KriyaGo - Blog #FASB

Top Reasons to Outsource Your Lease Abstraction

Fri, 12 Aug 2022 16:07:23 -0400

A complete lease can be filled with legal word jargon and complex language. It can end up being a nightmare for you if you are not trained to understand these. Getting a concise summary of the lease makes life much easier for a property manager. Finding comprehensible information and data from huge volumes of papers can be a huge logistical roadblock.

That is exactly why more and more real estate companies are outsourcing their lease abstraction work. This requires highly skilled professionals who know leases inside out. Within this CRE leases are even more intense due to the sheer volume of data work. Abstracting core information from this is a humongous task in itself. Getting a properly skilled lease abstraction partner to do this reduces the chance of gross human errors and benefits your growth.

Reasons to Outsource Your Lease Abstraction

JLL’s Future of Work Study (2018) says that globally more than 42% of commercial real estate firms outsource more than 50% of their lease abstraction work. The participating real estate managers in this study said that this is mostly to get more efficient workers to do the job without employing them full time. They also mentioned that it helped them cut costs quite subsequently.

Maximum Resource Utilization

When you outsource lease abstraction work to outside partners you save a lot of time for your in-house staff. We can use this staff and get them reassigned to important front office work that can help scale your business. This is probably one of the biggest reasons why in the UK more than 48% of companies have outsourced its work to outside firms.

Outsourced lease abstraction firms will also customize every document based on client demands and help better your credibility. These custom documents are simplified and easier to comprehend and helps you draw faster data based conclusions.

Effective and Authentic Portfolio Management

All the relevant data and information accumulated from the lease forms the basic structure for an authentic property portfolio. Crisp and consolidated information like termination clause, contractual obligation, maintenance, liabilities etc are put together in simple terms by any lease abstraction partner. This will help better assess risks, expose to liabilities and also help plan further action. Especially when a CRE has to manage multiple clients under their portfolio.

The KriyaGo team has the right set of experts to help you streamline your lease abstraction work. We are here to better this complex work with the best of software and custom features for your specific business needs.

Extremely Cost-Effective

If you get an internal team to do the lease abstraction work, especially when the volume of work is high in a CRE, the overhead cost is high. You must hire a team of experts, and pay them huge salaries, train them and constantly keep at it to get the work done. When you get back office outsourcing services for your lease abstraction you only pay for the services you take. You do not need to keep paying a team of experts as full-time employees even when there is no work. Outsourcing also becomes highly time effective when you skip out on the basics like hiring and training new staff.

Keeping Up With All Compliances

An outsourced lease abstraction service has to provide you with all monthly reports and disclosures that you need for the Financial Accounting Standards Board (FASB). They will also help you dive deep into the fine prints of these reports and analyse the data to get better results. This helps you mitigate all risks of non-compliance and penalties and fines. Having access to such expert lease accountants will also help you better the other financial services based on the data findings.

Quicker Work Turnaround

When you partner up with a firm who provides such super speciality services, their work turnaround time is bound to be much faster. Much more accurate data is extracted by outsourced audit accountants because they are solely dedicated to your project. An in-house in-experienced team will not have the right experience to provide you with the right results at the correct time.

This will also set your work tone right with all your tenants increasing your credibility and that will eventually reflect in business growth.

High Level of Data Privacy

A CRE has huge amounts of bulky data, hundreds of pages filled with complex legal terms. But that does not mean the content is not important or does not have usable data in it. Data accuracy is even more important because human errors skyrocket when working with complicated documents. This is exactly why an expert team can help you extract error-free data from these huge piles of complicated paperwork. All CRE are required to get accurate lease abstracts to fulfill their other financial obligations on time and avoid penalties.

Market research says that on an average businesses lose more than 20%of their yearly revenue due to wrong data work. Do you still think you can afford to get the lease abstraction with an experienced staff? You might want to rethink that decision a little.

As an additional benefit all your data will be confidential with a lease abstraction partner and under constant security checks. They will also back-up your essential data and you can easily do away with the fear of data loss from there on.

Summing Up

Is all the heavy paper getting the better of you? Struggling to keep up with the complications of lease abstractions and audits? Let the KriyaGo team take care of that. Our team of lease abstraction experts have just the right expertise to get the work done. No more breaking sweat over pilling up complex lease documents.

Be it commercial real estate leases or residential real estate leases, our team can customize strategy and leadership based on your specific needs. Not only this, we take care of all tedious back office work with our team of experienced staff. Get in touch with us to understand more about our back office outsourcing services. We are here to guide you on your path to simply all lease-related problems your real estate business might come across.

Common Lease Abstraction Issues and How To Solve Them

Fri, 03 Sep 2021 09:00:00 -0400

Leases are bulky but essential documents in every real estate business. These documents carry important clauses, making lease management even more difficult. Reading leases every time a tenant wants to sign them can be time-consuming. Instead, lease abstracts serve as a summary of the original document. These abstracts contain important clauses which make them easier to understand.

