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.
