One of the main financial challenges that property managers face is tracking expenses for common area maintenance (CAM expenses). How can CMMS and your facility service provider help?
One property manager who oversees small retail centers says, “National tenants are always finding ways to re-analyze their common area maintenance and amount owed.” No doubt, they do so with an eye to reducing their own cost.
However, good record keeping helps demonstrate the need for CAM expenses. One owner of retail and office properties offers this practical approach, “We budget each year and present a reconciled CAM budget based on actual expenses and projections at the beginning of the year and charge a monthly estimated fee. It is reconciled based on actual expenses at year-end.”
Recording expenses is less and less an issue partly due to the ability to track them with accounting and property management software. Does your facility services company use field technology to report and track regular maintenance and any needed extra repairs? This can be key to tracking your expenses and supporting it with data to back your CAM budget.
“Using property management software gives us the benefit of being able to evaluate the maintenance costs of a specific property and compare that to its income,” says an owner who manages 650,000 sq. ft. of industrial space. He adds, “Every day there is an emergency for someone. We have a perspective on [the problem’s] severity and a willingness to step up and make the repairs. The worst thing to do is to put off building maintenance.”
“Make the best of the property management software available to track and support your CAM expenses.”
Some property managers set aside reserves for unexpected expenses; but better, regularly scheduled maintenance makes unexpected maintenance costs less likely. To create a budget which allows for regular maintenance and any additional improvements, most managers use the last three to five years of maintenance costs as reference. The manager of a 14 property portfolio describes this process, saying, “We take previous years’ expenses, estimate what work we want to do on the property the next year, adjust for expected inflation on uncontrollable costs, and set a budget for the next year. We typically try to keep annual increases capped at 5 percent if possible.”
“Every day there is an emergency for someone… The worst thing to do is to put off building maintenance”
[su_box title=”Tips for CAM Expense Management” style=”soft” box_color=”#0071BB”]
- Track your CAM expenses and keep accurate data to support them.
- Use a facility service provider with advanced field technology, CMMS and cloud-based work order system.
- Make regularly scheduled property and building maintenance a priority to avoid unexpected expenses later.
- Create a realistic and feasible budget for property maintenance using past data and reasonable projections.[/su_box]