New York City condo & co-op budgeting guide
Healthy finances are the foundation of a thriving building. And the key to healthy finances is a well-planned budget. Our guide covers the essentials, from the breakdown of a budget to effective development strategies and practical ways to bring your budget to life.
Perks of a powerful building budget
A well-crafted budget will impact every aspect of your building for the better.
Smooth operations
Enables efficient daily management, swift maintenance responses, and stops minor issues from becoming major expenses.
Financial stability
Builds reserves for unexpected costs, plans for improvements, and maintains stable monthly charges for owners.
Long-term vision
Empowers your building to invest in aspirational projects and shape its future, turning "what if" into "what's next."
Community trust
Fosters transparency, instills confidence in the board, and gets residents excited about the building's future.
The anatomy of a building budget
Just like buildings, budgets have many different moving pieces. Understanding the structure of your condo or co-op budget is important for effective financial management. A well-crafted budget balances your building's expenses with its projected revenue, ensuring financial stability and long-term success. At the highest level, your budget should be separated into three buckets:
Operating Expenses (OpEx): Usually comprising 50-70% of the total budget, these are the day-to-day costs of running your building. This includes everything from utilities to staff payroll to insurance.
Capital Expenses (CapEx): For non-recurring planned major improvements, projects, or repairs to your building. This includes funds for projects in the coming years.
Reserve Funds: Your financial safety net for any unexpected costs. Conducting a reserve study every 3-5 years will help determine the right fund amount, but you should aim to allocate at least 10% of your budget.
Having a condo or co-op budget isn’t just important for running a healthy building, it’s the key to complying with several NYC laws and requirements.
Maintain adequate reserve funds
Designating at least 10% of your annual budget to reserve funds is the widely recommended threshold.
Financial transparency to owners
Remember to provide annual financial statements within 120 days of fiscal year-end to unit owners
Inform prospective buyers
Local Law 157 requires providing detailed financial disclosures to prospective buyers
What’s in my OpEx budget?
Wonder where the majority of your building’s expenses go? We broke down it down into the biggest buckets and shared some tips to reduce costs.
Beyond your monthly maintenance fees or common charges, there are some opportunities where the board can look to generate income additional income for the building.
Amenity reservations
Have a nice rooftop or common space? Offer residents (or even non-residents) the option to rent it out for parties and events.
Storage unit rentals
We all know New Yorkers need more space. Try turning that odd basement corner into rentable storage units. They'll go fast!
Strategic rooftop leasing
Your roof could be doing more than keeping the rain out. Cell towers, solar panels, or even urban farms, are a great way to put your space to work.
Energy generation
Going green puts some green back in your pocket. Solar panels can earn you credits on your energy bills, and you can participate in demand response programs.
Vending and shared goods
Upgrade old vending machines and add some shared goods. This levels up your building and brings in steady cash. Win-win.
Film and photoshoot locations
Big lobby or shared space? List it with location scouts! You'd be surprised how many shoots are always looking for 'authentic' NYC spaces.
A step-by-step roadmap to crafting your budget
A well-crafted budget balances immediate needs with long-term vision. Before diving into the numbers, the board should take some time to discuss the building's future. Where do you want to be in 5-10 years? Think energy efficiency, amenities, and resident satisfaction.
This future-forward mindset will help you identify necessary projects and plan funding strategies. Work backwards to determine which initiatives to prioritize in your current budget and how to allocate funds for future needs.
Reflect & learn
Analyze your past performance
Take a good look at where your money went last year. Did you spend on what really mattered, and what surprises popped up that you can plan for next time? Identify any areas you can cut back on?
Forecast strategically
Anticipate future expenses
Now consider the present - take into account the status of the building and economic factors. What's the inflation rate, energy costs, and upcoming building needs?
Think big
Plan for capital projects
Are there upcoming compliance deadlines? Factor in any major upgrades and projects. How you can start aligning your budget with your building's long term vision?
Construct your safety net
Reserve fund strategies
A strong reserve fund can help protect your building against financial shocks. A professional reserve study will pinpoint future needs. If underfunded, increase annual contributions by 3-5% until you reach your target.
Project income
Be realistic about revenue
Take a close look at your current income sources and consider where you might need to make adjustments. Are you increasing monthly fees? Are there any new revenue streams you haven't explored yet? Balance the building's financial needs with what's reasonable for owners to pay.
Fine-tune and prioritize
Balance needs and wants
With your big-picture goals, expense projections, and income estimates in place, it's decision time. Distinguish between essential "must-haves" and desirable "nice-to-haves". Look for areas where small, strategic cuts can add up without compromising quality.
The AI advantage
Leveraging generative AI can significantly level-up your budgeting process – from saving you time to identifying deeper insights.
- Analyze past spending patterns to identify savings opportunities
- Predict maintenance needs and optimal project timelines
- Adjust for economic factors and calculate optimal fee increases
- Flag compliance issues and suggest risk mitigation strategies
- Create visual reports and dashboards for easier analysis
AI should complement, not replace, human expertise in your budget decision-making.
Bringing your budget to life
After doing the hard work of developing a data-driven, forward-thinking budget, how do you make sure you’re able to stick to the plan?
Get owner buy-in
You’ll likely have to increase monthly fees. By effectively communicating the rationale and vision for the future of the building, owners will be more understanding, and even more excited about the future of the building.Read more
Conduct monthly financial check-ins
Constantly check spend trends. Are they aligning with what you had budgeted for? You might realize you over or underestimated an expense – that’s okay, you can still adjust your budget or funds accordingly.Read more
