By Accounting Team.
Asset Management is about making money.
Errors in tenant leases translate to a loss in your asset’s bottom line.
When we take over a property, our first action as the new Management company is to conduct a comprehensive review of all the current leases at your building.
This review serves two purposes:
- We extract data to build our accounting and Property Management software
- We identify errors in the current leases and develop an action plan to resolve
Lease audits are necessary based on the number of errors that we consistently uncover.
Here are some examples –
In 2024, we took over a building that was losing $4,315 a month because residents were occupying parking spaces but not paying their monthly parking charges because the prior management company had not accurately posted their lease terms in the accounting software. This resulted in tracking to lose over $50K in revenue a year or at a 5% cap $1,000,000 in potential value.
In a separate example, our lease audit revealed residents were supposed to be charged for monthly utilities. However, the terms were not correctly recorded in their leases.
Our best practices call for layers of checks and balances amongst our operating and accounting staff to minimize these types of problems to ensure the lease terms transfer to the accounting software correctly.
In a world where technology has revolutionized the leasing process, enabling electronic signatures and streamlined operations, it remains crucial to address the inevitability of human error. To truly optimize revenue and enhance property value, we advocate for conducting lease audits twice a year, coupled with consistent updates to tenant records. By implementing these proactive measures, you not only safeguard your investments but also pave the way for a more efficient and profitable future.