Even though they sound simple, lease abstracts are complicated to prepare. Since they represent the lease, abstracts need to be accurate and contain all the details. If you want to prepare lease abstracts for your properties, our guide on how to solve the common lease abstraction issues will help you.

Why are lease abstractions important?

Lease abstractions are not mere summaries of leases but also have numerous benefits for the real estate business.

Easily explains lease terms to tenants. Tenants can skip reading the bulky lease and choose the abstract which contains the extract of the same information.

Improves investment by providing information to calculate risk factors. Lease abstracts collect all information in a single place that lets you study it easily and determine market risks.
Determines values of the portfolio by collecting relevant information.
Lease abstracts are easier to present to clients. They can go through and understand your property management process without reading complex clauses.

Typically, a lease abstract is about 3 to 5 pages long. To condense the lease within these limits, employees have to face numerous challenges.

Common lease abstraction issues

Compliance with lease accounting standards

The Financial Accounting Standards Board (FASB) has released new lease accounting standards. This has set new guidelines for lease data management, making abstractions more complex. Real estate companies without organized data management plans find it difficult to meet these new guidelines.

Lease abstracts need adequate data to comply with the new standards. But many real estate businesses lack the storage and information to ensure FASB compliance. This can be a significant lease abstraction challenge. If the abstract doesn’t comply, then the business can face legal consequences. Adding to it, FASB standards also change from time to time, which means the leases need to be updated.

Bulky documents

Bulky lease documents and complex terms are the hardest to abstract. Since lease abstracts need to be short, you have to find important clauses from the document while making sure nothing is left out.

The real estate industry also uses traditional methods even if it is slowly upgrading to technology. So, most leases are manual work that requires employees to study them extensively to prepare the abstracts.

Moreover, disorganized data requires employees to scour through multiple documents to obtain the required information.

Extracting important data

Identifying which clauses are important is another challenge of lease abstractions. Bulky leases have more important clauses but the abstracts still need to be short. It is a task to summarize bulky leases by filtering additional information.

A lease abstraction typically includes:

The property address and basic tenant information.
Rent and security deposit information.

Any information regarding tax, maintenance, and CAM.
Lease renewal and termination clauses.
Lease termination clauses

Apart from these, any other information that can impact tenancy should be included in the abstract. Companies that do not create and store leases online face difficulties while recovering relevant data for their business. Excluding even a single important detail in the abstract can have a negative impact on tenants.

How to overcome these challenges?

Lease abstracts are challenging. But with the right resources, you can create accurate, legally complying abstracts. The below solutions help you clear your lease abstraction issues and also create better abstractions.

Use the latest technology

Lease data management is the basic challenge property managers encounter during abstractions. If you manage leases on paper or spreadsheets, then it is time to upgrade to new technology. According to Market Watch, 88% of spreadsheets have errors. Instead, you can use specific software to organize and manage data.

You can choose off-the-shelf software that is designed to suit most businesses. Or, you can integrate multiple software on a single platform, which lets you customize the software according to business needs. Companies like KriyaGo help integrate top property management software so you can leverage all the features in a single place.

Update lease data

Currently, leases are made in compliance with the FASB standards. As times change, these standards are also continuously updated. Though lease abstraction is a one-time process, it needs to be regularly updated with the latest information. This is to ensure that you are legally safe and disclose all the information as directed by law.

Tag the abstracts

Lease abstracts have their origin in the lease documents. If you are making leases online, then it is easy to tag any important terms and clauses in the abstract. This will help you look up the clause in the lease.

By keeping track of what information goes on the abstracts, you can also change them according to standards. Bookmarking also helps you review and remake abstracts, in case they are too long or short.

Outsource lease abstractions

The best way to create perfect lease abstracts is through outsourcing. Managed service providers have expert employees with relevant work experience. These experts identify important clauses and create lease abstracts suiting your requirements. They can also update leases from time to time and keep track of any changes in the FASB standards.

Outsourcing lease abstractions can also help you save money while ensuring quality. Good abstracts have a positive impact on tenants and help you build a better brand image.

Create perfect lease abstract with KriyaGo

Can’t manage the bulky paperwork? Let KriyaGo handle it for you! Our experts have relevant experience in creating lease abstractions for real estate businesses. Regardless of the size of your business, we can strategize and help you with lease abstractions and administrations. We also help our clients with back-office accounting and CAM reconciliation.

KriyaGo also integrates real estate software to create bespoke software for businesses. Whether you want better CRM software or want to organize your data, we have the right tools for you. Integrate more solutions and streamline productivity the easy way. Take a look at KriyaGo Blox today!