Common Area Maintenance is a highly complex task in itself. The CAM reconciliation process can be a further hassle due to the multiple stakeholder involvement. It is time-consuming and tedious, but extremely important to have proper reconciliation done. Commercial Real Estate CAM reconciliation process is even more complex. Why? Commercial lease agreements are filled with huge volumes of paperwork and complex legal matter. Though these might seem trivial, non-compliance to these might lead to long-drawn legal battles with tenants and authorities alike.
What major mistakes do commercial real estate landlords and property managers make while drawing CAM statements? Read this article to understand them in detail and avoid further roadblocks.
What are the major pitfalls in CAM statements?
All retail business outlets to multi-family homes come under the Commercial Real Estate CAM system. Compiling a comprehensible CAM statement for these is a herculean task. Most CRE property managers and landlords spend sleep-less nights over perfecting this. With deadlines looming over your head, there might be many pitfalls that you forget to consider.
Here are the most commonly overlooked mistakes that you as a property manager should avoid.
• Inaccurate expense allocation
If you forget to keep track of proper bills, invoices for maintenance, gross-ups, capital investment, your CAM reconciliation will suffer. You must also account for expense caps and not overcharge tenants than their lease tenure. When you manage multiple properties and tenants simultaneously, slip-ups can happen. But these can be grave mistakes in permanently damaging your tenant relations.
Property managers' poor expense allocation can lead to tenants paying less than what is due and negatively impacts ROI.
• Inconsistent process of making CAM statements
Most real estate companies use DYI processes to conduct their CAM reconciliation process. But reconciliation in real estate is a very complicated process. When you use inexperienced staff to get the work done, you open yourself up for significant problems. The hurdles can be indefinite, from inconsistency in the work process to manual data entry errors. Lack of proper record-keeping operational expense tracking is a terrible business process. But most real estate businesses do not record expenses right when they approve payments; most do it from memory at a later date. There is very little chance that you will remember all data without inconsistencies resulting in overcharging or undercharging tenants and losing money.
Do you find this process too tedious? You can always opt for a CAM reconciliation outsourcing partner. KriyaGo offers CAM reconciliation; our team has top-notch resources to streamline your real estate business process.
• No internal audits before presenting CAM statement to tenants
As a property manager, if you forget to conduct internal audits of lease agreements and CAM statements before presenting them to your tenants, that is a problem. Why? These are all formal documents with many jargons; you must internally audit your statements to get your facts and numbers in order and consistent across all documents. If the statement you produce in front of your tenants at the year-end has inconsistencies, your tenants will lose faith in you. Though this might just be a gross mistake on your partner, it can have a long-term ripple effect leading to bad business.
• Misinterpreting legal lease terms
Every Commercial Real Estate property has different lease terms, with special clauses for all. From restaurants, warehouses to malls and hospitals, all have their own lease rules and regulations. If you do not know or misinterpret these complex terms, it can negatively impact business. Most Commercial Real Estate businesses lack the expert resources to handle this level of work. This can be highly detrimental for your business and accounts work.
• Excessive management fees
Do you end up changing your management fees for every tenant? This is a major damaging factor to the business. Standard property management fees lie between 4 - 7% for an average property. It can scale depending on the number of units handled. If you end up charging more than the market average, your tenants will feel burdened by the additional costs. You can not indulge in rebates or extra charges based on personal relations.
• No ledger review
If you handle multiple properties and units simultaneously, it is easy to mix up data. Did you end up sending bills and CAM statements of one property to the other? Charged incorrect invoices to other buildings than the original? This is damaging to your image and overall tenant relations, negatively impacting business.
• No annual CAM budget
As a property manager, it is your responsibility to hand out an appropriately detailed CAM budget at the beginning of each lease term. Your tenants need to be well-prepared for what is coming their way. If you fail to do so, you might see a lot of tenant turnover. You must give your tenants an understanding of the workings, expenditure plans and building trends before charging them to ensure better tenant relationships.
How CAM Reconciliation can be easier with KriyaGo
Understanding which expenses come under the tenant's purview and which come under the landlords is a strenuous task. Only knowledgeable industry experts know the right way around this. This is why outsourcing is the best way to let others do the heavy lifting for you.
The KriyaGo CAM reconciliation services will help you save money, resolve irregularities and boost profitability. We will also provide you with expert professional resources and CAM reconciliation software to work on your CAM statement without you having to pay for them full-time. There is no chance of improper billing or statements when you partner with us. It will all positively show in your real estate business ROI in the long run.
Concluding
A flawless CAM reconciliation statement easily translates into better trust between tenants and property managers. It is a common occurrence where tenants believe that landlords are overcharging them. Tenants will see reason when you ensure you present a concrete, precise, and understandable statement. Do not let CAM clauses in your lease agreement remain open to interpretation for your tenants. A well-versed CAM reconciliation outsourcing partner will get it done for you.
Contact the KriyaGo CAM reconciliation team to know how we work. Talk to us soon to know more!
