How to Prepare a Condo Association Budget in Texas: BENCHMARK

Home sweet high-rise: The evolution of urban living

In recent years, the concept of "home" has evolved, particularly within communities where the available amenities have become more important to prospective residents. This gives “rise” to the appeal of high-rise living. With convenient access to upscale services and luxurious facilities, residents embrace the modern interpretation of home. However, the growing number of high-rise communities means more amenities, more shared spaces, more upkeep, which means more financial planning. This leaves condo owners' associations asking for better solutions on how to prepare a condo association budget in Texas.



As expectations evolve, the task of managing budgets has become more difficult. High-rise management teams must stay on top of legislation that affects Texas associations, monitor funding reserves for maintenance, and navigate a fluctuating insurance market.

While all types of homeowner and condo owner associations face similar issues, high-rise residential associations face the added challenge of balancing their budget in accordance with the latest state regulations while staying aligned with the elevated luxury experience their residents expect.

The good news: Board members of Texas high-rises can use our BENCHMARK as a guide when looking at your annual budget, long-term capital investments, industry trends, and more.

David Diestel, CEO of FirstService Residential, explains:

“Board members are everyday heroes performing a balancing act in the communities they serve. In their budgeting process, that means delivering on service expectations while managing costs. Our goal is to simplify community living by providing information to help association leaders optimize their budgets with confidence and assist them in communication with their residents. FirstService Residential’s extensive portfolio of high-rise properties has provided us with deep insights into the operating costs and budget challenges communities face, and comparable data to share with developers and the industry.”


 

Guiding Texas communities to new heights

Texas, a dynamic hub of innovation and growth, is home to a diverse portfolio of high-rise residential buildings. As a condo owners’ association board member in Texas, you’re tasked with the stewardship of these communities. To effectively navigate the challenges and opportunities that come with this responsibility, board members need a reliable foundation on which to build their budget forecast and strategic plan for their associations. This is where our BENCHMARK guide comes in.
 

How to prepare a condo association budget in Texas? Introducing the BENCHMARK guide

We’re excited to introduce FirstService Residential’s new publication, BENCHMARK. This report is designed to provide valuable information for board members, developers, and property owners, and simplifies how to prepare a condo association budget in Texas. We created BENCHMARK to help support your board in balancing the five-star service level your residents expect with the fiscal responsibilities that come with it.

Our goal is to support and collaborate with you, offering insights and cost-effective solutions to enhance your role as a leader in your community. As a board member, it is essential to make informed decisions when planning for the future of your high-rise residential building. 

BENCHMARK uses actual data and market insights to assist in creating a realistic budget and setting up your community for financial success. Additionally, it serves as a tool for discussing operating costs with your operations team and communicating effectively with residents during annual open meetings.

The BENCHMARK guide examines the operating costs and budgets of high-rise residential buildings FirstService Residential manages in Texas (specifically, Dallas-Fort Worth), which you can compare with data from other major urban markets across North America.

How reliable is the data outlined in BENCHMARK for budget planning?

FirstService Residential manages over 9,000 residential communities in the U.S. and Canada, involving nearly 1.7 million residential units and $10 billion in operating budgets. Our teams here at FirstService Residential Texas alone serve over 230,400 homes, representing over 300,000 residents! 

Our extensive presence allows us to provide valuable data that serves as a guide for board members, developers, and industry professionals. BENCHMARK is intended as a reference for your long-term capital planning and budget process, complemented by insights into new city developments, technologies, and vendor options in your area.

Here in Texas, we take pride in our local team’s dedication to developing solutions that optimize operational budgets for the communities we manage. Through our operational expertise and market leadership, we aim to fulfill our brand promise and deliver maximum value to the associations we proudly serve.
 

What to expect as a board member of your high-rise residential building

Before downloading the full BENCHMARK guide, let’s take a look at the challenges many condo owners’ association board members may be facing in Texas today. Let’s talk about the reasons behind these challenges, what’s driving costs in today’s market, and a few proven strategies for success when it comes to how to prepare a condo association budget in Texas.

