Builders: How to Hit a Moving Target

Controlling expenses for the condo or HOA is tough during the sales and construction period.  The disclosure or “at full” budget is of little value during the sales and construction period, yet many managers rely on this budget for their financial reports.  Using this budget in your income statement prior to the community reaching completion gives a false sense of security.  Of course you’re under budget on everything… the common elements are only partially complete! 

LandArc has a practice of creating annual operating budgets in partnership with our builder/developer customers.  These budgets forecast anticipated additions to the common elements, projected sales, and expected deficit funding requirements.  This is an essential tool for managing the developer’s funding obligations throughout the sales and construction process.

After an annual operating budget is adopted, LandArc’s systems produce a monthly update that contrasts cash against the forecast.  This system tracks revenue and expense projections against reality and recasts the expected deficit for the year.  This is a sophisticated piece of software, not a manually updated spreadsheet, but it is invaluable in creating accountability for association expenses throughout the sales and construction period.