What Is the Most Important Figure in a Building's Financial Statement?

Aug. 14, 2015 — We're looking at the building's financial statement from last year. What is the most important number to look at?

This is an easy question: the maintenance or common charges. It is imperative for a managing agent and board to make sure maintenance or common charges are sufficient for the building to operate at break-even or small surplus levels.

Boards that keep their heads in the sand and refuse to raise maintenance or common charges to the correct levels so that they do not operate at a deficit are not fulfilling their fiduciary obligations to shareholders or unit-owners.

If you don't get your income number at the right level you are always going to be behind the eight ball: not able to pay bills or make sure routine repairs or small improvements are addressed in a timely manner. In the end, that makes it impossible for you to plan for the future of your property.

Mark Hoffman is principal at Hoffman Management.