KriyaGo - Blog #CAM audit

How improving CAM reconciliation can help improve your leasing strategies

Fri, 21 Oct 2022 09:00:00 -0400

The Common Area Maintenance or CAM reconciliation process can be a very hectic task, especially when it comes to commercial real estate businesses. With multiple properties to handle, it can be overwhelming. But CAM reconciliation is crucial nonetheless and property managers can not afford to avoid it. CAM is a part of every lease shared with tenants, and a lot of monetary transaction banks on it for any property owner or manager. Due to missing data and discrepancies in agreements, landlords stand to lose a lot of money. Though this process is tedious, you still need to ace it to get maximum return on your ROI.

You need to better your strategies in handling CAM work to improve your leasing strategies.

Read this blog to understand the details of how CAM reconciliation negatively impacts real estate and how improving it can benefit you.

The adverse impact of flawed CAM Reconciliation

Some CAM areas might be easier to understand, like property taxes and insurance calculations. But the essential maintenance part can be very tricky given that a standard charge is divided among multiple stakeholders of different units in the same building. Any data error can simply lead to overcharging or undercharging tenants and messing up your lease agreement. Here are a few of the grave impacts of imperfect CAM reconciliation on your real estate business,

The conflict between landlord and tenant and extended negative impact on business growth.
Inaccurate cost classifications
Due to miscalculations, landlords paid out of their own pockets for CAM work when lease agreements said otherwise.
Wrongful interpretation of lease terms and conditions leading to uninhabitable conditions.

Also impacts tax payments in the end when lack of data leads to tenants paying less than what is required of them.
It can be a major legal battle when you have improper expense classification in your buildings and units. You need to thoroughly recheck all data before assigning expenses to each building to not lose out on tenants.

How proper CAM Reconciliation can help improve the situation

CAM reconciliation has an obvious impact on the finances of your business. But the CAM reconciliation process also can help landlords maintain their position in the real estate market and also improve their property leasing strategies. Let’s talk more about that to help you understand why you need to rethink your CAM work.

• Improved tenant relations

In most lease agreements, tenants feel that their landlord is overcharging them for things that are not their responsibility. The legal terms and everything can be open to interpretation, and all stakeholders want to steer it their way and gain some. Lack of expense invoices can lead to tenants paying more, or no proper statements can have landlords earning less. In both cases, the long-standing relationships are jeopardized.

Improved landlord and tenant relations can help in lease renewals, low tenant turnovers and improved reputation in the market. But when you keep clarity in your CAM reconciliation process and have proof for all expenses, then your tenants gain trust in your work ethic. Also, when there is transparency, all your payments are released on time, and your leasing strategies see a positive boost.

• Getting better sales in a competitive market

When you improve your tenant relations, it also makes your holding on the market much stronger. In this competitive market, if the reputation of your real estate business takes a hit, then your sales will go down. The commercial real estate market has already suffered a lot due to the pandemic.

As a leasing strategy, landlords and property managers can choose to provide some incentives in their CAM charges and retain long-term tenants. A controlled and streamlined CAM reconciliation process can help you better this process. A proper technology implementation plan can help solve this. Yardi CAM reconciliation software is one such provider that can give you quick CAM solutions. This software will also draw up valuable insights from the industry and stay ahead in the competition to drive sales. Strategically automating your CAM reconciliation work can get you more control over your lease agreements.

• Revamping and negotiating the future lease agreements

When you as a project manager have a stable image of doing great CAM reconciliation work, you can easily negotiate new terms during your lease renewals and new agreements. Staying clear about costs and providing enough data to help tenants understand every point of your CAM statement is one of the best project management best practices that you can establish.

Taking inspiration from previous reconciliation work, you can even come up with agreement terms and conditions that are beneficial for all stakeholders. This will help establish a stable foundation for your business. You can even get real estate lease audits done by neutral third-party auditors to straighten facts in your lease.

Why you should outsource your CAM Reconciliation work for a better lease strategy

Are you stressed out about the CAM reconciliation process? Don’t be when you can simply outsource the work to experts and shed the load from your shoulders. A team of experts who have done CAM reconciliation work for years can help you save money, better your tenant relations and find useful data to increase sales. An outsourced service provider will also have access to the latest technology, which you can leverage to automate the CAM work.

At KriyaGo, we have the needed professional resources, a team who will customize them based on your business needs and stay within your budget. Fromauditing leases to lease abstraction services and finally getting CAM reconciliation, our team can do it all.

Final Take

Though CAM charges vary from property to property, there are some common charges that are the same for most properties. Like pest control, insurance, utilities, security, etc. You need to keep constant track of these to manage your portfolio's daily operations properly. From financial stability and seamless cash flow to improved leasing strategies, proper CAM reconciliation work can have a lot of great impacts.

