally a fan of working with your PM software provider.
Budgeting Strategy
This a bit more complicated than looking at trailing information. Given the fact that utility spends amplify at a pace far in advance of rent growth (save a few crazy good markets in the country) you will definitely want to pass the increases along. The billing will also ebb and flow with occupancy and a number of other factors.
In this case, it’s best to work with a really good accountant who can build a formula into your budget template that considers all the factors for you. I liken this to one of those math word problems that many of us struggled with back in elementary school. Email me if you need help with this one.
Next Week
Next week we will be tapping the keys about sewer income – smelly as it may be…
Sending my thoughts and prayers to those who have been set back by the Super Storm,
M
Apartment Budgeting: Storage Income
One in Ten Americans Has a Self-Storage Unit
“Human laziness has always been a big friend of self-storage operators,” Derek Naylor, president of the consultant group Storage Marketing Solutions – New York Times article. I would say to my apartment friends – we/you need to get a piece of that action. Build garages not for parking cars but rather storing junk. Do some dual marketing – call it storage and or garage. It’s a place to put stuff and things.
Storage is such an epidemic that we now have Storage Wars (reality TV show) aimed at celebrating the agonies and lamenting the defeats of would be bidders. It also doubles as a back door way of marketing the self-storage business – a post for another day.
Storage Income Defined
Simply put – this is income that comes from those dusty old basement storage spaces that everyone tends to forget about.
Storage Income is a way to drive revenue to your bottom line. If your property has the space (basements are great for this) – consider the option of building out some simple caged space that people can use to store stuff. Or, if you already have it, just remember to market it. Price it to sell, create scarcity and urgency. Heck, give it away (for short stints) just to get people hooked on having it. Trust me, once they move their stuff in – as suggested above – they will be too lazy to move it out. Boom – you chance to get an extra $5 or so a month.
Budgeting Strategy
No real strategy here. Look at your trend lines over the trailing 24 months and get yourself an average. Use that average to straight line your storage income account and think about adding some inflation for the coming 12 months.
Any Other Thoughts On Storage Income?
Your having an amazing and over the top day multifamily maniac,
M
Apartment Budgeting: Telephone Income
I have taken a bit of a pause here at MBG due in large part to Mills Properties budget season. Every year around this time we dive head first into a process that takes the better part of two plus months to complete. We do our best to space it out so that any one VP, RM or AM does not get creamed. And, in the same respect it does take a good deal of focused time to do a budget right. With that in mind, I want to get back to posting to the blog as it provides good therapy for the day-to-day hustle of property management.
Today’s topic is telephone income.
Telephone Income Defined
Telephone Income is derived from a couple of different sources. Roughly twenty years ago plus or minus, it came from the likes of AT&T and or other local providers. Our on site sales teams would offer to transfer existing phone service or they would initiate the call for new service to be set up. For that, the property received a commission. It didn’t amount too much but it was income.
Around the same time, at least according to my aging memory, revenue share models arrived on the scene. Similar to cable and internet shares, in exchange for exclusive marketing rights, the providers gave the property owners a piece of the revenue. The share amount was equal to your ability to negotiate. These amounts started to mean something in the way of overall property value. Not huge but something nevertheless.
Cell phone towers changed all that. Providers would come in, especially in the case of high-rise buildings, and pay huge lump sums with ongoing payments. They would erect cell phone towers on your building and or land, sign mega long contracts (10 years plus) and be on their merry way. Huge deal when it came to adding value to your real estate.
I have likely left out a few income angles so feel free to fill in the blanks. And, thank you ahead of time.
Budgeting Strategy
This line item is a bit different from the prior line items. That is in terms of straight lining the income based on history. Because the income is based on contractual terms and agreements you can plug the income. That is to suggest that sometimes the payments are made annually, quarterly or monthly. And, they are specific in amount. Whatever the case, review your contracts, make note of the payment amounts and months they are to be paid and enter accordingly.
Refreshing
It’s good to be writing again. I really miss this part of my world. In the same respect, it felt good to take a pause.
Your looking forward to rockin’ the world today multifamily maniac,
M
