Lease administration is one of the most commonly misunderstood aspects of commercial real estate.
In the broadest terms, lease administration covers tasks that fall under two main categories: risk management and organization. But there’s so much more to it than that! Here are a few things you need to know about lease administration.
What is Lease Administration?
It’s hard to find a narrow definition of lease administration because it involves such a wide variety of tasks. Lease administration isn’t a one-and-done process. It’s ongoing.
Lease administration involves ensuring that tenants are adhering to their contractual obligations and that the property owner and/or management are following through with their obligations. When you’re using lease administration or property management software, you can leverage these data points to maximize value and minimize risk.
Common responsibilities that fall under lease management include:
- Receiving rent
- Reviewing and abstracting leases
- Receiving and tracking certificates of insurance
- Accounting and processing
- Lease auditing
- Conducting occupancy cost analysis
- Charging for Common Area Maintenance (CAM)
Lease management primarily involves the normal day-to-day tasks of managing leases. When done well, it also means taking a look at what’s happened in the past, learning from errors, and creating a better system for the future that protects your commercial real estate business’s bottom line.
What’s the Best Way to Carry Out Lease Management?
Some companies have a lease administration department, some outsource the task, and others use software to assist them in the process. Many, especially smaller commercial real estate companies, do not use any dedicated personnel or software. As your business grows, we’d strongly recommend investing in a program that improves your lease administration process rather than continuing to do it manually.
As the number of leases you’re managing increases, it becomes more difficult to stay organized on everything from repairs and CAM. But there’s a silver lining: it also means more data to draw from that can improve processes. Even if you think you’re easily managing 10 or 12 leases, you may be missing out on valuable insights. Not to mention, you will be more likely to make mistakes or overlook inaccuracies if you are doing everything manually.
If that still isn’t enough to convince, here are a few things to consider. Lease administration/property management software can help you:
- Keep track of exactly which leases have monthly rent increases
- Monitor when each lease is expiring or being terminated
- Keep track of all leases you are managing if there is a large number
- Resolve legal disputes with years of information helping to make a case
If you can’t accurately do all of these things right now on your own, it’s definitely time to invest in lease administration software.
Use STRATAFOLIO for Lease Management
STRATAFOLIO can help your commercial real estate business get more organized and discover valuable insights about your properties and your tenants. This software makes your life as a commercial real estate professional so much simpler. You can see for yourself by requesting a free demo today!