Having all the critical lease information at your fingertips is essential for monitoring the property's performance and dealing with day-to-day property-related issues.
Property managers have multiple clients, including property owners, investors, and tenants. To coordinate among them and maintain a harmonious relationship, they need to know every detail of the lease agreement.
Lease Abstraction is the only solution that can help them save time and effort. But it’s not as simple if done manually or in-house.
What is Lease Abstraction?
Lease abstraction is extracting all the essential data needed for portfolio property management. This data can be legal, financial, or business-related.
The lease abstraction team first checks and analyzes the complete lease document and then compiles the crucial points on a separate document known as the lease abstract.
This saves property managers time and allows them to make informed decisions without constantly examining lengthy and complex documents.
However, preparing the lease abstraction process is tedious and requires professional skills. Any minute error can lead to wrong decisions and incur losses.
On the one hand, a lease abstract can help real estate owners mitigate risks and maintain compliance with other stakeholders; on the other hand, they might need to employ several resources to prepare it.
The best solution is to implement an automated lease abstraction to automatically manage all tasks utilizing the latest AI bots.
Benefits of Automated Lease Abstraction
Automated lease abstraction refers to utilizing technology to extract and summarize key information from lease documents to help real estate owners, landlords, tenants, property managers, or other business stakeholders.
Adopting automation in lease abstraction serves various benefits:
1. Accuracy
With minimal human intervention during the interpretation of complex lease terms, the possibility of human error also decreases. The end-to-end automated process reduces the risk of accounting mistakes and other discrepancies.
The lease abstraction software can accurately extract critical points from multiple documents, including payment schedules, lease terms, renewal options, expense management terms, and other crucial details.
2. Improved Accessibility
The lease abstraction software organizes the extracted data in a centralized database, making searching for any particular lease information easy.
This enables property managers to access valuable information to manage lease obligations, track critical dates, or analyze portfolio trends.
3. Time and Cost Savings
When done manually, the lease abstraction process is time-consuming, especially for bigger lease portfolios. It is also labor-intensive and requires property managers to employ a lot of resources, resulting in increased expenses.
An automated lease abstract is well-summarized and allows them to identify cost-saving opportunities. Moreover, they can utilize their staff for more valuable tasks instead of spending time analyzing lease documents.
4. Strategic Decision-Making
Automation enables easy access and a comprehensive overview of lease portfolios. It allows lease parties to aggregate and compare lease costs, terms, and conditions.
Property managers can further optimize their portfolios, plan future strategies, and make progressive decisions.
5. Better Compliance
The automated lease abstract ensures accurate and efficient data extracts to support preparing financial statements and reports that comply with (International Financial Reporting Standards) IFRS 16 and Accounting Standards Codification (ASC 842).
6. Scalability
As your real estate business grows, the complexity of voluminous lease documents also increases, which becomes a major issue to handle. A lease abstraction software simplifies the process and allows the company to grow without any pressure to handle or manage documents.
7. Seamless Integration
The automated lease abstract solutions easily integrate with property management, accounting, and other departments within the company. This enhances the workflow and allows seamless data flow across different functions, ensuring the lease abstract is available for financial analysis, decision-making, and reporting.
The automated software can scan any format or layout of data available and digitalize them for easy analysis.
Conclusion
In today’s innovative world of advancements, ignoring technology and depending on manual labor is not an intelligent choice.
The lease abstraction process is one of the most engaging and complex tasks in real estate management, and it can easily be automated.
We help you utilize the best software solutions for lease abstraction and train your staff in its efficient operation. The automated lease abstract enables you to gain a competitive advantage and navigate the complexities of lease management.