Embarking on the multifamily budgeting journey using Excel is very typical for this industry, but in our experience, we have found it rife with problems. Join us as we outline the challenges faced in this intricate process and envision potential solutions through the lens of a budget manager.
Forecasting Frustration
The delineation between the forecast process and budgeting proves to be a labyrinth, causing confusion and inefficiencies. With Rental Income, for example, if you try to hold your 2023 forecast in a static state with amounts that you calculated 2 (or often more) months prior your January 2024 amount will not align with your now stale December 2023 amount. Optically, your jumping off point will seem out of step compared to a forecast that was trusted just 2 months ago. At best the forecast is stale from 2 (or more) months of actual events. More likely the forecast was created using overly optimistic assumptions. It’s typical to see businesses forecasting an uptick in rents and occupancy for September through December, when reality proves at best flat, and often a small downturn, during that timeframe. Simplify this intricate dance with a tool that seamlessly integrates the forecast into the budget process, and provide a set of more realistic rent and occupancy drivers for the 4th quarter forecast.
Operational Efficiency Dilemma
Operational teams grapple with a slew of individual expense items, translating complex spreadsheets into comprehensive budgets. For example, software expense is one of a long list of expenses typically allocated to properties on a per-unit basis. Sending an email with detailed instructions is a very inefficient way to attempt to get these in the budget. Pre-loading the template with these expenses seems like a decent method until you find that you need to update the per-unit rate, which calls for significant input and editing across multiple (dozens, even hundreds) of Excel workbooks since each property has its own Excel file. The solution is an intuitive Standard Cost functionality in a purpose-built budget application that brings all properties into a single database. This gives Budget Managers the right degree of power and flexibility and allows a single change to be propagated to all (or the appropriate subset) of the properties in a portfolio, simplifying the process, enhancing operational efficiency and ensuring consistency.
Collaboration Challenges
Excel limitations impede collaborative efforts on property budgets, leading to a fragmented workflow. It’s frustrating for a user to wait until a workbook is saved or checked in by another user. Cloud-based collaboration tools offer a streamlined, check-in/check-out-free environment, fostering seamless teamwork and uninterrupted workflows.
Rent Forecasting Complexity
Anticipating uncertain rent forecasts in April becomes a daunting task without proper tools. “Do it yourself” (DIY) solutions to gathering the correct data and loading it into a spreadsheet is time-consuming and fraught with errors. An application that automatically pulls in unit-level data so that the rent forecast begins in the right place is a much better solution. This daily data pull transforms overwhelming data into a manageable, actionable format.
Starting Anew Blues
Commencing budgeting endeavors from scratch each August consumes valuable time. Imagine a tool that retains the detailed assumptions you made in the past, allowing for a more expedited forecasting and budgeting experience. A user can see the details behind the most recent budget, reusing existing work and building from there.
Last-Minute Adjustments Symphony
Last-minute changes across the portfolio demand manual adjustments in an Excel environment, a time-consuming process. If the Tax Group sends its latest estimates the day before the review meetings, users are in a very difficult situation. Tools that facilitate bulk updates and assumptions at the push of a button streamline this otherwise intricate symphony of adjustments.
Reporting Quest
Crafting detailed side-by-side comparisons of per-unit data by property poses a challenge. Applications with embedded reporting functionalities or that use the versatility of Business Intelligence tools such as Power BI for customized, efficient reporting makes it easy to enable these capabilities.
No More Tears
If you’re a long-tenured Budget Manager using Excel, you’ve undoubtedly encountered that “Saturday just before Monday’s review” call from community managers who somehow deleted their budget file or somehow corrupted large swathes of the entries they’ve already made. They’re begging for some way to recover that data, and you have to deliver the news to a now-tearful colleague that the only thing they can do is start over—and be done by Monday morning. Budget applications built on top of databases make it impossible to “lose the file” and almost impossible to just delete large amounts of data inputs. With that, Johnson and Johnson no longer has a monopoly on “no more tears.”
As we navigate the multifaceted arena of multifamily budgeting, these challenges unveil opportunities for refinement with the right tools at our disposal. This is the opportune moment to choose a robust budgeting application, ensuring a seamless and stress-free experience for your upcoming budgeting process.
Here's to conquering budget complexities while maintaining a professional cadence in the multifamily finance arena!
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