Steve the loan is almost paid off and most likely the Board will get another loan shortly after.
The real estate agents have said our building has the highest flip tax. Steve we have excellent financials, way more then enough if we need a new roof. Our building is very well maintained and was highly sorted after until the monthly maintenance has been raised every year and the assessments have been increased to over our monthly maintenance. Nothing is being cut in the budget it's only going up. Thanks for your input Steve.

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PC#1, what kind of loan does your building usually take out, a Line of Credit or something else? I'm interested in what form of loan you find most effective and what your costs are to originate the loan in terms of percentage of principal amount.

Thanks!

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It's been my experience as a treasurer of 10 years that shareholders value consistency, especially when dealing with monthly maintenance and assessment payments. Besides the usual grousing every year from some shareholders when maintenance goes up, the vast majority of feedback we receive is that shareholders recognize expenses generally go up and rarely come down, so the board has to increase maintenance every year. As long as the shareholders perceive the increase is in line with inflation and extraordinary expenses are fully explained, they trust that they are getting good value for what they pay.

I would be very wary about balancing an annual budget that includes anticipated income from unit sales and the corresponding transfer fee (the PC way saying "flip tax"). Income from transfer fees is one of the most unreliable sources of revenue unless you're in a huge complex where there are historically a certain base number of annual sales.

As for reducing expenses, this can get tricky. The building across the street from ours tried to eliminate their part-time doorperson as a cost-cutting measure. They didn't have to raise their maintenance for a year or two, but the desirability of the building plummeted. Sales were much fewer and further between, and sales prices under-performed comparables in the area. A building can use cheaper materials and extend maintenance periods, but in the end the cost to remediate and repair will be greater.

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