This volatile real estate market does not depend on the chance to establish a proper CAM process. Take charge and outsource your work to industry experts. Call KriyaGo today and understand how we work. Talk soon!

Top 7 Best Practices for Better CAM Reconciliation

Thu, 20 Oct 2022 09:30:00 -0400

A real estate business has a lot of paperwork; it might be monotonous, but it is extremely important to run the business smoothly. One of these crucial but tedious works is CAM reconciliation or Common Area Maintenance Reconciliation work. Though this is a part of the more extensive lease agreement, a CAM reconciliation alone can be an overwhelming task. When not followed to the T, you can be up for more significant legal and compliance battles.

CAM reconciliation in itself involves a lot of legal documents and complex language. But property management must go through them with a fine-tooth comb to never overcharge or undercharge tenants and lose money. How do you do it? Here are a few project management best practices for excellent CAM reconciliation work. Read the full blog to know where to start.

Why do you need flawless CAM Reconciliation?

An essential need of CAM reconciliation is the money property managers, and owners retrieve from CAM can be reused to maintain the property. Another primary reason is that most tenants feel they are not supposed to pay for the things they are made to pay for. With proper reconciliation practices, you can make your tenants understand why the money is essential and how it benefits them in the end.

7 ways to get better CAM Reconciliation?

CAM reconciliation is an extensive and strenuous task; here are a few of the best practices that can ease the job for you.

1. Begin with a detailed expense review

This is the first step to getting a spotless CAM reconciliation report for your real estate business. Make sure all expenses and spending are accounted for. Every penny counts, and you need to have proper documents before you present it to the tenants. Never give your tenants a chance to question your integrity due to gross human errors in reviewing expenses. This must include month-to-month expenditure and vendor invoices. You can also go the extra mile and compare your CAM reconciliation with last year’s to get a better internal review.

2. Never negotiate on your standard maintenance fees

When you send out a lease and sign a contract with tenants, new or old, you must ensure that there are no discrepancies in maintenance fees. Be it 3-4%, make sure that your tenants understand that the money is for their benefit at the end of the day. Due to unprecedented events, you choose to waive off the fees for some tenants; you might open up flood gates for other tenants to ask for such favors constantly.

3. Be updated about special requirements

As a property manager, you must know that CAM reconciliation in real estate is not the same for all kinds of tenants. Restaurants, stores and office spaces all have special CAM reconciliation rules and regulations. If you are not updated about them, it is a major fault in your system.

4. Keep your documents audit-ready at all times

From getting third-party documents to keeping track of invoices, keeping your documents lease audit-ready has many different tasks. If you need reports from your insurance providers or need invoices from vendors, do not forget to ask for them and get them documented before you finish your CAM reconciliation.

Lease auditors cross-check with lease agreement data with actual charges made in CAM reconciliation to keep work on track. This is a very detailed process, and you can land in a lot of legal trouble if not.

5. Consider outsourcing your CAM Reconciliation work

Back office outsourcing services are becoming increasingly prevalent to help companies save costs and labor. Without adequate expert staff, you can lose out on money and land in trouble. CAM reconciliations are filled with legal jargon and complex clauses, and it is best to get the work outsourced. Outsourcing the work will get you the best resources, and you pay for them when you need them. You do not have to pay for these expert staff full-time. They will help obtain comprehensible data that you can work with and streamline your workflow for better management.

This is why more than 78% of businesses across all domains are outsourcing their tedious office work for better efficiency. The KriyaGo CAM reconciliation services provide your real estate business with professional resources and boost profitability. Our team also helps you solve all irregularities in your documents and save you additional money on audit issues.

6. Put careful thought into checking accuracy

Run your internal due diligence and ensure that all CAM charges are calculated and filed as per gross leasable area occupied. Before you present your reconciliation to your tenants, you must ensure that all charges are accurate. You need to calculate gross-ups and expense caps, account for capital investments, and confirm the tenant stay term. You must also keep track of tenant turnovers and move-out timelines to allocate charges accordingly.

7. General ledger review

Though this might be one of the most boring and time-consuming tasks, it is one of the most essential too. As a property manager, you must ensure that all bills are sent to the correct buildings and units. Handling multiple real estate properties under one portfolio might make mix-ups real easy, but you can not keep any window. You must review and recheck the general ledger multiple times to ensure that every account is filed to the right property and reconciled on time. If you do this with proper care, you can even file escalation charges when things are not paid on time.

Summing Up

Proper technology selection in project management can be challenging. That is why at KriyaGo, we let you leverage the best of technology in real estate property management and back office work to get the job done. Your CAM reconciliation work will no longer be a significant monetary affair and an extra burden on your shoulders. We will do the heavy lifting of back office tasks while you focus on growth.

