Is the funding for those needed capital projects in the budget? In these post-pandemic times, many multifamily and commercial properties are still struggling to fund needed improvements and normal maintenance expenses.
Whether there are no funds available or other projects have soaked up your capital expenditures (CapEx) budget, there may still be ways to fund those needed upgrades. From replacing worn carpet to upgrading security, your apartment or condo property probably has a long list of things that should be done sooner than later. But where does the money come from when it’s not in the budget?
The money for these projects may not be there right now but it doesn’t mean that there aren’t resources available to help fix the problems. Don’t look at it as spending money you may not have, look at it as an investment in your property’s future.
Finance it
We all think about car loans, home loans, and credit cards. But there are also financing options for amenities such as: media rooms, playgrounds, video intercoms, package lockers, and so much more.
Some companies may offer leasing, or an internal financing option. If the item your property needs doesn’t have a leasing or financing option, business financing solutions such as Ascentium Capital or Balboa Capital may be a good fit.
With competitive interest rates and a pre-approval process (like getting pre-approved for a home loan), this type of financing can help you get what your property needs quickly. Financing beats working an urgently-needed expense into the budget two years from now.
Find the Money Elsewhere
Condo buildings can impose a special assessment if there isn’t enough in the reserve budget, but what about apartment buildings?
Depending on the cost of the improvement, your building may be able to cut costs elsewhere and reallocate some funds towards the improvement. Or delay some less urgent maintenance expenses (like new interior paint) until later in the year or next year and apply those funds to the more pressing need.
Budgets need to be a little flexible to withstand reality. Hopefully when your property’s budget was prepared, there was a little kept to the side for items that may not have been necessary when it was drawn up.
Pass it On
While no one likes to feel nickeled and dimed, it is possible to raise enough to cover the expense by increasing charges or imposing new fees, such as a “technology fee” of as little as $1/month per resident. Depending on the size of the building, you could recoup all the upfront expenses within a year or two.
For example, let’s look at a building with 250 units. Implementing it at $5/month per resident fee would bring in approximately $30,000, after two years.
Several amenities/projects can be paid for with those funds. When you’re addressing an urgent need that the residents are feeling acutely, they are much more likely to be amenable to a small fee.
Or sometimes, it may be better to raise the rent a few dollars instead. The money may not become immediately available, but with the project done or the new amenity installed it shouldn’t be too difficult to find tenants who want to live in your improved property.
There’s Always a Way
In the end a successful property is one that has long term, happy, community-minded tenants. Making sure that you find the resources to maintain and expand your property may be difficult, but necessary.
Sometimes it may seem impossible to work these capital expenditures into the budget, but don’t worry, it can be done!
For more information on Luxer One’s “Luxer as a Service” OpEx options, check this out.
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