There are few things more tedious in the real estate world than CAM reconciliations. In itself, common area maintenance charges seem like a minor thing. These seem to be expenses that property owners in commercial real estate pay to maintain and repair common property.
There is no denying that CAM charges are precisely this. But landlords also know that 'common area' is an umbrella term for entirely circumstantial and subjective fees. There is also no fixed rule on how to calculate CAM expenses. As a result, the end-of-year accounting or 'reconciliations' meetings discussing said fees can be a headache for many property owners.
Contentions with CAM Charges
Common area maintenance charges have an enormous influence on the net operating income. Despite this, even landlords who otherwise benefit from this practice tend to see this as a chore.
They tend to react in this manner because of the tenant-landlord animosity of this practice. The fault lies with the CAM system and not the property owner.
CAM Expenses
The tenant lease includes the billing for the use of the common area properties. These added expenses are usually an annual payment. The central problem here lies in the absence of a single budgeting system for CAM reconciliations.
These charges are always reliant on factors like the lease’s pro rata share, building security, HVAC, and more. Things like janitorial services, common area heating, pest control are also a part of the annual tally. In addition, as an ‘estimate-based’ system, the chances of errors in accounting are always higher.
Tenant Reaction
It is not uncommon for a tenant to assume one of these mistakes to be the landlord’s attempt to scam them. Sometimes, if the charges fail to cover the actual expense, the landlord may send an invoice. In such cases, the tenant’s reaction is to be expected. They are receiving a payment demand for something already included in their lease.
How Outsourcing can Help You?
In such a tense situation, the intervention of a third party is necessary. Outsourcing your CAM reconciliation duties is a great way to maintain a friendly relationship with your tenant. You can rest easy with your hands off the billing process. Meanwhile, the objective stance of a third-party service provider is sure to reassure them of the fairness charges. Here are some more ways outsourcing CAM reconciliations can help property managers.
1. Promise of Transparency
Landlord Responsibility
Tenants tend to be generally insecure about the lease's common area maintenance clause. The fee is on a pro-rata basis. As a landlord, it is essential to be clear and direct about these charges. This payment implies a tenant renting a larger property will pay higher maintenance in proportion to their lease. Letting your tenant such crucial information before the end-of-year finance meeting is sure to save you a lot of trouble.
The tenant also should be aware that they will receive an invoice if their CAM expenses exceed those paid by the landlord. If the relationship remains unchanged despite these attempts, outsourcing your CAM reconciliations is your best bet.
Advantages of Outsourcing
Aside from reducing your financial processes, outsourcing also dispels current tense landlord-tenant dynamics. A third party helps introduce an element of objectivity and fairness into the equation. These professionals help both parties understand that common area management is a shared responsibility. There are times when both the landlord and the tenant require a firm talking-to. If you have outsourced your CAM work, the agent can quote the contract terms to make them see sense.
2. Better End Resolution
Accurate auditing is one of the essential benefits of outsourcing your CAM reconciliation to a professional. Before implementing their strategies, outsourcing parties scan the CAM system. This study gives them insight into the changes necessary. Aside from this, you also get timely and reliable reports on payments, rents, and fees. These are passed through CAM software like MRI and Yardi to maximize their efficacy.
Revamping Your Billing System
Common area maintenance reconciliation makes up a significant part of net operating income. So, having a healthy billing system can boost your profits. The software mentioned above reads irregularities in your financing to find anomalies.
After discovering them, they formulate strategies and enforce solutions to revitalize the system. Their real estate management software ensures that all improper links in the billing clockwork are well oiled and working in no time.
Meanwhile, the trained team provides you with the best financial service without the hassle of accommodation. There is no need to install a separate department to regulate the CAM duties. It is expensive and time-consuming, and vastly inferior to the outsourcing service.
3. More Accurate Data
Outsourcing your CAM duties can give you access to software and resources specializing in this field. These are professionals that specifically focus on common area management resources reconciliation.
Common Area Maintenance Software
Software like Yardi Breeze or Yardi Voyager Commercial can make your CAM duties very easy. The latter is suited for smaller rentals, while the Voyager is for more prominent property owners. Billing a whole year's worth of maintenance fees can take a long while. Besides this, with so much to calculate, errors are sure to present in the final sum. Owning multiple properties in the same block only amplifies the problem.
Top Features of CAM Software
Outsourcing agents solve this problem by switching to a highly efficient automated system. Yardi Breeze can create and mail a detailed reconciliation report to each tenant. Aside from this, it also allows users to mark a property as residential or commercial to streamline their work.
The Breeze's Premier variant offers additional features on CAM reconciliation services. As a condo and HOA-friendly service, customers can access several convenient add-ons. The Yardi Commercial Tenant Portals aims to make landlord-tenant interactions as easy and fuss-free as possible. This interface allows tenants to pay their rents, request maintenance, and lookup crucial retail data.
Innovations like these aim to open up communication between tenants and property owners to ensure higher tenant retention rates.
Make CAM Reconcilation Easier with Assetsoft
Want to make CAM Reconciliation a seamless affair? Talk to our experts at Assetsoft today. We can help you with all accounting and data needs - and it's one of the more cost effective and smart decisions you would make. Talk to us to know more!