The not too boring building budget guide

Condos
Co-ops

Co-op budgets: highlights

Operating income

Your operating income is how much money is flowing into your co-op. This should cover your operating expenses and reserve fund. Your goal? Break even at the end of the year!
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Operating expenses

60%+

of your budget covers:

Insurance

Includes: common area protection policies, D&Os, and liability coverage
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Utilities

Includes: common area heating, electricity, gas, and water bills
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Labor expenses

Includes: staff wages, benefits, and payroll taxes
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Taxes & debt service

Includes: property taxes and mortgage payments
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15-30%

of your budget covers:

Maintenance contracts

Includes: elevator, exterminator, boiler, and more
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Repair
costs

Includes: non-recurring elevator repairs, boiler repairs, and more
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Professional fees

Includes: accountants, attorneys, management, and more
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2-10%

for your:

Reserve contribution

When your reserve fund - your building's savings account - is healthy, your building will be better prepared for whatever the world throws at it.
LEARN MORE

Operating income

Your operating income is how much money is flowing into your co-op. This should cover your operating expenses and reserve fund. Your goal? Break even at the end of the year!
LEARN MORE

Operating expenses

60%+

of your budget covers:

Insurance

Includes: common area protection policies, D&Os, and liability coverage
LEARN MORE

Utilities

Includes: common area heating, electricity, gas, and water bills
LEARN MORE

Labor expenses

Includes: staff wages, benefits, and payroll taxes
LEARN MORE

Tax & debit service

From daily tasks to building emergencies, we’re always here for you.
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15-30%

of your budget covers:

Maintenance contracts

Includes: elevator, exterminator, boiler, and more
LEARN MORE

Repair costs

Includes: non-recurring elevator repairs, boiler repairs, and more
LEARN MORE

Professional fees

Includes: accountants, attorneys, management, and more
LEARN MORE

2-10%

for your:

Reserve contribution

When your reserve fund - your building's savings account - is healthy, your building will be better prepared for whatever the world throws at it.
LEARN MORE

Want help with your 2023 budget?

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Co-op budgets: deep dive

Operating income

Think of this as your co-op's checking account that shows every source of income flowing into your building. Primarily made up of maintenance fees, these funds are what cover your operating expenses - from keeping the lights on to paying property taxes. Your goal at the end of the year is a balanced budget across income, expenses, and reserve contributions.

Are you seeing rising insurance costs, staff wages and more? You might need to increase maintenance fees.  Follow our tips on effectively communicating fee increases to shareholders.

Don’t sleep on these income generators:

Commercial rent
Commercial utilities
Cell towers
Laundry machines

Operating expenses

Make sure to cover these expenses to keep your building running at peak performance.
Utilities
Insurance
Tax & debt service
Labor expenses
Maintenance contracts
Professional fees
Repair costs

Utilities

Ever gone even an hour without water, electricity, or heat (in the dead of winter, of course)? Yeah, it's rough. Your building’s utilities are the monthly expenses you just can't afford to miss. Researching local utility rates will help you prepare for upcoming increases and check out ways you can combat rising energy costs.

Insurance

What happens if someone falls in the stairwell, if your building gets sued, or if a hurricane floods your lobby? Enter insurance. Your co-op’s policy plans - from master liability plans to directors and officers (D&O) insurance - protect your building and your board from any misfortunes and mishaps that may occur.

This is a good time to review your plans to ensure you're getting the coverage you need.

Insurance policies are projected to increase  15-30%.

D&O liability insurance protects boards from:

Breach of contract
Breach of warranty of habitability
Breach of fiduciary duty

Tax & debt service

As co-ops are made up of shareholders rather than individual unit owners (like a condo), the building pays the mortgages and all property taxes.
During the budget planning process, it’s important to:
Ensure you're collecting the necessary amount of maintenance fees to cover these big-ticket items
Maximize your abatement by confirming the number of shareholders who use the building as their primary residence
Once paid, don't forget to share tax deductibility letters to all stakeholders for their personal tax returns

Labor expenses

Labor expenses vary building to building due to a variety of factors.
For example:
Are you a full-service co-op? Payroll may be your biggest expense.
Are your building employees non-union or part of 32BJ? The latter could increase your labor expenses dramatically.

Boosting staff morale can improve job performance and retention rates.

32BJ benefits (excluding payroll) are expected to increase 4.5% next year.

Maintenance contracts

Does your boiler need constant attention? Do you only trust one landscaper to keep your rooftop garden alive?
By locking in year-long service contracts with the vendors you trust now - from HVAC to elevator and beyond - they'll be able to jump right in when you need them most.

With overtime fees, a third-party security contract could cost way more than hiring a doorman directly.

Professional fees

Putting together a team of advisors you trust is no easy task. Make sure to review all your major professional contracts - accountants, attorneys, management, and more - to ensure you're getting the guidance you deserve.

You can expect contract fees to increase roughly 3-5%
annually.

Repair costs

Did the elevator break down during one morning’s rush hour?
Is the boiler clanging and hissing so loud it sounds like a cat's stuck in it? Make sure your budget is prepared to handle any repairs that are sure to come up throughout the year, usually at the worst possible times.

Break up with costly emergencies by investing in a predictive maintenance plan.

Reserve contribution

A healthy reserve fund is the sign of a healthy building. Your building will run better and you'll substantially cut down on future building assessments. Plus, lenders will be much more willing to lend to potential buyers, increasing the value of your building.
Check out our list of reserve funds best practices here.

Fannie May and Freddie Mac suggest contributing 10%. We can dream, right?

Capital expenses

Gearing up for a Local Law 11 project? Preparing for Local Law 97? Your reserve fund comes in handy for covering these large capital projects. For a refresher on New York City's most important local laws, check out our guides:

Co-op assessments

Co-op assessments are temporary charges to shareholders on top of maintenance fees. They usually fall under two buckets:

Capital assessments

Used to pay for larger projects that increase your building's value. Maybe you have a big Local Law 11 project or everyone's finally ready to turn that dream rooftop deck into a reality.

Operating assessments

Used to pay off necessary operating expenses that can no longer be covered by your existing budget. Maybe you hadn’t planned to fix the boiler’s circulator pump or you've finally had enough of that elevator that's as reliable as the 5 train.

Stop overpaying on capital projects. Save that 8.875% in sales tax by filling out a Certificate for Capital Improvement form.

Want help with your 2023 budget?

We’re here for you