What is an operating budget?

An operating budget is fundamentally a financial plan that outlines the expected income and expenses associated with operating a property over a specific period, typically a year. It serves as a roadmap for property managers, allowing them to anticipate costs such as maintenance, utilities, payroll, and other operational expenses, as well as forecast rental income from tenants.

Having an operating budget is crucial for effectively managing a property, as it helps in making informed decisions about operations and financial strategies, ultimately ensuring the property's financial health and sustainability. This budget also aids in identifying areas where costs can be controlled or revenue may be maximized, supporting overall property management goals.

While the other options provide different insights into property management, they do not encapsulate the essence of an operating budget. A record of past financial performance reflects historical data rather than projected plans. Reports on tenant satisfaction levels focus on tenant experiences rather than the financial framework of property management. Lists of potential new investments concern future opportunities but do not represent the comprehensive financial planning that an operating budget entails.