If you want to simplify and streamline your CAM reconciliation process, get in touch with the KriyaGo consultants. Talk to us in detail to know more.

How lease audits can help you achieve your goals

Wed, 07 Sep 2022 09:00:00 -0400

As Financial Accounting Standards Board (FASB) released new lease standards, you must get a proper lease audit to stay on track. This has complicated the lease abstraction process, which is one of the biggest reasons you need to audit your lease. If you do not have all your data and terms in place, sticking to compliance and regulations can become a problem.

Your real estate strategy and leadership body need to assess their needs for a lease audit and immediately start. Only then will you understand, analyze and get usable data from your lease abstractions and smoothen your business plans. You need a team of lease audits to correctly take care of this process.

Are lease audits a blessing in disguise?

The process of lease audits might be complicated and seem redundant, but they are not. They can be handy to keep you updated on FASB standards and establish better tenant relations. There are many benefits beyond this that can positively benefit your system.

• Crucial for problem resolution

FASB constantly keeps updating their standards and guidelines, and you need to get your lease updated accordingly. It is a constant process, and a proper lease audit can help you ensure that all agreements are running smoothly. There are many complex clauses and terms in the agreements that are beyond comprehension for inexperienced. That can be a roadblock if you do not get an expert from the industry who has a working knowledge of comprehending and analyzing leases. A lease audit partner can help mitigate that in time.

• Better tenant relations

A lease agreement document forms the backbone of any new or old tenant-landlord relationship. If there are any faults, your tenant might mistrust you and permanently hamper the relationship. When non-experienced people interpret leases, they can come to various conclusions and end up in confusion. That is why a lease audit will help draw up concrete conclusions that are comprehensible for all parties involved. All terms of the lease will be simplified for you, and you can quickly resolve your problems with tenants before they curveball into a significant issue.

• Identify errors in the agreement

In reality, lease agreements are these huge bulky documents filled with errors opening you up for legal battles. These can be human errors, but they can end up losing a lot of money and your reputation. A lease audit can set the record straight before you go down that rabbit hole of harming your business.

• Efficient portfolio management

When you have to handle numerous properties and units, pilling up leases can make portfolio management difficult. When property managers have multiple duties coming their way, it becomes hard for them to keep track of legal lease documents. How about letting your property manager manage the properties while a lease auditor who knows these documents inside outdo the work? This will help you manage your portfolio better and even save up time for expansion.

• Better data management

A lease auditor can help you quickly identify data discrepancies between systems and straighten them out. They will also help you understand if your balances and payments add up and cross-check them with finances and account holdings. It will give you a chance to understand if your lease terms and clauses are profitable and where you have a chance for improvement.

• Perfect CAM Reconciliation

CAM is a major portion of any lease agreement, and this is where most real estate owners and managers lose money. A lease auditor will look into this part of the agreement to. They will ensure both you and your tenants keep up with your bargain ends to maintain a healthy relationship.

Why should you outsource your lease audit work?

You can get experienced help in this complicated task without employing them full-time when you outsource your lease audit work. These experts will know precisely where to look within those bulky documents to get the correct data for you. That is why more than 78% of companies worldwide feel good about outsourcing their work to partner firms.

• Third-party neutrality

Your tenants will gain more faith in you when you get a third-party outsourced lease audit partner. A third-party auditor is neutral to landlords and tenants and has no vested interest in benefitting either. This is the best way for you to go to reach a fair settlement.

• Uncover overspending areas

Your lease might have you spending more than you need. When a lease auditor takes a look at your business functions, they will help you realise potential areas of growth. Doing the lease audit internally will not let you find these faulty areas.

• Quick turnover

Trained professionals who are solely concentrated on your lease abstraction work are sure to have a quicker turnaround than your internal team. An inexperienced internal team will not have the right expertise and bandwidth to meet all deadlines and keep up with compliances at the same time.

• Latest tech usage

Human data entry errors are as high as 4%. That is a big area you can cover when you outsource your work. A proper lease audit partner will use a proper selection of top-notch technology and software to streamline the work. This will eventually benefit you in getting error-free work without paying to buy the whole software and install it.

Selecting the best outsourcing partner for your lease audits

In recent years outsourcing lease audits and getting accurate audit reports has helped companies save a lot of money. It has also helped build a lot of healthy and transparent tenant-landlord relations. You need to keep your goals in mind while selecting your lease audit outsourcing partner.

At KriyaGo, we have a team of lease audit experts and the best technology for you to leverage. We analyze and derive valuable data from bulky leases and find you the best industry insights to work with. We have experienced professionals to help you with all lease-related issues, from lease audits to lease abstractions. To find out more about our services, contact the team today. Book a consultation call and talk to us soon!

The Top CAM Reconciliation Tips You Need to Know

Fri, 18 Mar 2022 09:00:00 -0400

Common Area Maintenance (CAM) reconciliation seems pretty simple at the outset. You just add up your costs and pitch them against your budget to close your books.