Top factors driving budgets for Texas high-rises

Ever wonder why it costs so much for condo owners’ associations to run a high-rise residential property? According to our recent study of fifteen high-rise markets in the U.S. and Canada, here are the top five cost-driving factors:

1. Reserve studies and funding: While not mandatory in Texas, reserve studies are now considered standard expectations for maintaining buildings.
2. Keeping great staff members: Maintaining and attracting talented employees to your association is crucial and often impacts your budget. See the article here on how to attract and maintain exceptional employees at your property.
3. Insurance costs: Obtaining affordable insurance has become challenging, especially as some areas experience huge increases in premium costs, sometimes as much as 300%! This is why it helps to have the right management company on your side with the right insurance partner to ensure you’re getting the best rates and coverage despite unpredictable changes.
   • See more on our banking partner, FirstService Financial, here.
4. Utility expenses: Rising prices for essentials like water, sewer, and energy are putting a strain on budgets across many communities.
5. Environmental goals: While going green and embracing sustainability is increasingly valued, these eco-friendly initiatives can come with high costs (for example, making your property EV-friendly).

The high price of high-rise residential operating costs

An unpredictable real estate market means higher operating costs. Operating costs jumped by almost 11% from 2022 to 2023, and another similar increase is expected for 2023 to 2024.

Experts predict that operating cost increases will slow down to about 6% for 2024 to 2025. However, the effects of past fluctuations still muddy the waters for board members trying to navigate how to prepare a condo association budget in Texas.


 

Balancing costs with service excellence

Despite these financial pressures, the core mission remains unchanged—providing residents with the five-star service and top-tier facilities they have come to expect. Striking this balance is no small feat. When thinking about how to prepare a condo association budget in Texas, consider four strategies for success.

Strategies for success

Board members looking for better answers on how to prepare a condo association budget in Texas can start with these four strategies:

1. Resource optimization: Carefully assess each property's unique needs to allocate resources effectively, ensuring that every dollar spent contributes to the community's overall quality.
2. Innovative compensation: Develop creative compensation packages to retain talented staff, who are vital to maintaining the building’s operational integrity and resident satisfaction.
3. Cost-saving initiatives: Explore energy-efficient technologies and sustainable practices that can reduce long-term utility costs and attract environmentally conscious residents.
   • See how our partner, FirstService Energy, provides customized energy-efficiency solutions for Texas communities. 
4. Community engagement: Foster open communication with residents to understand their priorities and involve them in decision-making processes, creating a sense of shared responsibility for the community’s success.

How to prepare a condo association budget in Texas: Comparing communities

One of the common questions from boards and developers is how their budgets compare to other communities in the area. Although several factors can affect a building's operating costs and reserve plans, comparing key categories can help boards better understand their financial standing. The BENCHMARK report insight can help condo owners see the reasons for budget choices and investment plans.

BENCHMARK compiles data from the high-rise residential associations we manage in Texas and across North America, showing how different buildings allocate resources and fund their reserves in a yearly budget. This information is particularly important for buildings that previously didn't set aside reserves but are now adjusting their funds.


 

Conclusion

When looking at how to prepare a condo association budget in Texas, our local team’s focus is always on delivering exceptional service and solutions, enhancing property value, and simplifying the lives of residents in our communities every day. This all starts with providing the best support and guidance to our board members fulfilling their fiscal responsibility to their associations.

High-rise living provides a unique, enticing blend of luxury amenities, prime locations, and contemporary conveniences that attract potential residents. While there are challenges to consider, they can become perfect homes for many people. For board members, overseeing a high-rise community requires insight into operational and financial planning.

For answers on how to prepare a condo association budget in Texas while keeping up with industry trends, we encourage you to download our high-rise BENCHMARK guide.