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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 9 Best Practices For CAM Reconciliation

Mon, 23 Aug 2021 09:00:00 -0400

Common Area Maintenance (CAM) reconciliation sounds simple. Just add up all common area expenses and divide them among all the tenants. But in reality, it is a complex and time-consuming process.

You might miss certain expenses or end up overcharging your tenants. Additionally, any error in CAM reconciliations has a negative impact on property management. You can’t miss out on having a thorough reconciliation process.

While the task is tedious, our list of best practices helps make your CAM reconciliation more accurate.

Impact of a good CAM reconciliation process

The money recovered from CAM reconciliations is used to operate and maintain common areas. An accurate CAM reconciliation process has various benefits other than just a financial boost.

Better tenant relationship

A transparent and timely reconciliation makes tenants trust you more. They will also be motivated to pay rent on time and also be responsible for maintenance. If the tenants are kept in the loop of the process, it leads to fewer CAM-related disputes. Through a good CAM reconciliation, you can build a better brand image and also get more referrals from trusting clients.

Be ahead of competitors

With around 2 million real estate agents in the US alone, the industry has become very competitive. To stand out, property managers need to provide additional amenities to tenants. Having control over the CAM expenses can help cover the costs of such amenities and also improve your brand image.

Negotiate leases

Lease negotiations need to be profitable for both the property manager and the tenants. A good CAM reconciliation process covers all property management costs while also giving tenants the best amenities.

Tips for CAM reconciliation

Common area maintenance expenses usually include:

Repairs and maintenance expenses
HVAC and other utilities
Property tax and other fees

Salary of property staff such as janitors and security services.
Cost of new amenities

To cover these costs and fairly divide them among your tenants, you need to follow these tips for CAM reconciliation.

Budget for your CAM

A CAM reconciliation starts with budgeting. One of the best ways to get a budget estimate is to look at the previous year's reconciliations. Or, if your property is new, you can also do a thorough expense review. This step is essential to avoid missing any expenses. If you detect any errors after submitting the report, then changing it would be difficult.

Apart from the usual expenses, your CAM reconciliation should also include pro-rata shares that have changed during the term.

Calculate your occupancy

One of the typical mistakes in CAM reconciliations is calculating the expenses by considering 100% occupancy. Some costs like security services and amenities might not change depending on the number of tenants.

But others like water, electricity, and janitorial services will vary with occupancy. You need to also consider the number of days a tenant has stayed on your property. Consider a tenant who has signed the lease in March. It would be unfair if they had to pay expenses for the whole year. In this case, you need to exclude the first two months of the year for that tenant's expenses.

Document all changes

It is not uncommon for property managers to exclude minor repairs and maintenance from their CAM reconciliations. But eventually, these charges add up as discrepancies in your final report. To avoid this, document every change you have made to the properties, and add this to your CAM reconciliation.

Include property management fees

Tenants are also liable to pay a monthly fee to their property manager. Depending on the number of units, property managers can charge anywhere between 4% to 12% of the monthly rent.

Ensure timely invoices

If you want to ensure you are paid on time, then you also need to send timely invoices to tenants. Your invoices should reflect the various expenses to ensure transparency. Make sure that you follow up and collect the fees within the due date. Timely payments make reconciliations easier and help avoid discrepancies.

Obtain all third-party information

Third-party information like bills from insurance and janitorial service providers and reports from utility companies are all required to make the CAM reconciliation more accurate. Obtain any such information to make sure your reconciliation process can finish on time. Keep track of all missing information as it is easy to miss something small, especially if you handle multiple properties.

Review the reconciliation

Verifying your ledger can be time-consuming. But it is also crucial to avoid any errors in the reconciliation. You can start by comparing your reconciliation report to the previous year's reports. This highlights any major mistakes, especially if the costs have a drastic difference.

Next, you also need to check if the details mentioned in the reconciliations reflect in the actual leases. Make sure you are not charging the tenant something, not on the lease.

Also, check for any missing entries or unpaid invoices from tenants and vendors.

Use property management software

Property management software has many features you can use to make CAM reconciliations easier. You can keep track of the expenses, save invoices and payment details, and communicate with your tenants.

For example, Yardi Breeze has specific tools to help with CAM reconciliations. It allows you to set up tenant details for all properties and create payables for the same. It also lets you run a reconciliation by creating balancing sheets for each property. You can reach out to a Yardi consultant to know more about its features.

Outsource your CAM reconciliation

As a property manager, you will have many tasks that require your attention. If you cannot handle CAM reconciliations or want an expert to take care of them, you can reach out to an outsourcing company.

Simplify CAM reconciliation with Assetsoft

CAM reconciliations have little room for error. At Assetsoft, we help clients simplify their CAM reconciliation processes. Our team of experts understands the legal and functional aspects of common area maintenance.

By outsourcing your CAM reconciliations to us, you can maintain common areas better while also reducing the overall fee. With platforms like Yardi and MRI, we make sure that the reconciliations are justified and the expenses are fairly divided.

To outsource your leasing processes, reach out to Assetsoft!