However, the reality is far from this ideal picture. Most real estate agencies are left scratching their heads trying to figure out what’s due from tenants or how much to pay back.

Undoubtedly, CAM reconciliation can turn out to be complex, especially for large businesses. You can lose your way in the expenses if you manage several properties.

However, worry not, as we have the best CAM reconciliation tips for 2022. You can implement them right away and optimize your CAM reconciliation process today.

Don’t Forget to Track Every Expense

CAM expenses can cover a wide range of activities. From general repairs to HVAC to the salary of staff, the expenses can become overwhelming.

In addition, property managers may make some expenses without recording them. These expenses may seem small at the occasion but can add up to a significant amount at the end of the year.

Each building you own or operate can thus have countless unaccounted expenses. Naturally, that will cause a dent in your profitability and eat up your revenues.

Therefore, it is necessary to track every expense you make for CAM, for all your properties.

Create a Single Source of Truth

It is much easier to track all your CAM expenses if you have a single source of truth. However, not all realtors or property managers follow this advice. They may maintain several spreadsheets or track their expenses based on vendor accounts.

The need of the hour is to switch to a single spreadsheet for each building. You can then get a ready source of data from a single source to perform your reconciliation.

Many real estate agencies today use digital solutions to manage their properties. However, these tools work in silos and don’t talk to each other.

As a result, the data in one tool is not available in others. So, your CAM calculations can go for a toss if you use several tools to track your CAM costs.

Therefore, use a single property management platform like MiCasa to manage your CAM reconciliation. Alternately, you can also integrate all your real estate tools to allow data to flow freely throughout teams and departments.

Be CAM Audit Ready

CAM expenses can form a large part of the lease payment for tenants. It can add up to become a significant amount as the price of goods and services increases.

For example, property taxes have increased by more than 2-times between 2009 and 2019. Services like pest control and security also experienced double-digit growth, as per the National Apartment Association survey.

As a result, your tenants can invoke their rights to audit your CAM reconciliation. The trend is more common when you are dealing with industrial, retail, or corporate tenants.

Therefore, always maintain a comprehensive record of your CAM expenses. You should also comply with the applicable accounting standards for your jurisdiction.

You can boost your reputation and improve tenant retention by staying audit-ready. It also shows you are transparent and don’t intend to take undue advantage of your tenants.

Factor In Your Tenant Occupancy

Are you reconciling your CAM expenses based on 100% occupancy?

This is a common mistake many real estate agencies make. They calculate the CAM costs considering full occupancy.

However, they forget to consider the changes in expenses that occupancy rates can impact.

For example, a tenant should pay for electricity, janitorial services, or water only for the months they occupy your space.

Therefore, you have to account for the number of days a tenant occupies your property. So, if a lease begins in April, the tenant should pay for these expenses for the remaining term.

On the other hand, some expenses don’t change with occupancy. The list may include payments for amenities, security services, and similar expenses.

As a result, consider every CAM expense individually and make your calculation.

Prepare Yourself While There is Time

CAM reconciliations are generally due within 3 – 4 months after the calendar year ends. The time may seem enough to match your books but not so in reality.

Most real estate agencies spend hours shuffling through countless leases. You might also have to pay your employees overtime to complete the workflow within the deadline.

Naturally, such a process opens room for errors and miscalculations.

Therefore, start early and prepare your spreadsheet beforehand. After that, you can start filling in your annual data.

The same applies to any software you use for CAM reconciliation. Set up your software in advance so that you can quickly record your data and get over with your CAM calculations.

This small step can go a long way to simplify your CAM reconciliation, says Colorado Real Estate Journal.

Outsource Your CAM Reconciliation

CAM calculations and reconciliation can become a burden on growing real estate agencies. It demands considerable resources and in-house talents to perform the process efficiently.

Additionally, you cannot take any shortcuts as your reconciliation affects your profitability. You also have to be 100% accurate as you don’t want to overcharge your tenants.

That could take a toll on your brand image and even make occupants leave.

As a result, it can be a strategic decision to outsource your CAM billing and reconciliation. However, you should always work with a reliable partner with due experience in your industry.

Real estate agents and realtors can partner with KriyaGo to outsource CAM responsibilities. We can help you enjoy a hands-off approach to boost your profitability and eliminate irregularities.

Additionally, you can always rely on our expert team for the best results. Get in touch with us now to discuss your requirements.

Final Thoughts

CAM reconciliation should be a well-thought-out process for every real estate agency. You should prepare beforehand and track every change over the year. In addition, calculate occupancy and maintain a single source of truth for accurate calculations. In the end, work with a reputed partner like KriyaGo to outsource your CAM reconciliation to save time and costs.